3451 Benning

3451 Benning OFFERING OPEN

A DC retail project designed for the foodie in us all.

ABOUT THE PROJECT

3451 Benning LLC (the “Developer”) is developing a retail site in the River Terrace neighborhood of Northeast Washington, DC consisting of 13,079 square feet of land zoned to permit retail and residential development (the “Property”). The project will be a newly constructed expansion of a single-story retail building located at 3451 Benning Road, NE, Washington DC, along one of the major retail corridors in the city. Architectural renderings (which may change) show the proposed building, to the right and above.

Modeled after a Portland retail concept (see photograph of "The Zipper" by Guerilla Development below), this project aims to entice tenants that will appeal to hipsters, foodies, and more with an array of diverse retail offerings. The project is planned to include 6,854 square feet of ground floor retail, 2,960 square feet of mezzanine space and 2,856 square feet of open space (the “Project”). In collaboration with our design, construction and 
advisory partners, we hope to establish a unique and 
desirable retail concept tailored to the DC market, with a design aesthetic that creates a thoughtful retail layout that can be delivered at a relatively low cost and fast timeline, since the existing building will be expanded instead of demolishing and building a new.

The Neighborhood Development Company, L.L.C. (“NDC”) is the manager of 3451 Benning LLC.  NDC owns two sites adjacent to the Property and is in discussions with the neighboring property owners to acquire their sites. If these negotiations are successful, this will provide an opportunity to create a unique, vibrant and thriving group of community oriented projects that combine retail, residential and exciting public space. If the planned expansion of an existing light rail line that would pass and stop directly in front of the Project is approved, it should provide additional upside potential for land value appreciation.

The Developer anticipates closing on the Property in late February 2018.  Once design and permitting are complete, estimated to be June 2018, eight months of construction is anticipated, with pre-leasing beginning immediately and rent payments anticipated to begin in May 2019.

Anticipated Project Schedule

February 2018 - Close on property.

March 2018 - Begin predevelopment and leasing.

July 2018 - Begin construction.

February 2019 - Begin tenant fit out,

March 2019 - Construction ends,

May 2019 - Fully occupied.

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ABOUT THE CHANGE

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ABOUT THE NEIGHBORHOOD
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ABOUT THE OFFERING

The total acquisition and development cost of the Project is anticipated to be approximately $4.435 million. This includes $2.88 million of bank debt, $400,000 in financing provided by the seller, and $1.155 million in equity. The Developer has raised $555,000 in equity to date in a private placement to friends and family, including an investment of $100,000 by NDC. The  balance of the approximately $600,000 equity needed for the development of the Project will be raised through this offering.

Through this offering, Investors will purchase securities in the form of limited liability interests, which we refer to as “Investor Shares,” in 3451 Benning LLC. The price is $1.00 per Investor Share. The minimum investment is One Thousand Dollars ($1,000). Investments greater than $1,000 must be made in additional increments of One Thousand Dollars ($1,000) each. The minimum target amount of this offering is $100,000 with an additional $500,000 in oversubscriptions available on a first-come, first-served basis.  If the full goal of $600,000 is not met, the issuer may solicit further private equity through family and friends or other type of offering in order to move the Project forward. Investors in this offering will have the same rights and receive distributions and returns on the same basis as all other investors. Each investor’s percentage membership interest in the Issuer will be determined by dividing the dollar amount of each investor’s investment by the aggregate amount of all equity investments in the Issuer, including those made by the earlier private placement investors and NDC and/or its affiliates. Ownership shares are calculated as described in the table below.

Total equity required $1,151,000
Small Change offering $600,000
Price of 1 security $1.00
Ownership share of 1 security 0.000087%
Ownership with an investment of $1,000 0.0870%
Ownership with an investment of $2,500 0.2170%

Investors, including NDC and/or its affiliates (in its capacity as an investor), will contribute 100% of the required equity financing during the pre-development phase, and will receive 100% of the  Net Cash Flow (as defined in the LLC Agreement) from the operations of the Project until the  Project is sold. Once sold, after all debts have been paid, investors including NDC and/or its affiliates (in its capacity as an investor), will receive 70% of any profits and  NDC and/or its affiliates will receive 30% on an equal basis,.

The offering will close at 11:59 pm on August 31, 2018 and Investors can cancel their commitment up until 11:59 pm on August 29, 2018. When the target amount ($100,000) has been met, as long as the offering has been open for a minimum of 21 days, we’ll conduct the first of a series of rolling closings. Investors will be notified, the first $100,000 in funds raised will be released to the Developer and Investors will become Members of the Company. 

