The Project is shovel ready, with the building permit in hand. This shortens the timeline from breaking ground to project stabilization. Additionally, many of the unknown elements of development are fully delineated upon completion of the preconstruction work, making it advantageous for an investor to come into a project at this stage.
Evanston Gateway offers many conveniences of the urban lifestyle, including restaurants, cafes, and lakefront access, perfectly blended in a less dense, more relaxed suburban setting. The Project is located near both the Chicago public transportation system as well as the suburban commuter train route. The commute to downtown is only 30 minutes (via Metra), to Evanston Hospital in under 20 minutes (by bike or car) and to Northwestern University in about 10 minutes (by bike or car).
The Project will be a first-class, boutique apartment building that offers residents a combination of privacy and top of the line amenities and finishes. The future building plans to be a response to resident preferences brought about by Covid, providing a highly sought-after alternative to extremely dense apartment buildings with overly crowded elevators, lobbies, and common areas.
$12,458,601
LG Development Group LLC and Harrington Brown LLC
The Project is jointly sponsored by LG Development Group, LLC and Harrington Brown, LLC.
About LG Development Group, LLC
Opening their doors in 2005, LG Development Group (the "Developer") was founded by Brian Goldberg as a real estate development company focused on producing luxury residential and commercial properties. They quickly realized they had an opportunity to serve their clients and partners more effectively, and in 2008, they started LG Construction Group, offering general contracting services independent from LG Development Group, then LG Advantage, a fully staffed small projects and service division, and their most recent venture, LG Design, a modern interior design division. Each team offers a combination of different skills and abilities, and being under one roof, LG is able to provide those services in a collaborative, cohesive environment.
Their portfolio has expanded from boutique single-family homes to large residential and commercial multi-unit buildings, developing over 2,000 units and $2B in properties spanning more than two million square feet.
About Harrington Brown, LLC
Harrington Brown, LLC, a non-controlling partner, is a boutique commercial real estate company, focused on investing and developing projects in our community on the north side of Chicago and Evanston. The company also provides advisory and brokerage services to a wide variety of clients.
The company was founded by David R. Brown in 2009. Mr. Brown is a commercial real estate veteran with 34 years of experience generating property value through asset management, development, redevelopment, and leasing, as well as creatively positioning assets for sale. The company’s principal development and investment activities have focused on developing and renovating multi-family, retail, and mixed-use properties. On the advisory side, Harrington Brown has assisted institutional and entrepreneurial owners with asset management, property management, leasing property acquisitions and investment sales throughout the country. Prior to forming Harrington Brown, Mr. Brown was CEO of ORIX Real Estate Capital where he oversaw company operations nationwide and spearheaded more than $1B in real estate development, acquisition, financing, and dispositions. Mr. Brown also has executive experience at Lehman Brothers and Jones Lang LaSalle (JLL).
HTTP://LGDEVELOPMENTGROUP.COM/-
Brian GoldbergPartner & Chief Operations Officer -
Matt WilkePartner & Chief Operations Officer - LG Development Group LLC -
Daniel HaughneyChief Investment Officer -
Jennifer AlbertChief Financial Officer -
David BrownPresident
Brian is a founding partner of LG Construction + Development and has spent the last 17 years developing, constructing, and renovating over $2 biillion in high-end residential and commercial projects around Chicago.
Brian’s relentless pursuit of the highest level of customer service and uncompromising standards has led us to be a top-rated company across many different construction types and asset classes.
Brian graduated from the University of Illinois with a Bachelors and Masters of Science in General Engineering, and also has an MBA.
Matt’s 15 years of industry success is built on his dedication and professional drive. By keeping his client’s needs foremost, and developing project teams that do the same, he ensures LG Construction + Development thrives.
As COO, Matt oversees all aspects of our projects. His hands-on approach to every facet of the process is visible in each of our completed projects.
