A DC retail project designed for the foodie in us all.
3451 Benning LLC (the “Developer”) is developing a retail site in the River Terrace neighborhood of Northeast Washington, DC consisting of approximately 13,000 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 approximately 6,800 square feet of ground floor retail and approximately 4,400 square feet of mezzanine 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 additional 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 closed on the Property on February 22, 2018. Once design and permitting are complete, estimated to be November 2018, approximately 9 months of construction is anticipated, with pre-leasing beginning immediately and rent payments anticipated to begin in October 2019.
Anticipated Project Schedule
February 2018 - Close on property.
March 2018 - Begin predevelopment.
July 2018 - Begin pre-leasing.
November 2018 - Begin demolition and construction.
July 2019 - Begin tenant fit out.
July 2019 - Construction ends.
October 2019 - Fully occupied.
The Company is engaged in two simultaneous offerings of its securities: An offering under Regulation CF (where anyone can invest), which we refer to as the “Reg CF Offering”; and an offering under SEC Rule 506(c) (where only “accredited investors” can invest), which we refer to as the “Reg D Offering. We plan to use the proceeds of the two offerings, together with a loan from a bank, and additional equity raised to develop approximately 6,800 square feet of ground floor retail and approximately 4,400 square feet of mezzanine space with a focus on food-related retail tenants.
It doesn’t matter how much is raised in the Reg CF Offering and how much is raised in the Reg D Offering. Thus, if we raise $1,000 in the Reg CF Offering and at least $99,000 in the Reg D Offering we will proceed, and vice versa.
In an offering under Regulation CF the issuer is required to state a “Target Amount,” meaning the minimum amount the issuer will raise in the Regulation CF offering to complete the offering. For the reason just described, our Target Amount for the Reg CF Offering is $1,000. However, we will not complete the Reg CF offering OR the Reg D offering unless we have raised a total of at least $100,000 by August 31, 2018. If we haven’t, both offerings and all investment commitments will be cancelled, and all committed funds will be returned.
When the minimum offering goal of $100,000 has been met, as long as the offering has been open for a minimum of 21 days, we’ll conduct the first closing. 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. After that, all further money raised through the Reg D offering will be released to the Developer as it is invested, and all further money raised through the Reg CF offering will be released when the offering target date is reached.
The minimum investment in the Reg CF offering is $1,000, and the minimum investment in the Reg D offering is $5,000. Investments above $1,000 in either offering may be made in $1,000 increments (e.g., $2,000 or $3,000, but not $2,500). Investors can cancel their commitment up until 11:59 pm on August 29, 2018. After that any funds raised will be released to the developer and investors will become shareholders of the company. The developer may decide to change the offering deadline but will provide at least five days’ notice of such a change to all investors. And investors will also be notified and asked to reconfirm their commitment if any other material changes are made to this offering.
Through this offering, investors will purchase securities in the form of limited liability interests in the Company. We refer to these as “Investor Shares.” If the full goal of $600,000 is not met, the issuer may solicit further private equity through family and friends or another 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||$1,163,837|
|Small Change offering||$600,000|
|Price of 1 security||$1.00|
|Ownership share of 1 security||0.000086%|
|Ownership with an investment of $1,000||0.08590%|
|Ownership with an investment of $2,500||0.2148%|
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 Developer anticipates refinancing once the project is stabilized, followed by a sale after the fifth to seventh year of operations. 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. More detail can be found here.
|Cash available for distribution||6% Cap Rate||6.5% Cap Rate|
|Net sales proceeds||$6,319,964||$5,833,813|
|Balance of loan||($3,359,069)||($3,359,069)|
|Balance of seller loan||($400,000)||($400,000)|
|Profit from sales||$1,960,895||$1,474,744|
|Return on $1,000 investment|
|Total investor cash flow over 5 years (at 100% of cash flow)||$1,681,925||$1,207,159|
|Cash flow return to $1,000 investor||$1,064||$877|
|70% of profit from sales||$1,124,882||$1,015,521|
|Profit return to $1,000 investor||$1,030||$749|
|Total return on $1,000 investment||$2,030||$1,749|
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.
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|
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.
- 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.
- Anticipated annual cash flow plus lump sum payment at exit.
Total acquisition and development costs of approximately $5.2 million will be financed with a bank loan of approximately $3.6 million for acquisition and construction. In addition, an interest-only loan, in the amount of $400,000 will be provided by the seller. In 2022, 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 $4.2 million. The Developer anticipates refinancing once the project is stabilized, followed by a sale after the fifth to seventh year of operations. 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 $1,163,837 in total equity. NDC and/or an affiliate have invested $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||70%||Loan to value ratio||75%|
|Loan to value ratio limit||70%||Debt coverage ratio||1.25|
|Interest rate||6%||Interest rate||5.25%|
|Committment fee||0.75%||Amortization period||30 years|
|Acquisition loan amount||$523,362||Permanent loan amount||$4,218,620|
|Construction loan amount||$2,863,842||Permanent loan annual payment||$268,620|
|Total bank loan amount||$3,648,960|
|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 $343,957 in 2019 to approximately $390,926 in 2023. You can download and review a detailed operating proforma here.
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.
The Company was organized under Title 29 of the D.C. Code (Business Organizations Act) on November 28, 2017 and 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.
We intend to use the proceeds of this Offering to buy, construct, and operate the project as described I our business plan soon after the Offering closes. We will also use debt (borrow money) to finance a portion of the costs. 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.