The Franklin
Regulation Crowdfunding

Goal: $725,000 to $1,235,000


Membership Units

8% Preferred Return


60/40 Profit Split

+

75/25 Split Upon Sale


$940,643


Funded
Start date: November 18, 2022
End date: February 14, 2023
Why fund our local story

Highlights


  • Historic Building with the National Register


  • Planned tax credits as a portion of the investor returns


  • 8% preferred return and 60/40 profit split

Overview

Project Summary 

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The Franklin 107 East Park, LLC is pleased to offer The Franklin, a historic rehabilitation office project for investment.


Built in 1917, the site is currently an existing home converted into private offices. Plans for the building include a full historic rehabilitation, renovation, and the addition of a redesigned parking lot. 


Preserving and highlighting the building's original character and grit, FRED is creating a one-of-a-kind environment for the next generation to enjoy this historic site.



Inspired by Tradition

Listed on the National Register of Historic Places, the project will undergo a full-scale restoration, renovation, and addition per the National Park Service's standards. FRED is expecting to secure Federal and State historic tax credits for the project. An addition will be constructed to accommodate a break room, additional offices, and ADA-accessible restrooms on the first floor. The building's original windows will be carefully restored and reinstalled during the renovation. 




Energized by Access

The project sits atop Greenville's growing downtown, within walking distance to restaurants and lodging as well as attractions like the Children's Museum and Greenville Museum of Art. The building overlooks the beautiful McPherson Park which was recently renovated, including a walking path, miniature golf greens, and tennis courts. 




Enlivened by Vibrancy

Offices will be rented individually, with all expenses and amenities included in the rent. Tenants will have access to updated bathrooms and a generously sized break room. Each office will be private, spacious, and comfortable, finished with historic features and stately glass doors. 


Elevated by Engineering

The offices will be acoustically insulated, a feature almost unheard of in the Greenville area. This creates a welcome haven for businesses such as therapists and attorneys where privacy is critical. While co-working spaces abound, sound-conscious offices like The Franklin have become a rarity.


Plans and Perks 

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Construction plans

FRED’s plan is to close on the project in Q4 2022. We will continue leasing to existing tenants for a few months until historic tax credits are secured and tenants are relocated. Once credits and relocations are complete, then we will proceed with the rehabilitation of the property. The goal is to complete construction within 7 months of "breaking ground" and plans to have the building fully leased upon project completion. 


Target Tenants 

Marketing is focused on professionals with established businesses that need private, high-end office space and require a downtown location.




Gross Rents will start at $1,200 monthly and up to $2,000 monthly for larger offices. As part of the financing of this project, FRED will be occupying at least 50% of the building. This provides investment partners with a built-in tenant for half of the building rent income.


In addition to 50% pre-leased to FRED, we are already in discussion with multiple tenants for the offices and are confident in pre-leasing the remaining space well before the project's completion. 


Tax Credits

The Franklin plans to apply a mix of state and federal historic tax credits for local investors. Investors may be able to use these tax credits dollar-for-dollar against their income tax liability.

 

All historic tax credits received will be treated as a return of capital, increasing the target return for the project. For further clarity, investors may reference the pro forma below which incorporates the tax credits as being used.


*None of these descriptions should be construed as investment, tax, or accounting advice. Please consult your CPA for advice and details on your specific tax liability in relation to this investment*


Floorplans & Elevations 

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Floorplans

The upstairs and downstairs floorplans allow for a variety of office sizes and layouts. 



Elevations



Site Plan



Investment Summary

Terms

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  • Equity offering (Membership Units)
  • Amount: up to $1,235,000
  • 8% Preferred Return, compounded annually
  • 60%/40% Split between Investor/Sponsor on profits
  • 75%/25% Split between Investor/Sponsor at Capital Events
  • Loan Assumptions: 

    ➤ 60% Loan-to-Cost

    ➤ 5.5-7% Interest Rate 

    ➤ 3-5 year terms at 20-year amortization

Our People
Kurt Wallenborn, MRED,
Developer
Kurt Wallenborn, MRED (Clemson University) has over a decade of experience in commercial real estate development. He's successfully managed ..
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Financial Highlights

Analysis



Pro Forma




Docs
Risks

Real Estate Operations Generally.

Investments in real estate generally are subject to various risks including: adverse changes in economic conditions; adverse local market conditions (such as an oversupply of space or a reduction in demand for space); zoning laws and other governmental rules; environmental claims; lack of marketability; and other factors beyond the control of the Manager. 


Property-Related Regulatory Risks.
An investment in a Property is subject to various federal, state, and local laws and regulations, including building codes, regulations pertaining to fire safety, and handicapped access and other regulations which may be enacted from time to time. The Company’s performance may be adversely affected by significant costs required to comply with any future changes in such regulations.


Competition from Other Properties.
The Property will compete with comparable commercial office properties. Competition in the identified target markets areas is significant and likely to increase during the anticipated investment term, and may affect the Property’s vacancy levels, rental rates and operating expenses. Moreover, if development of properties similar to the Property by other operators were to increase, competition with the Property could intensify. Competition in the local market could decrease the Company’s ability to rent office space or increase rents, cause an increase in operating expenses, make refinancing the bank loan more difficult or impossible, make a sale of the Property more difficult or less profitable, or otherwise make it difficult or impossible to operate the Property profitably.