Matt grew up in Naperville, Illinois and graduated from Purdue University with a Bachelor of Science in Construction Engineering and Management.
As Chief Investment Officer, Daniel oversees the firm’s investment activity and leads the overall strategy. His responsibilities include sourcing and analyzing potential investment opportunities, building the capital stack, and structuring joint ventures. He also assists with portfolio management and investor relations.
Prior to joining LG, Daniel served as a Vice President of JLL’s Capital Markets Group where he focused on development and adaptive reuse assets.Daniel has closed over $1 billion of real estate transactions during his 15 years in the industry.
Daniel holds a BA in Business Communications from the University of Kansas and a certificate in urban real estate from the UIC Graduate School of Business. He is a LEED accredited professional and a member of the Urban Land Institute.
Jennifer has spent over 12 years in public accounting, working in audit, tax, and consulting focused primarily on construction and real estate.
In addition to Jennifer’s industry-wide experience and knowledge of best practices, she has a passion for the operations side of it, and actually believes accounting is fun!
Jennifer received a Bachelor in Science from Bradley University, is a Certified Public Accountant, a Certified Construction Industry Finance Professional, and a member of the Illinois CPA Society, the AIPCA, the CFMA, and CREW.
David Brown is a commercial real estate veteran with 34 years of experience generating property value through asset management, development, redevelopment and leasing, as well as creatively positioning assets for sale. On the advisory side, Mr. Brown has assisted institutional and entrepreneurial owners with asset management, property management, leasing, property acquisitions and investment sales throughout the country. He is a long-time resident of Chicago's north side and has been actively involved in the community as a volunteer and Board member of various organizations.
| Developer | Property | City, State | Asset Type | Acq Date | Units or SF | Purchase Price | Sales Price | Project Value |
| LG | 1241 N Milwaukee | Chicago, IL | Mixed Use | 12/17/2013 | 60 units, 16,000 SF retail | $3,350,000 | $31,470,000 | |
| LG | 1643-47 N Milwaukee | Chicago, IL | Mixed Use | 8/26/2014 | 36 units, 11,000 SF retail, 20,000 SF office | $5,050,000 | $26,280,000 | |
| LG | Illume | Chicago, IL | Condos | 10/30/2015 | 79 units | $6,350,000 | $84,849,978 | |
| LG | 1879 N Milwaukee | Chicago, IL | Mixed Use | 4/1/2016 | 36 units, 7,000 SF retail | $1,487,500 | $11,875,911 | |
| LG | 1437 N Wells | Chicago, IL | Mixed Use | 4/8/2016 | 50 units, 6,743 SF retail | $8,677,548 | $25,000 | |
| LG | The Plymouth | Chicago, IL | Multi-family | 4/29/2016 | 30 units | $3,000,000 | $1,680,000 | |
| LG | Ronsley | Chicago, IL | Condos | 5/18/2016 | 41 units | $11,540,000 | $72,273,674 | |
| LG | The Insurance Center | Chicago, IL | Mixed Use | 7/14/2016 | 132 units, 24,489 SF office, 5,224 SF retail | $10,071,897 | $53,441,270 | |
| LG | The Jax | Chicago, IL | Mixed Use | 9/7/2018 | 166 units, 7,426 SF retail | $5,435,000 | $51,713,729 | |
| LG | Trailhead | Chicago, IL | Mixed Use | 4/2/2019 | 109 units, 9,791 SF retail | $5,100,000 | $51,169,964 | |
| LG | Roots - Printers Row | Chicago, IL | Retail/Restaurant | 10/5/2018 | 9,365 SF | $2,730,000 | $9,500,000 | |
| HB | Larchmont-Lincoln | Chicago, IL | Mixed Use Rehab | 6/1/2003 | 7,950 SF (6 units, ground floor retail) | $1,200,000 | $2,050,000 | |
| HB | Montrose Green | Chicago, IL | Land Flip, Entitled, Designed | 12/1/2009 | $605,000 | $3,000,000 | ||
| HB | Half Acre Brewery | Chicago, IL | Industrial Rehab/Repurpose | 6/1/2012 | 57,000 SF | $1,600,000 | $3,150,000 | |
| HB | Montrose West | Chicago, IL | Retail Rehab | 3/1/2015 | 2,854 SF | $949,000 | $1,950,000 |
*The above bios and track record were provided by LG Development, LLC and Harrington Brown, LLC and have not been independently verified by RealtyMogul.
