Although the Bay Area’s hotel market has struggled throughout the pandemic, we at Urban Catalyst remain bullish on its future. We’ve scheduled a groundbreaking ceremony for our 175-key extended-stay Marriott TownePlace Suites, named Keystone; stay tuned for future development updates. We'll soon begin building Downtown San Jose’s first extended-stay hotel, one that’s within walking distance of Google’s planned mixed-use campus.
Obtaining construction financing for any large project is no small feat, especially with the current market for interest rates. We aim to secure construction financing for Gifford Place, our 167-unit senior living project about a block away from Keystone, and for TMBR, our 272-unit apartment project across from Gifford.
The city of San Jose approved in December our proposal to increase TMBR’s unit count to 272 from 184. We’ve already broken ground on Gifford and plan to go vertical on it as soon as we obtain the necessary capital.
We’ve leased almost the entire ground floor of our Paseo office-retail project and expect our tenants to be operational in the fourth quarter. Paseo’s tenant roster consists of craft cocktail bar Eos & Nyx, ax-throwing venue Unofficial Logging and Downtown San Jose’s first indoor mini-golf course, Urban Putt.
They’ll be able to commence tenant improvements on their spaces at the end of this quarter, after we finish “turning over” their future storefronts. We’ve got one retail availability left on Paseo’s ground floor and are close to announcing that tenant.
Our cold-shell improvements to the building’s second and third floors, consisting of 75,000 square feet of new office space, are slated for completion early next quarter.
Our capital markets team is in discussions with multiple student housing operators to take our The Mark project vertical. The city of San Jose is processing our initial building permit application we filed in December for the 23-story Mark, our 240-unit student-focused apartment project a block from San Jose State University.
We’ll be closing on the acquisition of the final parcel that makes up our Icon-Echo site, which spans roughly half a city block bounded by North Fourth, East Saint John and East Santa Clara streets, by the end of March. We plan to start infrastructure work on Icon and Echo in the second quarter.
We continue to hold talks with potential joint venture partners to take our Fountain Alley Building office-retail project vertical and hope to have more updates to share in our next update. We’re raising funds for Icon and Echo through our second Qualified Opportunity Zone Fund.
Contact us today if you’d like to learn more about how to invest in Fund II.
Architectural renderings courtesy of Aedis Architects, ARC TEC, Basile Studio, BDE Architecture, brick., HGA, holzdesign, Stemach Design + Architecture, Studio Current, and WRNS Studio.
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Past performance is no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by Issuer, or one of its partner/issuers. Issuer does not warrant the accuracy or completeness of the information contained herein. Thank you for your cooperation.
Real Estate Risk Disclosure:
- There is no guarantee that any strategy will be successful or achieve investment objectives including, among other things, profits, distributions, tax benefits, exit strategy, etc.;
- Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
- Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
- Potential for foreclosure – All financed real estate investments have the potential for foreclosure;
- Illiquidity – These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.
- Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
- Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits
- Stated tax benefits – Any stated tax benefits are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.
Opportunity Zone Disclosures
- Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings.
- Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments.
- Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations.
- Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available.
- Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund.
- Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments.
- Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities.
- It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable to realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.
The above material cannot be altered, revised, and/or modified without the express written consent of Urban Catalyst.