Cottonwood Multifamily Opportunity Fund, a Regulation A+ real estate investment trust primarily focused on multifamily construction and development projects, has fully subscribed its $50 million offering.
The fund has no upfront fees and its sponsor, Cottonwood Capital Property Management II LLC, is responsible for paying all selling commissions, the dealer manager fee, and organizational and offering expenses without reimbursement.
“We are pleased with the successful capital raise on another Cottonwood real estate program and believe our success is largely a result of our approach to long-term real estate investing and our commitment to a no-load structure and alignment with investors” said Daniel Shaeffer, CEO of Cottonwood Residential. “We believe a compelling opportunity exists for us to create value by developing apartment communities that have strong curb appeal, are well located and attract quality tenants.”
In August 2018, under a joint venture with affiliate Cottonwood Residential O.P LP., Cottonwood Multifamily Opportunity Fund acquired a 90 percent interest in its first development site, a $6.5 million, 1.7-acre site situated in Salt Lake City’s Sugar House neighborhood.
Given a projected total development cost of $61.5 million, it is anticipated that the developed property, Park Avenue Apartments (previously referred to as Cottonwood Sugar House), will be comprised of a mix of studio, one-bedroom, and two-bedroom units with an average size of 711 square feet. Amenities will include a fitness center, clubhouse, pool and lounge area.
On May 30, 2019, a $37 million non-revolving, senior secured construction loan facility was secured with an unaffiliated lender to finance the project. Terms include an interest rate of 1-month LIBOR plus 1.75 percent, interest only for the full-term through November 30, 2022, and a one-year extension option subject to certain conditions.
Construction is expected to commence by June 30, 2019 and Park Avenue is slated for completion in the Fall of 2021.
Cottonwood Multifamily Opportunity Fund is Cottonwood’s third Regulation A+ offering, following Cottonwood Multifamily REIT I and Cottonwood Multifamily REIT II, that has been fully subscribed since 2016.
Shares of Cottonwood Multifamily REIT I common stock were originally sold for $10.00 each, and currently have a net asset value of $11.31 as of September 30, 2018. The board of Cottonwood Multifamily REIT II is expected to declare its NAV later this year.