Evanston Gateway presents a unique opportunity to invest in a completely shovel ready project on the boundary of Chicago and Evanston. The Project is fully entitled, GC contract is negotiated, building permit is in hand, and construction is set to commence in April 2021 with a build timeline of 12 months. Leasing is anticipated to begin in April 2022 with the residential move-ins starting in May 2022. The Real Estate Company anticipates stabilization during Year 2 and a target sale by April 2024 at an expected cap rate of 5.0%, totaling $13.2M.
Total project costs are estimated to be $12.46M, and the construction loan term sheet offers attractive terms at 3 years interest only at LIBOR + 2.65% with a LIBOR floor of .25%. Further, the Project has secured Tax-Increment Financing (TIF) from the City of Evanston, which provides for reimbursement of approximately $1.6M of costs to be incurred. The TIF is an additional source of equity in the deal, which results in a total equity raise of only 27%, therefore yielding higher returns to investors.
Project Schedule:
Year 1 - Construction
Year 2 - Lease-up
Year 3 - Stabilization and Disposition
A boutique 28-unit mixed-use project situated in the highly desirable Chicago North Shore, just steps from Lake Michigan, adjacent to Chicago's public transportation and the suburban commuter train. This transit-oriented building features a rooftop amenity space situated between two lush green roof gardens, a fitness room, and about 5,000 sf of ground floor retail.
Unit Mix
| Unit Type | # of Units | Avg SF/Unit | Avg Rent (Stabilized) | Rent PSF | ||
| 1 x 1 (Market) | 10 | 745 | $1,877 | $2.52 | ||
| 1 x 1 (Affordable) | 3 | 811 | $1,185 | $1.46 | ||
| 2 x 2 (Market) | 13 | 1,115 | $2,607 | $2.34 | ||
| 2 x 2 (Affordable) | 2 | 1,055 | $1,422 | $1.35 | ||
| Total/Averages | 28 | 946 | $2,109 | $2.23 | ||
Lease Comparables
| Elevation Lofts | Edge on Broadway | The Main | Arcade Residences | Comp Averages | Evanston Gateway | |
| Address | 1531 W Howard | 6149 Broadway | 847 Chicago Ave | 1135 Sheridan | 100 Chicago Ave | |
| Year Built | 2020 | 2020 | 2016 | 2019 | 2018 | 2022 |
| Units | 38 | 105 | 112 | 58 | 78 | 28 |
| Average Rental Rate | $1,308 | $1,503 | $2,069 | $2,694 | $1,903 | $2,109 |
| Average SF | 620 | 621 | 899 | 902 | 761 | 946 |
| Average $/SF | $2.11 | $2.42 | $2.30 | $2.99 | $2.45 | $2.23 |
| # Units (Studio) | 45 | 7 | 26 | |||
| $ (Studio) | $1,267 | $1,438 | $1,290 | |||
| SF (Studio) | 409 | 500 | 421 | |||
| $/SF (Studio) | $3.10 | $2.88 | $3.06 | |||
| $ (1x1) | $1,308 | $1,633 | $1,868 | $1,877 | $1,673 | $1,717 |
| SF (1x1) | 620 | 635 | 788 | 652 | 689 | 760 |
| $/SF (1x1) | $2.11 | $2.57 | $2.37 | $2.88 | $2.43 | $2.26 |
| $ (2x2) | $1,776 | $2,226 | $3,027 | $2,345 | $2,449 | |
| SF (2x2) | 772 | 1,027 | 978 | 954 | 1,107 | |
| $/SF (2x2) | $2.30 | $2.17 | $3.10 | $2.46 | $2.21 | |
| $ (3x2) | $3,364 | $3,528 | $3,468 | |||
| SF (3x2) | 1,424 | 1,209 | 1,288 | |||
| $/SF (3x2) | $2.36 | $2.92 | $2.69 | |||
| Distance to Subject | 0.4 Miles | 2.4 Miles | 0.9 Miles | 2.1 Miles | 1.5 Miles | |
