Cayuga Capital Crowdfunds Part of $7M Bushwick Buy
Lauren Elkies Schram Oct. 24, 2014, 1:30 p.m.
Developer Cayuga Capital Management has paid $7 million for the acquisition and planned renovation of a series of Bushwick, Brooklyn multifamily properties in part through crowdfunding, Commercial Observer has learned.
Two days ago, Cayuga Capital closed on the $6 million acquisition of four buildings at 290 and 294 Harman Street from two private individuals. Fundrise raised $1.4 million toward the project cost for Cayuga Capital through investments ranging from $5,000 to $500,000 from 33 people around the country, according to Dan Miller, the co-founder and president of Fundrise.
Customers Bank provided $4.2 million, or 60 percent, of the total project cost through a senior loan. Cayuga Capital co-founders Jacob Sacks and James Wiseman and an existing network of investors provided the other 20 percent in equity. The Fundrise investors are projected to receive a 12 percent gross annual return in a three-year term, Mr. Miller said.
The buildings are comprised of 24 two-bedroom units, four of which are vacant and will be the first ones to get renovated.
“We simply hope to perform aesthetic improvements to the common areas, interior and exterior, as well as renovate the apartments as and when they turn over in the ordinary course,” Mr. Wiseman said.
This project marks Fundrise’s first venture in Bushwick, but the real estate crowdfunding and investment platform has raised money for other properties in the borough. For example, Brooklyn Standard Properties used Fundrise in two of the three deals it has closed: it raised $250,000 for the $1.89 million purchase of 151 Dupont Street in Greenpoint, and $250,000 for the $3.25 million purchase of 533 Bergen Street in Prospect Heights.
“Working with Fundrise allowed us to quickly raise the capital needed for the project, while simultaneously expanding our brand and tapping into a new investor base of savvy individual investors,” Mr. Wiseman noted in a prepared statement.
Fundrise announced in May that it received more than $31 million in its first substantial capital raising, including funds from two Silverstein Properties executives.
Cayuga Capital currently owns and operates 15 multifamily properties in and around Bushwick, and has over $400 million in assets under management. The firm has proposed a project at 44 Kent Street at West Street, with 48,000 buildable square feet. And as Commercial Observer first reported, Cayuga Capital along with capital partner Latus Partners sold the northside Williamsburg building that houses Output nightclub over the summer for $7.4 million.