Equity Pledge Debt Fund 812

Site Location: 42-43 27th Street, Long Island City, NY 11101

Region: Long Island, Queens, New York

Land Area: 1,865 Square Feet(25 Ft x 77.75 Ft)

Zoning: M1-5/R7-3(Commercial & Residential FAR =5)

Building Area: 7,180 Square Feet

Land Closing Date: June 2014

Land Closing Price: $1,680,000.00

The developer plans to conduct two phases of real estate development in this area:

Phase 1: Build a multi-family rental apartment with one retail space on the first floor at 42-43 27th Street. The land for Phase I was purchased in September 2014, and the property construction was completed in 2018 and started operations. The property of Phase I consists of 7 residential units and 1 retail space. The leases of all units and the retail space had been signed in 2019. The current rental income of the property is stable, and the operations are in good condition.

Phase 2: the two lots, 42-62 & 42-64 Hunter Street, will be used to build similar property type as the completed property in Phase I, including multi-family rental apartments and 1 retail space. About the two pieces of land developed in the Phase II, 42-62 Hunter Street was purchased in October 2019 for US$2.99 ​​million, and 42-64 Hunter Street was purchased in July 2020 for US$2.55 million. The two lots are closely connected and backed by the property developed in Phase I.

The funds invested by Crowdfunding Fund 812 will be in the form of a loan for developer’s Phase II development. The property completed in Phase I will be considered as collateral since its owning entity, Greenland 27 LLC. Pledge the company’s 100% to CrowdFunz Fund 812.

Well-operating Property, Sufficient Value Collateralized

- For evaluating the value of the collateral, the property has had stable rental income since its operation. The residential tenants are white-collar workers; the commercial tenant on first-floor, Koufuku Market, is one of the few Asian grocer in the community and has performed well during the pandemic.

- According to the valuation provided by the third-party appraiser, EAST COAST, in September 2020, the property built in Phase I is currently worth $5,230,000 and will be worth $6,480,000 after the property receiving the 421-a Tax Exemption.

- Based on the financial data released by the developer, the current annual revenue for the operating property is $388,296.00, and the annual net operating income is $273,438.71, with a net income margin of 70.42%

- Currently, the developer is applying for the 421-a real estate tax abatement for the property built in Phase i. The approval is expected to be authorized within 6-8 months. By then, the property tax will be reduced to $8000.00 per year, and the annual net operating income will raise to $333,095.71, with a net income margin of 85.78%.

Prime Location, Strong Demand

- The development is located between Queens Plaza and Court Square in Long Island City. There are many subway lines such as E, M, R, 7, G, etc., bus like Q32, Q60, Q66, and train lines as MONTAUK, OYSTER BAY, and PORT WASHINGTON, making residents easily commute to most of the locations in the metropolitan area.

- In recent years, the communities in Long Island City have gradually become a gathering place for young generations, and the surrounding business environment has been more matured. The demand for housing has grown steadily. According to statistics from Trulia and Zillow, the median house sale price in Long Island City is $874,837, and the median monthly rent is $2,798, which has been incrementally increased in the past five years.

Clear Debt Spending, Straight Exit Strategy

The loan disbursed by CrowdFunz Fund 812 will be used for the Phase II of development, and the items of expenses are clear. Meanwhile, the developer is currently applying for the 421-a real estate tax abatement for the property built in Phase I. and The tax abatement is expected to be approved within 6-8 months. At that time, the property tax will be significantly reduced, and the developer will use the property as collateral to apply for refinance from banks. The cash subsidy from refinance will be directly used to payback the loan originated by CrowdFunz Fund 812.

Seasoned Developer, Concrete Capabilities

The developer has run its business in the New York real estate market for many years, establishing a good reputation on developing small and meddle size properties. Its prior completed projects are located across all boroughs of New York. For real estate financing, the developer has cooperated with CrowdFunz many times, including Fund 804, Fund 807 fund, and Fund 809. In those past funds, CrowdFunz has established a trustworthy cooperative relationship with the developer, backed by its development capabilities and business reputation.