If we succeed in raising the first $100,000, we will continue trying to raise money in $100,000 increments until we reach a total of $600,000 or we may decide to stop trying, whichever happens first. For each $100,000 increment, we will hold investor funds in escrow until we receive the full $100,000. Then we’ll release that $100,000 to the Developer, Investors will become Members of the Company, and we will start with the next $100,000 increment. If we have not received commitments for a full $100,000 increment when we reach the target date, we will release the final lesser amount to the Developer and those investors will become Members of the Company.

If the target amount or the goal ($600,000) is reached before the closing deadline, the Developer may decide to change the offering deadline, but will provide at least five days’ notice of such a change to all investors. Investors will also be notified and asked to reconfirm their commitment if any other material changes are made to this offering. If the target amount ($100,000) is not reached, then all investment commitments will be cancelled and all committed funds will be returned to investors.

The original Form C, can be downloaded here and the most recently amended Form CA can be downloaded here.  And you can view all company filings with the SEC here.

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ABOUT THE TEAM

Adrian G. Washington is the founder and CEO of Neighborhood Development Company, the manager of 3451 Benning LLC. Mr. Washington has over 25 years of experience in urban real estate development, construction and management. He founded NDC in 1999 and served as President from 1999-2005. From 2005 until early 2007, Adrian took a leave of absence to serve as the President and CEO of the Anacostia Waterfront Corporation (AWC), the entity charged with leading a $10 billion, 20-year initiative to revitalize Washington, DC’s Anacostia Waterfront and surrounding communities.

Adrian grew up in the city’s Anacostia neighborhood and is a lifelong resident of DC. He received his B.S. in Economics and Political Science from Stanford University and his M.B.A. in Marketing and Finance from the Harvard Business School. And he has received numerous individual awards reflecting his leadership in the development industry. NDC focuses on real estate development that revitalizes emerging urban neighborhoods while respecting the rich diversity of their existing 
fabric. Founded in 1999, NDC has developed over 700,000 square feet of real 
estate and has projects currently under development 
that total over 500,000 square feet. In addition,
 NDC is a joint-venture participant in several
 public-private partnerships in the area, including the 
now completed CityVista project (to the right), the State Center 
Project in Baltimore, and City Center (below), which has now
 completed construction. Collectively, these projects represent over 3.7 million square feet of mixed-use space.

NDC has won numerous awards during the past 17 years including:

Inc. Magazine – America’s 5000 Fastest Growing Companies 


Washington Business Journal – 50 Fastest Growing Companies, DC’s 100 Top Private Companies 


Black Enterprise Magazine – BE 100 Top Black-Owned Businesses

NDC’s projects, including The Residences at Georgia Avenue, Lamont Street Lofts (see photograph above), Lofts at Brightwood, and CityVista have all received numerous design and development awards. Adrian Washington has also received many honors and awards for his thought leadership in the industry. Other representative projects include CityCenter DC, 3232 Georgia Residences and Retail and 1100 Eastern.

Other key personnel at NDC include Diarra McKinney, Michaela Kelinksy and Michael Giuloni.  You can read more about the team here.  And you can chat with the developer at the bottom of this page.

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ABOUT THE MARKET

River Terrace is a middle-class neighborhood made up of row houses, duplexes and rental apartment buildings. The neighborhood has recreational assets, including a Capital Bikeshare, a park with basketball courts, tennis courts, baseball field, grills and picnic tables, and nearby Langston public golf course. There is a well-designed trail along the Anacostia River providing neighbors with high quality-of-life walking and biking benefits. The site is adjacent to Interstate 295, making getting in and out of the city easy.

But until now, the neighborhood has lacked one thing -- a larger commercial retail core where residents can shop, eat, meet and play. This kind of destination-oriented businesses within this market has the potential to grow substantially during the next five years. The Project will have good access. The site is approximately three quarters of a mile from the Minnesota Avenue Metrorail Station on the Orange Line, or about a fifteen-minute walk. The X2 bus, an express bus that travels to Gallery Place and Lafayette Square in Downtown Washington D.C, stops along Benning Road. Vehicular access is excellent - one block to the east are the entrance/exit ramps to the Anacostia Freeway (Route 295).  Benning Road in this location has high visibility with over 35,000 vehicle trips per day, while Interstate 295 receives over 127,000 vehicle trips per day. (District Department of Transportation) Traffic Counts February 2017 on adjacent map)

Benning Road also crosses the Anacostia River and quickly arrives at the H Street Corridor (depicted to the right) and Capitol Hill. It provides quick access to and from Downtown Washington, DC. And the Benning Road/H Street Corridor/Minnesota Avenue neighborhood has many well known destinations, such as Safeway, Whole Foods, and Walmart.

