Equity Pledge Debt Fund 822
Type: Debt
Target: $850,000
Annual Return: 7.75% - 8%
Min-invest Amount: $10,000
Duration: 3 - 12 Months
| Fund Type | Equity Pledge Debt Fund |
| Offering Amount | $850,000 U.S. Dollars |
| Estimated Return | 7.75% - 8.00% Annualized Return *1 |
| Investment Type | Equity Pledge Loan |
| Unit Price | $10,000 per Subscription Unit |
| Offering Date | April 2022 |
| Investment Horizon | 3 – 12 Months |
| Dividend Schedule | Prepay Before Per Period (3+3+3+3 Months) |
*1 7.75% Annualized Return For Investment of 1-19 Units. 8.00% Annualized Return for investment above 20 Units.
- Developer received approval on construction plan in 2018. After 30 months of construction and due inspections, the property received Final Certificate of Occupancy in December 2021. The property had been leased to JG BROOKLYN HOTEL LLC in April 2021 under a Triple Net Lease agreement. The lessee has a history stable operation and outstanding debt repayment.
| Site Address | 646 39TH ST. BROOKLYN, NY, 11233 |
| Site Area | Sunset Park, Brooklyn, New York |
| Lot Size | Near 7,512 SF |
| Zoning | M1-2 |
| Leasable Area | 15,025 SF |
| Building Size | 15,084 SF |
| Current Market Value | $10,200,000 (Based on WM. SHUBERT & CO. appraisal report in July 2021) |
| Expected Dividend Calendar | ||||||
|---|---|---|---|---|---|---|
| Round of Dividend | Funding Amount | Dividend Date *1 | Counting Date | Ending Date | Dividend Period | Notes |
| First | $1,500,000 | No Later than 4/22/2022 | 4/7/2022 | 7/6/2022 | 3 Months | Pre-paid Dividend |
| Second | No Later than 7/22/2022 | 7/7/2022 | 10/6/2022 | 3 Months | Extension Option Owned by Developer | |
| Third | No Later than 10/22/2022 | 10/7/2022 | 1/6/2023 | 3 Months | Extension Option Owned by Developer | |
| Fourth | No Later than 1/22/2023 | 1/7/2023 | 4/6/2023 | 3 Months | Extension Option 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 first Dividend Period, the developer has 3 options to extend the borrowing by 6 months. If the developer chooses to extend, the investors will receive dividends at the same rate of return during the extension.
- Operation started in April 2022, under close cooperation between the developer and the property management company.
- Due to the pandemic, the market price of individual hotel units fell under expectation, but the lessee pivoted and lower the leasing price to successfully attract more customers.
- The property received a $4,000,000 first-lien mortgage originated by The Berkshire Bank. The developer had contributed $5,350,000 of total equity.
- Under current capital structure, the equity pledged to CrowdFunz 822 Debt Fund is value at over $3,000,000.
- The underlying hotel property is in Sunset Park, Brooklyn, 3 minutes drive to Brooklyn-Queens Expressway; 10-minute walk to Subway Line DNQRW; 20-min drive to LaGuardia Airport and 25-min drive to JFK Airport.
- The hotels in Sunset Park, Brooklyn offer higher value for money than hotels in other NYC boroughs.
- Strong transportation network, proximity to two major airports, and prime location made the neighborhood one of the most popular among hotel customers.
- The developer will use all the mezzanine loan provided by CrowdFunz 822 Debt Fund, to cover the construction cost of another project, located in College Point, Flushing. After the construction loan has been approved, the developer will use the proceeds to retire the mezzanine loan.
- The seasoned developer had completed multiple mid-to-large scale commercial real estate developments in New York and has strong expertise in commercial real estate and outstanding project execution.
- The project marks the 5th collaboration between CrowdFunz and the developer. The developer had repaid the mezzanine loans provided by 807 Debt Fund and 809 Debt Fund, while 812 Debt Fund and 818 Debt Fund are still operating according to plan.
Investment Structure of CrowdFunz 822 Fund
CAPITAL STACK
| Capital Stack | Percentage | |
|---|---|---|
| Mortgage Originated by Commercial Bank | $4,000,000 | 39.21% |
| Loan Issued by CrowdFunz 822 Fund | 850,000 | 8.33% |
| Equity Investment by Developer | 5,350,000 | 52.46% |
| Total Amount | $10,200,000 | 100.00% |
After CrowdFunz 822 Mezzanine Loan enters the capital stack:
- As of April 2022, the title report shows only a First Lien Mortgage of $4,000,000.
