Equity Pledge Debt Fund 818
Type: Debt
Target: $1,500,000
Annual Return: 8% - 8.25%
Min-invest Amount: $10,000
Duration: 12 - 24 Months
Offering Amount: $1,500,000 U.S. Dollars
Estimated Return: 8.00% - 8.25% Annualized Return*1
Investment Type: Mezzanine Loan
Unit Price: $10,000 per Subscription Unit
Offering Date: June 2021
Investment Horizon: 12 - 24 Months
Dividend Schedule: Prepaid before per Period(6 Months in advance)
*1 8% Annualized Return For Investment of 1-19 Units;8.25% Annualized Return for investment above 20 Units.
Address: 41-04 27th Street, Long Island City, NY 11101
Area: Long Island City, Queens, New York
Lot Size: +/-5,000 Square Feet
Zoning: M1-5/R7-3(FAR=5)
Salable Size: 24,981 Square Feet
Building Size: 29,867 Square Feet
Market Value: $20,700,000 (From the appraisal provided by BBG, March 2021)
The developer bought the land and started the project construction in 2013. In July 2018, the completed property obtained the Certificate of Occupancy and started its operations.
The property is a 9-floor mixed-use building with buildable size of 28,867 square feet in the prime area of Long Island City. It contains 32 residential units and 5 commercial units. Currently, six of residential units have been sold as condominiums, and the developer keep the rest of 26 of residential and 5 commercial units for rental purpose. The valuation of the project is based on the cash flow generated only by rental units. So far, all rental units has been operated well. Two commercial units on the first floor are rented to Deli and supermarket respectively; one commercial unit in the basement is rented to dental clinics, and another unit is rented to accounting firm. All those rental units have been fully occupied in the last 2 years.
| Expected Dividend Calendar | |||||||
|---|---|---|---|---|---|---|---|
| Round of Dividend | Round of Investment | Dividend Date *1 | Counting Date | Ending Date | Dividend Period | Notes | |
| First | $1,500,000 | No Later Than 6/30/2021 | 6/15/2021 | 12/14/2021 | 6 Months | Pre-Paid Dividend | |
| Second | No Later Than 12/31/2021 | 12/15/2021 | 6/14/2022 | 6 Months | Pre-Paid Dividend | ||
| Third | No Later Than 6/30/2022 | 6/15/2022 | 12/14/2022 | 6 Months | Extension Options Owned by Developer | ||
| Fourth | No Later Than 12/14/2022 | 12/15/2022 | 6/15/2023 | 6 Months | Extension Options Owned by Developer | ||
*1 In case of holidays and non-working days, the dividend date will be automatically postponed to the next working day.
*2 After the expiration of the second Dividend Period, the developer has 2 options to extend the borrowing 6 months. If the developer chooses to extend, the investors will receive dividends at the same rate of return during the extension.
Sufficient Value in the Collateral
The developer has been operating this property effectively. Even during the pandemics in 2020, all units were 100% rent out, and the actual rental income was 99.4%. As of May 2021, all residential and commercial rental units are fully occupied. According to the third-party appraisal, the value of the property is estimated at $20,700,000.
The loan originated by CrowdFunz Fund 818 is a mezzanine debt to provide liquidity for the developer. The developer proposes to use this loan to prepare for early-stage development in next project. 100% ownership interests of Richstar Development LLC. & Easy Home 168 LLC., two entities owning 70% the project entity, is pledged to CrowdFunz Fund 818; unlimited personal guarantee is also attached for this borrowing.
Prime Location, In Demand Market
The project location is in Long island City, Queens, a prime and up trending area, and it’s on the other side of East River, directly facing the United Nation headquarter. The surrounding public transportation is well-developed, and there are 7 subway lines and multiple bus lines covered. The residents can reach various communities in Queens, Brooklyn, and Manhattan. It also takes about 20-minutes driving from the site to LGA airport and 30-minutes to JFK airport.
Long Island City has become one of the most booming areas nearby Manhattan. Commute convenience has made the area development rapidly and attracts many young professionals in financial and IT industries to live here. The population density has been catching up with the traditional prime neighborhoods in Manhattan. The population has steady and growing income in general. The commercial and residential developments of the area is expected to be prosperous.
