Real estate crowdfunding platform, Fundrise, announced this week that it has opened a new crowdfunding campaign dedicated to raise a minimum of $2 million in tax free bonds for New York City’s 3 World Trade Center.
The investment summary reads,”This investment is dependent upon the performance of Class 1 Bonds for 3 World Trade Center, a 2.5 million square foot class A ground-up office development by Silverstein Properties in downtown New York City. Investors in the offering will be investing in a Company which holds the Class 1 Bonds.
“The Class 1 Bonds represent the most senior portion of capital in the project or $1.08 Billion of the $2.49 billion total project cost, approximately 43% LTC. the he bond financing for 3 World Trade Center closed in November 2014. The Company intends to be treated as a partnership for tax purposes with the anticipation that distributions to investors in the Company will be tax-free. (It is recommended that any prospective investor consult with his or her own tax attorney in regard to the tax treatment and their particular tax circumstances). The Company plans to make distributions to investors on a semi-annual basis.
“The Class 1 Bonds held by the Company have a maturity date of November 15, 2044. However, the Company intends to sell the bonds within 5 years, after initial completion of construction. At this point, the Company will dissolve and any proceeds plus principal will be distributed to investors.”
Co-founder of Fundrise, Dan Miller announced in a statement, “We think the 3 World Trade Center investment offering is proof of the power of crowdfunding at work. We are proud to be able to give more people a chance to invest in this important iconic asset.”
Investors of the project are to receive a 5 percent tax-free annual return over five years. Business Week reported that they would be buying into an entity that holds an interest in a portion of bonding backing the construction that were sold late last year by New York Liberty Development Corp.
The media outlet also revealed that this past October, Silverstein sold $1.6 billion of tax-exempt bonds to finance construction of 3 World Trade Center. The sale came after Port Authority of New York and New Jersey rejected Burger’s bid to have the agency guarantee bond payments. The authority allowed Silverstein to use $159 million of proceeds from a $4.6 billion insurance award that it received after September 11, 2001 attacks.
Investors that participate in the project must be accredited to participated, meaning they are required to meet certain Securities and Exchange Commission (SEC) criteria for income or net worth.
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