- CrowdFunz 822 Fund has originated a mezzanine loan in total of $850,000, which is accounted for 8.33% of total capital and is secured by project entity’s equity and Developer’s unlimited personal guarantee.
- Developer has contributed $5,350,000 of equity investment, which is accounted for 52.46% of total capital.
FUND USAGE
The $850,000 of mezzanine loan provided by CrowdFunz 822 Debt Fund will be used to cover part of the construction cost of another project of the developer, located in College Point, Flushing.
The developer started College Point project in the end of 2021, and the construction plan had been approved. The plan is to build two commercial mix-use buildings, with total area of around 10,000 SF and construction cost of $1,700,000.
| College Point Project – Cost Breakdown | ||
|---|---|---|
| Cost Item | Amount | Percentage |
| Land Acquisition Cost | $1,400,000 | 41.79% |
| Construction Cost | 1,700,000 | 50.75% |
| Aboveground Construction | 750,000 | 22.39% |
| Groundwork | 950,000 | 28.36% |
| Soft Cost and Funding Cost | 250,000 | 7.46% |
| Total | $3,350,000 | 100% |
* Data provided by Developer
Demographics in the Zip Code
| Zip Code 11232 | |
|---|---|
| Regional Population | 26,430 |
| Median Age | 34.2 |
| High School Education or above | 50% |
| Races | Asian |
| Family Median Income | $84,732 |
| Child-Bearing Family | 33% |
| Average Family Size | 2.79 |
| Average House Price | 50% |
Most of the residents are of Asian backgrounds, mainly Chinese and Indian. Most families living in Sunset Park are middle class, with living standard above other areas in Brooklyn and a Family Medium Income of $84,732.
According to data, younger population dominates the area, with an average age of 34.2; 33% of the families have one or more children, and average family size is 2.79 people.
50% of the housing supply are owned by families, with the rest being single family rentals; overall vacancy rate is low.
Residents have strong savings and spending power, which encouraged the growth of local retail businesses.
* Data Source： United States Zip Codes. Org. & Esri Zip Code Lookup，American Community Survey in May 2021.
Hotels Valuation Analysis of Underlying Property
* Average sale price of comparable hotel units：$205,622/unit
Location
Project is in the Sunset Park neighborhood of Brooklyn, a prime area with convenient access to bus and subway stations. The site is 20-min drive away from LGA Airport and 25-min to JFK Airport.
Transportation
- Subway: D, N, Q, R, W
- Bus Line: B35, B70
- To Midtown Manhattan: About 20-min Drive
- To JFK Airport: About 25-min Drive
- To LGA Airport: About 20-min Drive
Nearby Schools
The basis education system in the area ranks average and does not possess significant competing leverage. According to Great Schools, the PS 169 schools are of average rating.
Living Facilities
The area is surrounded by Japanese, Chinese, and Italian restaurants, and adjacent to banks, supermarkets, clinics, gyms, and shopping malls. The site is close to one of the busiest street in Brooklyn, the 8th avenue.
Recreations
The neighborhood is close to Sunset Park, one of the most known community parks in Brooklyn, and the surrounding recreational businesses can meet all residents' need.
Developer Company: Great Stone General Construction Corp.
Developer Website: https://www.greatstoneny.com/
Prior Cooperation: CrowdFunz 818 Debt Fund / CrowdFunz 807 Debt Fund / CrowdFunz 809 Debt Fund / CrowdFunz 812 Debt Fund
Great Stone General Construction Corp. has 20 years of real estate development experience. The team started as real estate brokers and became a seasoned developer. The firm had great commercial success in its first development in Elmhurst, Queens in 2002. Over the past two decades, the developer had completed multiple successful projects and earned outstanding reputation among New York real estate industry.
- The loan originated by CrowdFunz 822 Fund is a short- term debt investment. CrowdFunz will closely monitor the use of the capital after deployment and ensure timely repayments.
- Given the great expertise and credit history of the developer, sufficient equity value pledged, and healthy capital stack, we believe that the risk-return balance in CrowdFunz 822 Fund is rational.
- Based on clearly defined bilateral agreements, the loan originated by CrowdFunz 822 Fund can provide the developer with short-term liquidity to help the project proceed, and a great value-creation opportunity for the investors. The project has a financial risk lower than industry standard.
CrowdFunz 822 Project Rating
Subscription Agreement (Only available to accredited investors)
Appraisal (Only available to accredited investors)