Compound Asset Management has launched the Manhattan Residential Fund, a Regulation D real estate investment trust, that seeks to raise up to $100 million in investor equity to purchase condominium units, apartment buildings and townhomes in Manhattan. As its first acquisition, the fund has agreed to purchase a 49 percent interest in four properties located in Chelsea, Flatiron and the East Village at a valuation of $47 million.
The four building portfolio totals approximately 45,000 square feet and is comprised of 86 residential units total.
The purchases include 41 West 24th Street, located in Flatiron, is a 13-unit, eight-floor building totaling 15,700 square feet and currently 100 percent occupied. The property consists of two- and three-bedroom units and is located at the intersection of Fifth Avenue and Broadway.
- 310 West 20th Street, located in Chelsea, is a 34-unit, three-floor building totaling 8,000 square feet and currently 94 percent occupied. The building is five blocks away from Google’s New York City headquarters and near the Highline.
- 424 East 14th Street, located in the East Village, is a 23-unit, five-floor building totaling 9,000 square feet and currently 100 percent occupied. 220 Avenue A, also located in the East Village, is a 16 unit, 5-floor, building totaling 12,000 square feet and currently 100 percent occupied.
“We believe in allowing our investors to become long-term owners of the assets we acquire – our goal is not to buy and flip, but to offer ownership opportunities that will create wealth over the course of several years,” said Jesse Stein, Compound’s chief investment officer. “Flatiron, Chelsea and the East Village are established 24/7 neighborhoods that have experienced strong appreciation.”
Compound is offering shares of its Manhattan Fund through a pre-IPO private placement with the intent of listing the fund on a national exchange. Shares can be purchased directly through the Compound website or through one of its affiliated broker-dealers and investment banks.
Shares are priced at $10.00 each and have a minimum investment of $2,500. According to the offering circular, the fund has a targeted return of 12 to 15 percent, and fees include a 1 percent annual asset management fee and a 1 percent acquisition fee. Equity incentive awards include a 15 percent annual return subject to a 6 percent hurdle payable in shares to the fund manager.
Compound is a New York City-based real estate technology company which creates city-specific real estate funds that sells its investment products online, direct-to-consumer and through a network of broker-dealers.