Transparent Fund Usage, Explicit Exit Strategy
The developer is preparing one land development in Flushing, Queens（the Flushing Project). The developer has urgent fund needs for constructing foundation and base. Since the Flushing Project hasn’t started yet and the property in Long island City is under stable operations, CrowdFunz chooses the ownership of the property in Long Island City as collateral pledged for risk adjustment. After the mezzanine loan be issued, CrowdFunz will keep track of construction progress of the Flushing Project until the developer is able to pay off Fund 818 by obtaining permanent loan from commercial banks.
Seasoned Developer with Approved Experience
The developer has great reputation among real estate professionals in Queens and Brooklyn, and tens of projects were successfully developed in New York City. Prior to this project, the developer has already cooperated with CrowdFunz in CrowdFunz Fund 804 (matured), Fund 807 (matured), Fund 809 (matured) and Fund 812 (in operating). The developer has shown financial trustworthiness backed by its reputation, track records, and credibility.
| Source of Capital | Percentage | |
|---|---|---|
| Total Mortgage Originated by Commercial Bank | $12,700,000 | 61.35% |
| Total Loan Issued by CrowdFunz Fund 818 | $1,500,000 | 7.25% |
| Total Developer’s Equity | $6,500,000 | 31.40% |
| Total: | $20,700,000 | 100.00% |
After the loan issued by CrowdFunz Fund 818 contributes to this project, the capital stack will consist of:
The $12,700,000 mortgage originated by commercial bank, holding first lien and counted 61.35% of total capital.
$1,500,000 mezzanine debt issued by CrowdFunz Fund 818 pledged by major property ownership equity, counted 6% of total capital.
The equity value of the project is estimated $6,500,000, counted 31.40% of total capital.
The loan issued by CrowdFunz Fund 818 is pledged by 70% of the project entity’s total ownership interest which is worth $4,550,000. In addition, the key persons of the project entity also provide unlimited personal guarantees for the borrowing.
| Use of CrowdFunz Fund 818 | Percentage | |
|---|---|---|
| Underground Construction Costs | Fund Capital | |
| Shoring | $200,000 | 13.33% |
| Excavating | $400,000 | 26.67% |
| Foundation | $300,000 | 20.00% |
| Pike Work | $300,000 | 20.00% |
| Slab | $300,000 | 20.00% |
| Total | $1,500,000 | 100% |
Site Address: 140-42 Sanford Avenue, Flushing, NY, 11355
Site Area: Flushing, Queens, New York
Lot Size: +/- 5,775 Square Feet
Zoning: R7-1 (FAR=4.0)
Salable Size: 28,365 Square Feet
Buildable Size: 41,890 Square Feet
* Construction Costs Data Provided by Developer.
The capital offered by CrowdFunz Fund 818 is a mezzanine loan, up to $1,500,000. The loan is expected to be used for the underground construction costs.
The existing building at the Flushing Project has been demolished, and foundation works will begin soon. The loan issued by CrowdFunz Fund 818 will enter after construction starts to facilitate early-stage processes.
The Flushing Project will be a mixed-use building with 42,000 buildable square feet. It will contain 33 residential rental units, 10 parking lots and 4 community facilities. The whole project is expected to enter middle-to-late stage after 1 year, and the developer will pay off the loan issued by CrowdFunz Fund 818 by refinancing from commercial bank at the time.
Demographics:
| Zip Code 11101 | |
|---|---|
| Regional Population | 31,366 |
| Median Age | 35 |
| High School Education or Above | 69.8% |
| Workplace | Metropolitan(99.8%) |
| Family Median Income | $66,579 |
| White Collar/Blue Collar | 90.5%/9.5% |
| Child-Bearing Family | 23.6% |
| Average Family Size | 2.21 |
| Average Housing Price | $975,000 |
Due to its premium geographic location, Long Island City has become one of the hottest areas absorbing new real estate developments in New York. Meanwhile, more companies and residents have chosen Long Island City as the destination for business and living.
Younger population dominants in the area, and most residents are middle class professionals with jobs and stable incomes. The ethnic backgrounds are also well-diversified.
The average age is 35; 23% of the families have children. Self-residence is the main demand for tenants. Due to the low housing inventory available for sale and high needs from buyers, the property prices are constantly going up.
* Data Source: United States Zip Codes. Org. & Esri Zip Code Lookup, American Community Survey, May 2021.
