Property Details
Stabilized Income  Below Market Rents  NOI Growth 
Asset Profile
Value Add

District Lofts

Brooklyn, NY

Multi-Family Property
Mortar Capital Management New York, NY
Mortar Capital Management
  • IRR 20.58%
  • Equity Multiple 2.39x
  • Hold Period 5Y
  • Minimum Investment $25K
  • Year 1 Cash on Cash 6.28%
  • Stabilized Cash on Cash 6.28% in Y1
  • First Distribution Dec 2021
  • Distribution Frequency Quarterly
  • Co-Investment 5% ($291K)
  • Preferred Return See PPM
  • Investor Profit Share See Financials
  • Asset Profile Value Add
  • Loan-to-Value 69%
  • Current Occupancy 92%

About this Property

"District Lofts is the acquisition of a cash – flowing, Class B multi-family asset in the prime neighborhood of Williamsburg, Brooklyn. The investment strategy involves the strategic refinement, operation, and sale of a pre-war apartment building with 35 residential units."

-Anthony Morena, Mortar Capital Management

Address 265 South 2nd St
Square Footage +/- 24,108 sq. ft.
# of Units 35
Year Built 1914
Year Renovated Partial Renovation 2016
Current Occupancy 92%
Market Occupancy 97%
Current Average Rents $2,714
Current Market Rents $3,200
Purchase Price $15,600,000
Price/Sq. Ft. $647/Sq. Ft.
Stabilized Loan to Value 65%

Top Questions

All answers are provided by the sponsor, Mortar Capital Management, or its representatives.

 

Why are you buying this property?

Anthony Morena, Mortar Capital Management: "Mortar Capital Management works in their backyard. Mortar acquires and develops assets in neighborhoods and locations that they understand extremely well – working to eliminate market guess work about rental rates, demographics or market history."

"While cash flow positive from commencement – Mortar will implement its multiple tier strategy to create value. In addition to creating new revenue streams in the building, the current rental income will be increased via minor renovations, market rent increases and operational value engineering."

"The project is located in the prime and established Brooklyn neighborhood of Williamsburg with direct access to a diverse selection of restaurants, bars, and unique retail, and with strong transportation links to Brooklyn and Manhattan. In this location – assets of this nature are unique and remain highly desired – maintaining and preserving market value."

 

What is your investment strategy/business plan?

Anthony Morena, Mortar Capital Management: "Mortar Capital Management's investment strategy is one they have honed and refined over twenty years. The asset's revenue and cash flow streams will be systematically improved – beginning in the project first year, and then the asset will be sold after stabilization. The project schedule anticipates 60-72 months to exit. The expected project delivery is well-timed with a low-supply of quality units in the neighborhood, under-valued amenities, and the projected increase in demand - which suggest both growing rents and upside at disposition."

"Fully occupied at acquisition, the building will quickly be stabilized, and quarterly distributions to investors will begin in the first year. Simultaneously the refinement plan will be implemented to increase NOI, reducing operational costs, automating online management systems, and generate new sources of revenue. At the sale of the asset, investment partners will receive a 12% preferred return on their initial investment, followed by 75% of all proceeds and profit."

 

How has COVID-19 impacted your business plan?

Anthony Morena, Mortar Capital Management: "Mortar had great success managing their rental portfolio during the pandemic. While management of assets over the last 18 months required more time and detail than typically needed, the operations team was experienced and well versed, which helped Mortar quickly and efficiently communicate with tenants, make adjustments to payment schedules or concessions, and/ or address resident concerns."

"As the world begins to exit the pandemic, market fundamentals are getting stronger in New York, with new units on the market renting quickly – at asking price, and with no price concessions or discounts. New buildings are being retrofit with Post-Covid amenities, including fitness rooms, updated home offices, rooftop lounges and outdoor cooking areas, as well new co-working spaces and conference areas that are exclusive to residents."

 

What are the risks and how are you mitigating those risks?

Anthony Morena, Mortar Capital Management:

  • "Market: Market risks or pricing fluctuations are always a risk. Prior to any acquisition, Mortar will diligently review current rents and base future projections off what is market – not what is trending or may happen in the future."
  • "Acquisition:Mortar’s goal is to properly purchase assets or win a deal before it starts. While doing detailed due diligence before signing a contract, Mortar shall efficiently review a project and the targeted objectives, taking stock of Covid’s effect on the local market, and then negotiating purchases accordingly."
  • "Have a plan in place: Making sure there is a conservative plan in place to add value to the asset is most imperative to a project’s success. As a project term may last 48-60 months, Mortar's goal it to lay out a detailed and time-tested plan to optimize the revenue and valuation of the building. There is no one – quick fix or easy flip, as the process involves a comprehensive plan with dozens of moving parts that tackles each part of the building and operating budget."
  • "Leverage: Mortar uses conservative leverage and underwrites each deal with margins in place that protect against the downside or market fluctuations."

 

NOTE: All answers provided by the sponsor, Mortar Capital Management, or its representatives.

About this Property

"District Lofts is the acquisition of a cash – flowing, Class B multi-family asset in the prime neighborhood of Williamsburg, Brooklyn. The investment strategy involves the strategic refinement, operation, and sale of a pre-war apartment building with 35 residential units."