A number of substantial developments are planned for and have been recently completed nearby, including three multifamily apartment buildings with 283 units along Benning Road, completed in December 2017;  a 110,000 square foot office building proposed in Parkside, half a  mile from the site, and  eight multifamily apartments buildings with 700 units proposed less than two miles away. 


Other market highlights include the revitalization of Benning Road and Minnesota Avenue in Northeast Washington, a limited retail pipeline in this neighborhood and the planned extension of the H Street Street Car.

When complete, the Project will have approximately 6,854 square feet of ground level retail and 2,960 square feet of mezzanine space, which will be leased at a market rent of approximately $35 per square foot, triple net (NNN) Based on current market conditions, the rent has the potential to increase to $40 per square foot. 


The table below summarizes recent market rent comparables near the neighborhood. Due to these current comparables and other market attributes, the neighborhood appears to be attractive for projects that bring new retail and restaurant concepts. Because of our unique concept and the smaller module sizes of the Project’s retail bays (creating a lower “sticker price” for potential tenants), rents have the potential to exceed the market comparables.  However, higher rents have not been built into the Project’s financial projections.

 

Address Floor Base Rent per SF Lease Type S.F Tenant Sign Date
Park 7-4020 Minnesota Ave NE 1st $32.00 Triple Net 1,582 Not specified 09/13/17
Park 7-4020 Minnesota Ave NE 1st $32.00 Triple Net 1,500 Not specified 08/02/16
Park 7-4020 Minnesota Ave NE 1st $35.00 Triple Net 2,375 Pop Eyes 07/20/15
Park 7-4020 Minnesota Ave NE 1st $35.00 Triple Net 2,188 Sala Thai 07/20/15
Park 7-4020 Minnesota Ave NE 1st $35.00 Triple Net 1,478 Dunkin' Donuts 07/20/15
4047-4063 Minnesota Ave 1st $31.74 Triple Net 1,520 Reliance Pharmacy 08/25/14
4047-4063 Minnesota Ave 1st $33.00 Triple Net 910 Not specified 06/20/14
4047-4063 Minnesota Ave 1st $33.55 Single Net 1,520 Sharks Fish & Chicken 04/11/12
4047-4063 Minnesota Ave 1st $33.55 Single Net 1,520 PA 7 Management 02/01/12
4047-4063 Minnesota Ave 1st $33.55 Single Net 1,520 Not specified 05/15/12
4047-4063 Minnesota Ave 1st $37.58 Single Net 910 Not specified 07/14/11
4047-4063 Minnesota Ave 1st $37.50 Single Net 1520 Mattress Outlet 08/05/11

 

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KEY DEAL POINTS
  • Retail space designed to attract an underserved pool of customers.
  • Walkable location with access to Metro and other public transportation.
  • Experienced development team.
  • Matter-of-Right development with no rezoning required.
  • Expansion of existing building providing anticipated lower cost of construction.
  • Anticipated annual cash flow plus lump sum payment at exit.
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ABOUT THE FINANCES

Total acquisition and development costs of $4.435 million will be financed with a 65% loan-to-cost bank loan of $2.88 million for acquisition and construction. In addition, an interest-only loan, in the amount of $400,000 will be provided by the seller. In 2021, the third year after the project is stabilized, the Developer expects to pay down the acquisition and construction loan with a permanent loan of approximately $3.34 million.

During the initial holding period (the first year) an estimated $144,049 in interest-only payments to the construction lender and an additional $24,000 in interest-only payments to the seller will be paid from annual cash flow. During the balance of the holding period, annual interest and principal payments to the construction lender and the interest-only payments to the seller will be paid out of the Project cash flow. The Developer anticipates either selling or refinancing the Project in years five to seven. After all debts have been paid and reserves established, Investors, including NDC and/or its affiliates (in its capacity as an investor), will receive 70% of any profits and NDC and/or its affiliates will receive 30% on an equal basis.

