ALT Seattle Financing Webinar

Summary

Josh Hy, CEO of Citizen Mint, discusses a new preferred equity opportunity for wealth advisors and their clients. The investment focuses on a multifamily building in Seattle, offering a 14.5% annualized return with a potential 18% return if sold within 15 months. The opportunity is designed for accredited investors, with quarterly updates provided. The sponsor, kimc, has a strong track record in real estate development, and the investment is expected to be sold within 12-18 months.

Takeaways

• 😀 Josh Hy is the CEO of Citizen Mint, a company that provides private market opportunities for Wealth Advisors and their clients.
• 💼 Josh Hy's background includes working at Deloitte, Russell Investments, and Lerner Wealth Management, focusing on investments and asset management.
• 🏢 Citizen Mint aims to partner with wealth advisers to provide access to compelling investment opportunities in private markets such as real estate, infrastructure, private equity, and private debt.
• 📈 The company operates through a platform designed to simplify operations for wealth advisers and their clients.
• 💵 A new opportunity discussed is a preferred equity investment in a multifamily building in Seattle, which is part of the capital stack when investing in real estate.
• 🏦 Preferred equity acts like second lien debt on a property, providing a fixed interest rate to investors without participation in the property's upside.
• 📊 The investment is targeted at accredited investors, defined by the SEC as those with substantial assets or income, to protect less sophisticated investors.
• 🏗️ The multifamily building in Seattle is in a high-demand area with proximity to major tech campuses like Amazon, offering potential for high rental demand.
• 📈 The investment offers an attractive 14.5% annualized interest rate, with a balloon payment at the end of the term, which is not tied to the federal interest rate.
• 📅 The investment term is 18 months, with an expected sale of the property within 12-18 months, and a minimum interest requirement ensuring a return even if the property sells early.
• 🔍 Risks include interest rate risk, geographic concentration risk, and potential impacts from a downturn in the tech industry, though the short-term nature of the investment and strong local market dynamics may mitigate these risks.

Q & A

What is Citizen Mint and what services does it offer?

Citizen Mint is a company that provides access to private market opportunities specifically for Wealth Advisors and their clients. It offers investment opportunities across the private market space including real estate, infrastructure, private equity, and private debt.

What is Josh Hy's professional background?

Josh Hy has a background in investments. He has worked at Deloitte, Russell Investments, and Lerch Wealth Management. His experience includes working with large pension and institutional funds, such as Boeing, AT&T, and Microsoft.

What is a private investment and how does it differ from traditional investments?

A private investment is not traded on a traditional exchange and is not actively marketed to individual investors. It requires more due diligence and is not liquid, meaning it cannot be cashed out at any given time. It often involves buying into an asset with a long useful life and no immediate liquidity.

What is the definition of an accredited investor according to the SEC?

An accredited investor is someone who has over $1 million in total assets not including their primary residence, or an individual who makes $200,000 or a couple who makes $300,000. They are considered sophisticated investors with enough capital to make such investments.

What is a preferred equity opportunity and how does it work in the context of real estate investment?

Preferred equity is a portion of the capital stack in real estate investment. It acts like a second lien debt on a property, providing debt to facilitate the sale of the building. In this case, it's used as a bridge loan to allow the property to stabilize by getting rented up.

What is the interest rate offered to investors in the preferred equity opportunity discussed?

The interest rate offered to investors in this preferred equity opportunity is 14.5% net of all fees and expenses. However, if the building is sold before the 15-month period, investors are guaranteed to receive at least 15 months of interest, which could potentially increase the annualized return to 18%.

How is the investment in the Seattle multifamily building structured?

The investment is structured as a capital stack with senior loan holders, equity investors, and preferred equity in the middle. The preferred equity position is a 10% position acting as a bridge loan to stabilize the property, with a term of 18 months and a potential extension.

What is the expected timeline for the investment and the sale of the building?

The investment term is expected to be 18 months, with the possibility of a one-year extension. The building is expected to be sold within a 12 to 18-month period, with the sale anticipated in Q3 or Q4 of the following year.

What are the risks associated with this investment opportunity?

The risks include interest rate risk, which could impact asset prices if rates increase significantly, and geographic risk, as the investment is tied to a specific location in Seattle. However, the building is already constructed, reducing development risk, and the area has strong job and population growth.

How does an investor participate in this opportunity and what is the process?

An investor interested in the opportunity would express their interest to John, who would then handle the investment on their behalf. The investor would sign a subscription document, and the funds would be wired from a brokerage account or personal bank account. Updates on the project would be provided quarterly.

How will investors receive their money back once the investment term ends and the building is sold?

Once the term ends and the building is sold, the investor's money, including principal and interest, will be distributed into their wallet within the Citizen M platform. They can then link an account to withdraw the funds to a brokerage account or bank account.