| Notes | 78.9% occupied. Fitness center, dog run, and rooftop deck. | 94.2% occupied. Fitness center. Clubhouse. | 95.5% occupied. Rooftop terrace/resident area. | 77.6% occupied. Rooftop resident area with BBQ's. | Market rent following construction completion in 2022. |
Sales Comparables
| 931-933 Belle Plaine Ave | 1620 Central St | 3200 N Clark St | 5427-5437 N Broadway | 3905 N Western | Total/Averages | Evanston Gateway | |
| Date | Mar '20 | May '19 | Jul '18 | May '18 | Feb '17 | Mar '23 | |
| Submarket | Chicago | Evanston | Chicago | Chicago | Chicago | Evanston | |
| Year Built | 2018 | 2017 | 2016 | 2015 | 2009 | 2015 | 2022 |
| SF | 13,600 | 42,300 | 160,000 | 95,000 | 56,739 | 73,528 | 42,558 |
| Units | 17 | 47 | 98 | 42 | 30 | 47 | 28 |
| Average SF | 800 | 900 | 850 | 1,164 | 1,000 | 943 | 946 |
| Sale Price | $6,700,000 | $20,500,000 | $53,000,000 | $15,800,000 | $14,125,000 | $22,025,000 | $13,263,811 |
| $/Unit | $394,118 | $436,170 | $540,816 | $376,190 | $470,833 | $443,626 | $473,708 |
| $/SF | $492.65 | $484.63 | $331.25 | $166.32 | $248.95 | $344.76 | $311.66 |
| Cap Rate | N/A | 4.75% | 6.00% | N/A | 6.08% | 5.61% | 5.00% |
| Distance from Subject (mi.) | 5.1 Miles | 3.7 Miles | 5.9 Miles | 3.2 Miles | 5.5 Miles | 4.7 Miles | |
| Notes | 94.1% leased at sale. Local buyer (Fairmont Properties). | 87.2% leased at sale. Institutional buyer (Highlands REIT). | 20% retail mix (Target Express) valued at $10MM. $438K per unit excluding retail. Institutional buyer (Standard Companies). | 25% retail mix valued at $5MM. $255K per unit excluding retail. Institutional buyer (Laramar Group). | 16% retail mix valued at $3MM. $367K per unit excluding retail. Local buyer (Vestian Group). | 12% retail mix valued at $1.7MM. $411K per unit excluding retail. Fitness center. Rooftop deck. BBQ. |
Market Overview
The Evanston area remains a strong market with numerous drivers that continue to attract renters to the submarket, including a major university (Northwestern University), an expansive healthcare sector, convenient public transportation within Evanston and into the Chicago Business District, and a superb location along Lake Michigan. In the previous 12 months, 206 units have been delivered, while 240 units have been absorbed, resulting in positive absorption despite the ongoing coronavirus pandemic (Costar). Additionally, after an influx of 4- and 5-star assets delivered in Q42019 and Q12020, no development activity is currently underway in the Evanston submarket.
The largest employers in Evanston include the NorthShore University HealthSystem, Saint Francis Hospital and Northwestern University. All three employers employ approximately 5,000 individuals each. Evanston features a walkable downtown area and public transportation via the Chicago Transit Authority (CTA) Purple line and Metra, which has historically attracted young professionals who work in Downtown Chicago. Evanston has a population of nearly 75,000, boasts a median household income of $95,497 and a median age of 34-years-old.