The Project requires $1,151,000 in total equity. NDC and/or an affiliate will invest a minimum of $100,000 on the same terms as the other Investors. It is anticipated that investors, including NDC and/or an affiliate (in its capacity as an investor), will contribute 100% of the required equity financing during the pre-development phase, and therefore will receive 100% of the annual cash flow from the operations of the Project.

Key anticipated construction loan terms are described in the tables below:

Acquisition/Construction Loan     Permanent Loan  
Loan to cost ratio limit 65%   Loan to value ratio 65%
Loan to value ratio limit 65%   Debt coverage ratio 1.25
Interest rate 5%   Interest rate 5.25%
Committment fee 0.75%   Amortization period 25 years
Acquisition loan amount $523,362   Permanent loan amount $3,344,734
Construction loan amount $2,357,611   Permanent loan annual payment $231,162
Total bank loan amount $2,880,973      

 

Seller's Financing  
Interest rate 6%
Loan term 5 years
Annual interest payment $24,000
Construction loan amount $400,000

You can download the anticipated project budget showing development costs, sources and uses of funds here.  During the holding period, the Developer expects Net Operating Income from operations to increase from approximately $250,855 in 2019 to approximately $369,196 in 2023. You can download and review a detailed operating proforma here

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ABOUT INVESTOR RETURN

The Developer plans to sell or refinance the project in year five, after the property is stabilized. All distributions will be made in the following order of priority, after loans and other costs have been repaid:

  • First, investors, including NDC or an affiliate in its role as an investor member, will receive 100% of all distributions from the project until the property is sold.
  • Second, investors including NDC in its role as an investor member, will receive a 70% pro rata split of the profit upon refinancing or sale of the building.

The table below illustrates an estimate of return to Investors assuming a $1,000 investment made and assuming a sale or refinancing of the project in year five with a 6% or a 6.5% market cap rate.  

Cash available for distribution 6% Cap Rate 6.5% Cap Rate
Sales price $6,153,267 $5,679,939
Net sales proceeds $5,968,669 $5,509,541
Balance of loan ($3,433,234) ($3,169,139)
Balance of seller loan ($400,000) ($400,000)
Profit from sales $2,224,723 $2,048,953
     
Return on $1,000 investment    
Total investors $1,139,755 $1,139,755
Total investor cash flow over 5 years (at 100% of cash flow) $1,230,182 $1,009,245
Cash flow return to $1,000 investor $1,069 $877
70% of profit from sales $1,494,805 $1,358,282
Profit return to $1,000 investor $1,298 $1,180
Total return on $1,000 investment $2,367 $2,056

Caution:  This table is merely an illustration based on current assumptions and estimates as of the date of this offering and may change at any time based on market or other conditions and may not come to pass. All investments carry risk of loss and there is no assurance that an investment will provide a positive return. Many things could go wrong with this offering, including those listed in the Risk Factors.

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ABOUT THE RISKS

A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment. In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document. 

The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature. These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.

There are numerous risks to consider when making an investment such as this one and financial projections are just that - projections. Returns are not guaranteed. Conditions that may affect your investment include unforeseen construction costs, changes in market conditions, and potential disasters that are not covered by insurance. Download this risk disclosure for a more expansive list of potential risks.

Unless otherwise noted, the images on this offering page are used to convey the personality of the neighborhood in which the project is planned. Properties shown in these images are not included in the offering and investors will not receive an interest in any of them.

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FINANCIAL CONDITION OF DEVELOPER

3451 Benning LLC is a newly formed LLC, organized under Title 29 of the D.C. Code (Business Organizations Act) on November 28, 2017.

We have raised $555,000 in equity in a private placement to friends and family, including $100,000 from NDC. These investors were admitted as members of the Company on January 16, 2018. As of now, we have not yet begun operations other than those associated with general start-up, organizational, and pre-development  matters. We have no operating revenues. As such there is no previous year income tax return. The funds raised through this offering will be invested as equity in the project. You can review the company’s financial statements here.

Adrian Washington is the CEO of NDC, which is the manager owner of 3451 Benning LLC. Neither NDC nor 3451 Benning LLC have previously raised funds through a Regulation Crowdfunding offering. As a result there are no past reporting non-compliance issues and Adrian Washington has no bad actor issues to report.

The Securities and Exchange Commission requires annual filing of reports depending on size of the company and the number of investors.  This report will be posted on a company website no later than 120 days after the end of the fiscal year. 

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