-Anthony Morena, Mortar Capital Management

Address 265 South 2nd St
Square Footage +/- 24,108 sq. ft.
# of Units 35
Year Built 1914
Year Renovated Partial Renovation 2016
Current Occupancy 92%
Market Occupancy 97%
Current Average Rents $2,714
Current Market Rents $3,200
Purchase Price $15,600,000
Price/Sq. Ft. $647/Sq. Ft.
Stabilized Loan to Value 65%

Top Questions

All answers are provided by the sponsor, Mortar Capital Management, or its representatives.

 

Why are you buying this property?

Anthony Morena, Mortar Capital Management: "Mortar Capital Management works in their backyard. Mortar acquires and develops assets in neighborhoods and locations that they understand extremely well – working to eliminate market guess work about rental rates, demographics or market history."

"While cash flow positive from commencement – Mortar will implement its multiple tier strategy to create value. In addition to creating new revenue streams in the building, the current rental income will be increased via minor renovations, market rent increases and operational value engineering."

"The project is located in the prime and established Brooklyn neighborhood of Williamsburg with direct access to a diverse selection of restaurants, bars, and unique retail, and with strong transportation links to Brooklyn and Manhattan. In this location – assets of this nature are unique and remain highly desired – maintaining and preserving market value."

 

What is your investment strategy/business plan?

Anthony Morena, Mortar Capital Management: "Mortar Capital Management's investment strategy is one they have honed and refined over twenty years. The asset's revenue and cash flow streams will be systematically improved – beginning in the project first year, and then the asset will be sold after stabilization. The project schedule anticipates 60-72 months to exit. The expected project delivery is well-timed with a low-supply of quality units in the neighborhood, under-valued amenities, and the projected increase in demand - which suggest both growing rents and upside at disposition."

"Fully occupied at acquisition, the building will quickly be stabilized, and quarterly distributions to investors will begin in the first year. Simultaneously the refinement plan will be implemented to increase NOI, reducing operational costs, automating online management systems, and generate new sources of revenue. At the sale of the asset, investment partners will receive a 12% preferred return on their initial investment, followed by 75% of all proceeds and profit."

 

How has COVID-19 impacted your business plan?

Anthony Morena, Mortar Capital Management: "Mortar had great success managing their rental portfolio during the pandemic. While management of assets over the last 18 months required more time and detail than typically needed, the operations team was experienced and well versed, which helped Mortar quickly and efficiently communicate with tenants, make adjustments to payment schedules or concessions, and/ or address resident concerns."

"As the world begins to exit the pandemic, market fundamentals are getting stronger in New York, with new units on the market renting quickly – at asking price, and with no price concessions or discounts. New buildings are being retrofit with Post-Covid amenities, including fitness rooms, updated home offices, rooftop lounges and outdoor cooking areas, as well new co-working spaces and conference areas that are exclusive to residents."

 

What are the risks and how are you mitigating those risks?

Anthony Morena, Mortar Capital Management:

  • "Market: Market risks or pricing fluctuations are always a risk. Prior to any acquisition, Mortar will diligently review current rents and base future projections off what is market – not what is trending or may happen in the future."
  • "Acquisition:Mortar’s goal is to properly purchase assets or win a deal before it starts. While doing detailed due diligence before signing a contract, Mortar shall efficiently review a project and the targeted objectives, taking stock of Covid’s effect on the local market, and then negotiating purchases accordingly."
  • "Have a plan in place: Making sure there is a conservative plan in place to add value to the asset is most imperative to a project’s success. As a project term may last 48-60 months, Mortar's goal it to lay out a detailed and time-tested plan to optimize the revenue and valuation of the building. There is no one – quick fix or easy flip, as the process involves a comprehensive plan with dozens of moving parts that tackles each part of the building and operating budget."
  • "Leverage: Mortar uses conservative leverage and underwrites each deal with margins in place that protect against the downside or market fluctuations."

 

NOTE: All answers provided by the sponsor, Mortar Capital Management, or its representatives.

Offered By

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Assets Under
Management

Currently
$91.99MM less than 10 assets
Exited
$147.65MM 20+ assets
Portfolio LTV
67%  
Historical
Realized Returns

Total IRR
34.4%  
Equity Multiple
2.6x  
Annual Cash
12.5%  
Years Of
Experience

As Principals
15+ years  
In Business
22 years  
Size
12 Staff * Dedicated investor relations
* All information is reported by Mortar Capital Management as of 7/28/2021.
Assets Under
Management

Currently
$91.99MM less than 10 assets
Exited
$147.65MM 20+ assets
Portfolio LTV
67%  
Historical
Returns

Total IRR
34.4%  
Equity Multiple
2.6x  
Annual Cash
12.5%  
Years Of
Experience

As Principals
15+ years  
In Business
22 years  
Size
12 Staff * Dedicated investor relations
* All information is reported by Mortar Capital Management as of 7/28/2021.

Financials

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Offering Financial

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Location Details

Brooklyn, NY

Anthony Morena, Mortar Capital Management: "District Lofts is located in the prime and trendy Brooklyn neighborhood of Williamsburg. This area has seen steady market growth year over year, a growing and thriving business community, and well established comps for rental assets. Williamsburg also provides direct access to a diverse selection of restaurants, bars, and unique retail, and with strong transportation links to Brooklyn and Manhattan."

Documents

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Offering Agreement Documents

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