Submarket Overview
Commonly known as where Chicago meets the North Shore, Evanston combines the relaxing nature of suburban living with much of the shopping, cuisine, culture, and arts found in urban settings. The city boasts the largest downtown workforce in the North Shore, with over 10,000 employees in the CBD. Evanston is home to Northwestern University, one of the most prestigious institutions in the country. Northwestern enhances Evanston's uniqueness through its Big Ten Conference athletic events, performing arts concerts, musicals and plays, and unrivaled landmarked architecture dating back to the turn of the century.
With several miles of frontage, Evanston gets to have direct access to Chicagoland's most prized asset, Lake Michigan, with seven different beaches. Culturally, Evanston is thriving with art galleries, festivals, public art, and museums. In addition to Evanston's downtown, there are charming commercial corridors on Central Ave on the north side of the city, and Howard St on the southern gateway. It’s easily accessible by an abundance of public transit options, and appreciated for its safe, walkable streets.
| Sources of Funds | $ Amount | $/Unit | |||
| Debt | $7,453,489 | $266,196 | |||
| GP Investor Equity | $335,112 | $11,968 | |||
| RM Investor Equity | $3,080,000 | $110,000 | |||
| TIF Agreement | $1,590,000 | $56,786 | |||
| Total Sources of Funds | $12,458,601 | $444,950 | |||
| Uses of Funds | $ Amount | $/Unit | |||
| Purchase Price | $2,500,000 | $89,286 | |||
| Acquisition Fee | $25,000 | $893 | |||
| Loan Fee | $119,535 | $4,269 | |||
| Hard Costs, excluding contingency | $7,300,813 | $260,743 | |||
| Retail Tenant Improvement Reserve | $224,550 | $8,020 | |||
| Soft Costs(1) | $1,466,209 | $52,365 | |||
| Interest Reserve | $175,000 | $6,250 | |||
| Contingency | $647,494 | $23,125 | |||
| Total Uses of Funds | $12,458,601 | $444,950 | |||
Please note that the equity contribution from LG Development Group and Harrington Brown may consist of friends and family equity and equity from funds controlled by LG Development Group and Harrington Brown. Additionally, the numbers represented above can change prior to closing depending on final loan proceeds, property condition assessments, appraisals, final closing costs, and other lender-mandated expenses.
(1) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Transactional Costs and is intended to be capitalized into the transaction at the discretion of the Manager.
The expected terms of the debt financing are as follows:
- Lender: Busey Bank
- Term: 3 years with a 2-year mini perm option
- LTV: 60.0%
- Total Estimated Proceeds: $7,453,489
- Interest Type: Floating
- Spread above one-month LIBOR: 2.65%
- Interest Only: 3 years
- Amortization: 27 years
- Prepayment terms: After conversion to mini perm, prepayment is 2% in year 1 and 1% in year 2 but only applies to a refi and not to a sale.
- Extension requirements: Debt Service Coverage Ratio before distributions to be at least 1.20 to 1.00; DSCR after distributions to be at least 1.05 to 1.00.
There can be no assurance that a lender will provide debt on the rates and terms noted above, or at all. All rates and terms of the debt financing are subject to lender approval, including but not limited to possible increases in capital reserve requirements for funds to be held in a lender-controlled capital reserve account.
A substantial portion of the total acquisition for the Property will be paid with borrowed funds. The use of borrowed money to acquire real estate is referred to as leveraging. Leveraging increases the funds available for investment or development purposes, on the one hand, but also increases the risk of loss on the other. If the Company were unable to pay the payments on the borrowed funds (called a "default"), the lender might foreclose, and the Company could lose its investment in its property.
