Overview. Four Arrow Funding, Inc. (the “Issuer”), an affiliate of Chesterfield Faring, Ltd. (“CFL”) is making a $450,000 Preferred Equity financing (the “Preferred Equity” or “PE”) that will be secured by a preferred membership interest (the “Interest”) in The Alto Townhouses on Hall LLC (the “Borrower”) secured by 3911 North Hall Street, Dallas, Texas 75219 (the “Property”). The development of the Property is twenty (20) townhouses with fourteen (14) townhouses under construction in Phase 1. The balance will be developed upon completion of Phase 1. The Borrower is a repeat borrower of the Issuer. The Property was inspected by the Issuer on July 11, 2019.
Economics of the Project. The gross sellout is estimated at $11.62 million at a cost basis of $8.80 million (less $1.1 million of selling costs) for a net profit of approximately $1.7 million. The Borrower should realize a net profit close to 170% on their invested common equity. Each townhouse will contain an average space of 1,968 SF at an average sales price of $295 PSF or a gross price of $580,625 per townhouse multiplied by 20 townhouses equaling the gross sellout of $10.95 million. The $450,000 PE is subordinated to a $7.3 million first mortgage construction loan but superior in preference to a $964,000 million common equity investment from the Borrower. We, as the PE investors, have a 2:1 ratio of common equity monies subordinated to our PE investment. This reduces our risk profile. The chart to the right shows the Sources & Use of Funds including the PE at 89.05% ($450,000) of the capital stack with 10.95% subordinated ($964,006) and 67.52% of the property value.
The Developer/ Borrower. Dooley Developments is the developer of this project. In 2010, Colin Dooley formed Dooley Developments USA, LLC (the “Developer”). Colin is 34 years old. His father was an architect. He received a Business Management Degree from University of Queensland, Australia.
The Developer finished three (3) projects so far including Lancaster Grove, Waterford Townhomes, & Skyline Terraces. The Developer specializes in affordable and modern housing designs in attractive community developments.
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| Preferred Equity
Chesterfield Faring Ltd - Four Arrow Funding
Sponsor Profile - Four Arrow Funding.
Four Arrow Funding is an alternative investment platform that focuses on funding and servicing private commercial real estate loans. Our strategy is to originate, hold and service all our loans. Our discretionary platform and nimble structure delivers unparalleled certainty of execution. We emphasize direct origination of our loans, which allows our management team a greater degree of control over due diligence, underwriting, and custom-tailored credit enhancements.
- Lawrence J. Selevan will be the Executive Chairman of the Company. He is the Chairman and CEO of Chesterfield Faring Ltd, and is responsible for the overall direction of the Firm. Mr. Selevan has more than 40 years of experience in real estate investment banking, investment management, principal ownership, and capital markets activities. During his career, Mr. Selevan has executed over $15.0 billion (plus) in transactions for both US domestic and offshore institutional and private clients, including US REITs, pension fund, fund managers, global investment banks, private family home offices, and Sovereign Wealth Funds. Previously, Mr.Selevan was the CEO of Garrick Aug, Director of Fund Management for Sumitomo Real Estate, Managing Director at Fieldstone, Inc. and the merchant banker for a private family office. He has worked on projects throughout the world including the US & the Americas, EMEA (Europe, Middle East, Africa), plus Asia.
- Jordan Shrier. serves as President a co-founder of Four Arrow Funding Inc. He originates and underwrites transactions for the firm and acts in an advisory role and direct lender having helped his clients raise over $800 million in capital markets transactions. Mr. Shrier is active with the Commercial Real Estate Finance Council (CREFC), Mortgage Bankers Association (MBA) and International Council of Shopping Centers (ICSC). Mr. Shrier has twelve years of experience in commercial real estate and corporate finance. He has held positions at Investment Banks C.E. Unterberg Towbin and Bear Stearns & Co. When Jordan isn’t working he’s spending time with his wife and three children
Prefferred Equity Terms
Prefferred Equity Terms
The Issuer is offering six (6) loan participation units (“Units”) at $75,000 each totaling $450,000 to you as loan participants (“Participants”). The term of the Units is six (6) months. The base interest rate for the Units is twenty four percent (24.0%) per annum. The interest is prepaid in the amount of $54,000 or $9,000 per Unit, for a net investment of $396,000 or $66,000 per Unit for a $75,000 face amount. Calculated on an annualized basis, the total return is 27.27% for the six (6) month term to the Participants.
|Senior Bank Loan||$7,390,691|
The Dallas/Fort Worth metropolitan area is the fourth largest metropolitan area in the United States and is currently the fastest growing metropolitan area in the nation. In March 2019, Dallas-Fort Worth-Arlington, TX had a population of 7.6M people with a median age of 34.9 and a median household income of $67,382. North Central Texas Council of Governments projections indicate that an 9 million people will call the area home by 2030. Much of the explosive growth is occurring within fringe communities—communities situated along the edges of the developed/urbanized metropolitan area. Between 2016 and 2017 the population of Dallas-Fort Worth-Arlington, TX grew from 7.23M to 7.4M, a 2.32% increase and its median household income grew from $63,812 to $67,382, a 5.59% increase.
2018-2019, the Dallas-Fort Worth-Arlington employment base increased by 96,000. The unemployment rate remained stable at 3.5% at the close of Q1 2019. Out of the 96,000 jobs added, 21% (20,522 jobs) can be attributed to the industrial sector, which is comprised of goods producing and trade, transportation, and utilities. The trade, transportation, and utilities category accounts for 61% of the entire industrial sector and is the leading indicator for industrial space demand. Texas employment expanded an annualized 2.1 percent in May, following upwardly revised growth of 3.1 percent in April. The Dallas Fed’s Texas Employment Forecast predicts 2.3 percent job growth in 2019 (December/December), with an 80 percent confidence band of 1.4 percent to 3.2 percent.
Dallas/Fort Worth growth can also been see as inventory is expanded at a strong clip over the past four quarters, particular in the northern suburbs and urban core of Dallas. Nine suburbs in Dallas gained more than 1,000 new apartments and approximately 2,000 apartments in the Fort Worth area. Currently, apartment rents are increasing at an average effective rent year over year of 4.5%
Submarket. Bryan Place began as a “stylish downtown neighborhood in the shadow of skyscrapers”. Housing around 600 families, Bryan place is a .6 mile by .3-mile rectangle just outside of Downtown Dallas. The average home price in the area is roughly $225,000 and expectations are that trends are to follow the rest of Dallas in reference to home appreciation. While there aren’t any large corporations within Bryan Place, it’s among the most sought-after real estate due to its proximity to the rest of Dallas.