This zip code is dominated by white and Asian population with a high proportion of white-collar workers; most of residents are middle-class workers in Manhattan.

Residents in the zip code are well-educated, higher than the overall level of New York and Queens; median household income is also higher than Queens and New York State.

Residents are generally young generations, with an average age of 34.1 years; most families are just married; only 1/4 of families have children.

The rate of self-occupied residence has been increasing in recent years, and the main population of young homeowners and tenants provide the community medium-and-long-term momentum on development.

* Data Source: Property Shark, Esri Zip code Lookup, September 2020

Residential Real Estate Perspective:

In the residential market, the housing rental and house sales in the long Island City have been very active in the past 5 years. The average selling price of residential units has increased significantly; the residential rental market has continued to maintain healthy.

Affected by the pandemic in 2020, Long Island City has experienced a small decrease in monthly rents due to sufficient rental supply and sellers’ active market strategies. For the property collateralized in CrowdFunz Fund 812, its rental units are relatively less than larger apartments, with a cost-effective pricing. Thus, the current rental revenue is not impacted by the issues, supporting by the remained rental prices.

Current Residential Rental Prices of the Underlying Property:

Studio: $66.67 per SF/Year (About $ 2,333/Month)

2B2B: $50.37 per SF/Year (About $ 3,758/Month)

As of August 2020, the Capitalization Rate of residential rental properties in Queens is approximately 3.95-5.03% *¹

The Circumstance of Nearby Commercial Leasing:

According to the current commercial property leasing information in the surrounding market, the major commercial properties currently being leased are offices, and small-to-medium-sized leasing spaces that can be used for retail are mostly located in properties over 30 years old and with a limited number available.

In the future, the population in communities at Long Island City will continue to rise. The demand for retail space for supermarkets and convenient stores is consistent, aligning with the communities 'growth. The retail space, similar to the one on the first floor of the underlying project, has certain market potential while more small residential properties with retail space will help the community be flourish.

Market Condition of Comparable Retail Spaces:

Number of Researched Properties: 13

Median Rental Price per Square Foot per Year: $39.7/Sf/Y

Rental Price Range: $14 - $72/Sf/Y

Median Rental per Lease: $6,469/Month

Median Rental Area: 2,350 Sf

Geographic Location:

The development is in the central area of ​​Long Island, next to the Queensboro Bridge, which is the entrance from Manhattan to Queens. The surrounding areas are well-developed, densely populated, safe and suitable for business and living. The buildings in the community are mainly commercial offices and apartment towers. This area has become one of the best emerging communities in Queens over the past decade.

Transportation:

Subway: W、N、M、R、E、G、Line 7(5 minutes walking distance)
Bus: QM1、QM31、Q32、Q60、Q66、Q69(5 minutes walking distance)
Train: MONTAUK、OYSTER BAY、PORT WASHINGTON
To Manhattan Midtown: 2-3 miles (15 minutes driving)
To JFK Airport: 15.8 miles (About 45 minutes driving)
To LaGuardia Airport: 4.6 miles (About 25 minutes driving)

Schools:

There are many education institutions in Long Island City area, and many elementary schools, junior high schools, and high schools have settled to meet the educational needs of children. Both LaGuardia University and Cornell Medical College are within 2 miles of the nearby area, adding value to the area's rental potential.

Diet & Living:

The retail environment is maturing, supporting for more convenient living. The area contains kinds of American and Asian supermarkets, and 24-hour convenient stores to meet the needs of diet shopping. Starbucks and bars are distributed among the area as well. Due to the ethnic diversity of residents, there are many choices of restaurants such as Chinese, Greek, European, and American cuisines.

Recreation:

There are many museums, sports venues and recreational sites near the project. If residents want to enjoy recreational activities, it is convenient to run along the coast, to exercise at the gyms, and to ride bicycles along the riverside. If residents want to participate outdoor sports, the community’s football and basketball courts are all within 2 miles nearby.