LG Development Group and Harrington Brown intend to make distributions from 100 Chicago Holdings, LLC as follows:
1. To the Investors, pari passu, all operating cash flows to a 10% preferred return
2. 70% / 30% (70% to Investors / 30% to Promote) of excess operating cash flows
Note: These distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).
Distributions are expected to occur after the sale of the property, which is expected to be in April 2024. These distributions are at the discretion of LG Development Group and Harrington Brown, who may decide to delay distributions for any reason, including maintenance or capital reserves.
| Cash Flow Summary | ||||||
| Year 1 | Year 2 | Year 3 | ||||
| Effective Gross Revenue | $0 | $756,689 | $914,675 | |||
| Total Operating Expenses | $0 | $253,904 | $288,237 | |||
| Net Operating Income | $0 | $502,785 | $626,438 | |||
| Project-Level Cash Flows | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | |||
| Net Cash Flow | -$3,415,112 | $0 | $0 | $6,241,967 | ||
| Investor-Level Cash Flows* | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | |||
| Net Cash Flow | -$3,080,000 | $0 | $0 | $5,139,670 | ||
| Investor-Level Cash Flows - Hypothetical $50,000 Investment* | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | |||
| Net Cash Flow | -$50,000 | $0 | $0 | $83,439 | ||
*Returns are net of all fees including RM Admin's 1.0% administrative services fee.
NO ASSURANCE OF RETURN: The Company's pro-forma projections are based on assumptions regarding future events, such as the timing and extent of the recovery of the residential market and the stabilization of the debt markets. While the Manager believes that these assumptions are reasonable and achievable, the likelihood of its occurrence is subject to many factors that are not within the control of the Company or its Manager and that could impair the ability of the Company to meet its projections
.
Certain fees and compensation will be paid over the life of the transaction; please refer to LG Development Group's materials for details. The following fees and compensation will be paid(1)(2)(3):
| One-Time Fees: | ||||
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
| Acquisition Fee | 1.0% of Acquisition Price | LG Development | Development Costs | |
| Loan Guaranty Fee | 1.0% of Loan | Brian Goldberg | Development Costs | |
| Loan Broker Fee | 1.0% of Loan | LG Development | Development Costs | |
| Development Fee | 4.0% of Hard & Soft Costs | LG Development | Development Costs | |
| General Contractor Fee | 3.0% of Total Construction Costs | LG Construction Group, LLC | Development Costs | Affiliate to LG Development |
| Recurring Fees: | ||||
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
| Administrative Services Fee | 1.0% of amount invested | RM Admin(3) | Cash Flow | |
| Asset Management Fee | 2.5% of EGI | LG Development | Cash Flow |
(1) Fees may be deferred to reduce impact to investor distributions. The above table is a summary and there may be additional fees and expenses associated with this offering. Please refer to the Private Placement Memorandum for further details.
(2) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Closing Costs and is intended to be capitalized into the transaction at the discretion of the Manager.
(3) RM Admin will be providing the following services:(a) responding to inbound investor inquiries regarding how to subscribe to the Project, (b) distribution of all annual tax forms (after receipt of same from Project Sponsor), (c) processing distributions that are payable from RM Investors to Investors, however, RM Admin will not be deemed to have custody of client funds, (d) distribution of all quarterly reports (after receipt of same from Project Sponsor) and (e) summarizing sponsor information on property performance, responding to investor inquiries regarding sponsor performance information as well as the real estate market generally.
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The preceding summary of principal terms of the offering is qualified in its entirety by reference to the more complete information about the offering contained in the offering documents, including, without limitation, the Private Placement Memorandum, Operating Agreement, Subscription Agreement and all exhibits and other documents attached thereto or referenced therein (collectively, the "Investment Documents"). This summary is not complete, and each prospective investor should carefully read all of the Investment Documents and any supplements thereto, copies of which are available by clicking the links above or upon request, before deciding whether to make an investment. In the event of an inconsistency between the preceding summary and the Investment Documents, investors should rely on the content of the Investment Documents.
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