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Realized Deal : Mainstreet Bloomington

Sponsored By Mainstreet

Risk Profile
Core-Plus
Amount Invested
$1,612,000
Targeted IRR
14%
Actual IRR*
12.1%
Targeted Equity Multiple
1.3x
Actual Equity Multiple*
1.14x
Targeted Hold Period
2.0 years
Actual Hold Period
1.2 years

In April 2014, Mainstreet launched an offering for an investment opportunity in a mezzanine note targeting a 10% annualized cash yield, plus potential upside.

The underlying development project was a short-stay transitional care and assisted living facility consisting of a 66,197 square foot building with 100 beds. The property would feature world-class care, a rehab center, movie theater, salon, game room, on-site restaurants, and walking trails, among other amenities. Prior to this project, the City of Bloomington did not have a facility dedicated to post-acute care. Mainstreet believed the property would truly enhance the lives of those patients treated and cared for now and in years to come.

Capital raised from the mezzanine note investors, along with capital invested by Mainstreet and proceeds from a first mortgage, would be used to fund the land acquisition and construction costs of the property.

The anticipated project timeframe was 18-24 months, at which time Mainstreet expected to either sell or refinance the property, producing a special distribution to the mezzanine note investors equating to a 14% annualized rate of return when combined with all of the previously paid distributions to that time.

Project Timeline

Partnership Announcement

August 2014

Mainstreet announced that it had agreed to form a partnership with Health Care REIT, Inc., which included a required purchase of the Bloomington project upon completion of construction. The partnership was officially finalized in November, with the sale anticipated for 2015.

Construction Continues

December 2014

Mainstreet reported that, as of year-end 2014, approximately 63% of the total anticipated project costs had been incurred. The project remained on budget in both timing and cost. Progress included completed exterior building masonry and roofing, as well as drywall in three wings. The certificate of occupancy was expected in May 2015, with the sale to Health Care REIT now projected for Q3 2015. Quarterly distributions at an annualized rate of 10% continued to be regularly paid out to investors.

Sale

August 2015

In August 2015, the property was officially sold, triggering a distribution to investors consisting of invested capital, accrued interest at 10% per annum, and a 4% special distribution to achieve an overall 14% annual rate of return.

Final Outcome

Successful development plan execution and a strategic partnership formation created the opportunity for Mainstreet to successfully exit the investment, achieving strong returns for investors in-line with the original offering.

*Net of fees.

This report contains explanations of a series of events associated with Mainstreet’s “Mainstreet Bloomington” offering that resulted in an approximate 14% (net of fees) absolute return on original equity to investors (including those from the CrowdStreet Marketplace). Certain aspects of the report such as dates of major events and the final outcome are easily verifiable while others, particularly underlying reasons behind the sponsor’s business plan execution, are not. 

The report partially relies upon the sponsor’s explanations, the information contained within sponsor-produced quarterly reports, and conference calls. This analysis is not an assertion of independently verified facts but, rather, is for informational purposes only, to convey CrowdStreet’s understanding of what transpired.

CrowdStreet makes no representation or warranty, express or implied, in relation to the fairness, accuracy, correctness, completeness, or reliability of the information contained in this report. CrowdStreet does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it.

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