Cottonwood Makes Preferred Equity Investment in NYC Multifamily Project
Cottonwood Communities, Inc., a publicly registered non-traded real estate investment trust, has closed on a preferred equity investment of $15 million toward the development of a multifamily apartment community in Queens, New York.
Cottonwood Communities, Inc., a publicly registered non-traded real estate investment trust, has closed on a preferred equity investment of $15 million toward the development of a three-building, 534-unit multifamily apartment community located on a 2.5-acre waterfront site in the Astoria neighborhood of Queens, New York.
The total development cost is estimated to be $342 million and the project is sponsored by a New York-based real estate development, investment and management firm.
In connection with the investment, Cottonwood Communities entered a joint venture agreement with two unaffiliated joint venture partners consisting of a publicly traded multifamily REIT as its co-investor in the preferred equity, and the New York-based developer of the project and manager of the joint venture.
The REIT has contributed at a preferred return of 13 percent per year and receives a profit participation upon a liquidity event, alongside a $40 million preferred equity contribution from its co-investor.
The preferred equity investment has an expected redemption of July 2025 and is positioned senior to approximately $62 million in common equity from the developer and its equity partner. Additional funding for the project will come from a $225 million construction loan.
Construction has commenced with the majority of the foundation work now complete. The first units are slated for delivery in the second quarter of 2022.
The Project will include 50,000 square feet of central courtyard/green space and 7,100 square feet of rooftop amenities including a nearly 4,000-square-foot pool deck, outdoor barbecues and lounge areas. Indoor amenities will include a golf room, a music room, an arcade and party room, coworking spaces, and a communal lounge with views of the East River and Manhattan skyline.
The project is located within a few blocks of the Astoria Ferry station and less than a mile from the nearest subway station, offering convenient transport to Roosevelt Island, Midtown Manhattan and the greater New York City metropolitan area.
In other company news, Cottonwood Communities has extended its offering until August 13, 2021.
Cottonwood Communities launched its $675 million offering in August 2018 and has raised $106.9 million as of June 2020. At March 31, 2020, the REIT owned multifamily apartment communities in West Palm Beach, Florida and the Greater Boston, Massachusetts area; issued a B Note secured by a deed of trust on a multifamily development project in Allen, Texas; made a preferred equity investment in a multifamily development project in Ybor City, Florida; and entered into an agreement to provide a preferred equity investment for a multifamily development project in Denver, Colorado.
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