Residential Units Rent Roll of Underlying Property Analysis
As of May 2021, all residentials units are rent out, and actual rental income has reached 100%. The average rent of the residential units is $55.16/SF/Year. Data Source: Provided by the Developer; Calculated and Summarized by CrowdFunz Holding LLC.
Location:
The site location is in the prime area of Long island City, Queens. The surrounding public transportation is well-developed with 7 subway lines and multiple bus lines. The residents can reach various communities in Queens, Brooklyn and Manhattan. It takes about 15-minute driving from the site to LGA airport and 25-minute to JFK airport.
Transportation:
Subway: M, R, E, G, 7, N, W(5-min Walking)
Bus: Q67, B32, B62
To Midtown Manhattan: About 10 Minutes
To JFK Airport: 15 Miles (About 25-min Driving)
To LGA Airport: 7 Miles (About 15-min Driving)
Nearby Schools:
The basic education system in the area covers many elementary schools, junior high schools, and high schools, fitting the residents 'needs on children’s education. There are also many technical schools to meet young professionals’ self-development goals.
Living Facilities:
Despite convenient transportation, the business environment in Long Island City is booming, and living facilities are increasing like new stores and supermarkets. The area is safe and good to live in, attracting large amount of young generation around 30-year-old to relocate here.
Recreation:
The surrounding recreation facilities are also improving to fit residents 'needs. Museums, gyms, and entertainment venues nearby are within walking distance.
Developer Company: Great Stone General Construction Corp.
Developer Website: https://www.greatstoneny.com/
Prior Cooperation: CrowdFunz Fund 804, Fund 807, Fund 809, Fund 812
Great Stone General Construction Corp. has over 18 years real estate development experience. The key persons were originally started business as real estate brokers then successfully transformed to property developers. The developer’s first project was in Elmhurst, Queens and gained success in 2002. After two decades of practices in various projects, alone with its quality-based pursuit development, the developer has accomplished remarkable business achievements with solid and honorable reputation locally.
The loan originated by CrowdFunz Fund 818 is a mezzanine loan to provide liquidity for the developer. With sufficient collateral and smooth operations of underlying property, this short-term debt investment is to help the developer fulfill the construction needs for the next project.
After issuing loan from CrowdFunz Fund 818, we will continue to conduct monitoring for two sides. One side is for pledged property’s operating income; The other side is for construction progress and expenses of the new project in Flushing.
We believe that the underlying project of CrowdFunz Fund 818 is solid, and we trust the developer’s reputation and credibility. From the perspective of capital stack, with sufficient collateral and active operations of underlying property, the lending from Fund 818 is feasible. In addition, the current pledged equity value is 3 times greater than total capital provided by CrowdFunz Fund 818, and unlimited personal guarantee is also attached.
We believe that the risk-return balance in CrowdFunz Fund 818 is rational. Sufficient collateral based on bilateral agreements may also mitigate uncertainty before the date of maturity.
| RISK CATEGORY | 0 | 1 | 2 | 3 | 4 |
|---|---|---|---|---|---|
| Sponsor | |||||
| Experience | 1-3 Years | 3-5 Years | 5-10 Years | 10-15 Years | 15+ Years |
| Tracking Record | 0-3M | 3-10M | 10-30M | 30-50M | 50M+ |
| Credit Score | Low | Accept | Fair | Good | Excellent |
| Financials | |||||
| Investor Equity | 1-20% | 20-30% | 30-40% | 40-50% | 50-60% |
| Loan-to-value ratio | 85-100% | 70%-85% | 65%-70% | 50-65% | 1-50% |
| Financial claims | Common Equity | Preferred Equity | Equity pledge debt | Secondary lien debt | First lien debt |
| Location | |||||
| Location | Sub Rural | Rural | Regional center | Suburban | Core Urban |
| Walk Score | <40 | 40-55 | 55-70 | 70-85 | 85-100 |
| Supply & Demand | S>>D | S>D | S≈D | S<D | S<<D |
| Property Status | |||||
| Development Phase | 0-20% | 20-40% | 40-60% | 60-80% | 80-100% |
| Property as Collateral | No | Extremely insufficient | Relatively insufficient | Relatively sufficient | Extremely sufficient |
| Investment Term | >48 Months | 37-48 Months | 25-36 Months | 13-24 Months | <12 Months |
Subscription Agreement (Only available to accredited investors)
Appraisal (Only available to accredited investors)