 
Risks of Distributions in Availability of Commercial Office Space at the Property.
The Company’s business will be dependent on the availability of commercial office space at the Property. Any disruptions in the availability of office space at the Property, including, without limitation, as a result of adverse weather conditions, floods, earthquakes, other natural disasters, strikes, wars, terrorism, human error or malfeasance or other reasons, could have a material adverse effect on Property business, results of operations or financial condition. 

Leverage.
The Property will be leveraged and subject to substantial mortgage indebtedness. As a result of such leveraged position, an increase in the value of the investments could result in substantial benefits to the Company, upon resale of the investments. Conversely, a decrease in the value of the Property could result in the Company being unable to sell the Property for a price sufficient to return to the Members their investment in the Company.


Access to Necessary Debt Funding.
Debt financing will be needed in addition to equity in this project. There is risk to not being able to obtain the necessary bank capital or receiving terms that are not favorable for the project. Risks include but are not limited to the interest rate, loan-to-cost requirements, guarantee requirements of Kurt Wallenborn and potentially other guarantors, the amortization schedule, and the term.


**This is not an exhaustive list of risks. Please read the Form C for additional important risks and disclosures.**

Disclosures

THE FRANKLIN 107 EAST PARK, LLC Form C filing can be found here.


Vicinity will be compensated upon a successful raise at 4% of the total amount raised, plus securities in the same form offered to the public equal to 2% of the total number of securities sold in the offering.


There is no cost for investors to invest, though Vicinity will receive a 1% transaction fee on all payments from the Company to investors that will be withheld from the payments to investors.

Forum
William McGuire
12-30-2022 8:32 AM
Investor
Neat use of tax credits. Some questions and comments: 1. The Waterfall and Distributions download links seem to link to the same document as of today 12/30/2022. Was that intentional? 2. For those investing with an IRA, do you know if those can still sell tax credits to take advantage of them? 3. From what I read in the model, it assumes investors are able to 100% take advantage of the HTCs assigned to them, $1 for $1, correct? In other words, if an investor might have to sell their HTCs for less than every $1 assigned to them, their overall return would be reduced correct? 4. If the raise + construction takes longer than through 2023, the HTCs wouldn't be recognized until 2024, correct? 5. Kurt, you already own the building correct? Thanks.
 
 
Kurt Wallenborn
01-03-2023 10:43 AM
Issuer
William, answering your questions by each number: 1) I believe these are the same - I'll check with Vicinity to ensure nothing is missing here. 2, 3) In this project, we are not selling the tax credits - all the investors will be using them and will account $1 for $1 towards their equity. If tax credits were sold, they would typically be less than $1, but the model accounts for every investor using them 100%. I recommend consulting a trusted tax advisor to discuss this. 4) Yes if the raise + construction took longer and the building opened in 2024, the tax credits would be for 2024. They are applicable for the year it is placed in service (when the building receives a certificate of occupancy), currently expected in Fall 2023. 5) I don't own the building yet; I am currently under contract. Thanks!
 
Lucas Selvidge
12-30-2022 11:02 AM
Investor
I know that the federal tax credit portion (Rehabilitation Credit) can be claimed dollar for dollar against an individual's federal tax liability so long as their adjusted gross income is less than $200K. For individuals with adjusted gross income of $250K and above, the credit is subject to the passive activity rules and can only offset one's federal tax liability resulting from passive activity income (similar to the passive activity loss rules). All suspended credits can be carried forward to future years and can be utilized when either the taxpayer's AGI is less than $250K or has sufficient net positive passive activity income. As far as the state tax credits go, I would imagine that for us non South Carolina residents, we would have to sell each credit for less than $1, unless we end up having to file a non-resident SC tax return. Per the IRS website's FAQ, the federal Rehabilitation tax credit is prohibited from sale to a third party.
Karen Wolin
12-16-2022 9:29 AM
Investor
Where are you at in your raise as of today? Thanks.
 
 
Josh Rollins
12-16-2022 1:47 PM
Issuer
Hi Karen, Thanks for the question. We’re just starting to have the early investments come in now and we are working with Kurt (Issuer) to begin publishing progress within the next few weeks. We will keep you posted!
Lucas Selvidge
11-25-2022 11:27 AM
Investor
Excellent, thanks!
 
Lucas Selvidge
11-18-2022 2:37 PM
Investor
So investors will receive allocations of federal rehabilitation tax credits as part of their return; assuming that this is the qualified rehabilitation expenditures credit, box 15 code E of Schedule K-1?
 
 
Kurt Wallenborn
11-21-2022 10:41 AM
Issuer
The link below references the IRS FAQs regarding the Rehabilitation Credit and should answer your question. I recommend consulting a tax advisor who can answer your question specifically. https://www.irs.gov/businesses/small-businesses-self-employed/rehabilitation-credit-historic-preservation-faqs