Could I begin life again, knowing what I know, and had money to invest, I would buy every foot of land on the island of Manhattan. – Jacob Astor
CityShares LLC (www.cityshares.com), a unique alternative investment platform providing accredited investors the opportunity to invest in appreciating New York City neighborhoods, has launched its first Neighborhood Investment Fund (NIF) covering Bedford-Stuyvesant, Brooklyn.
The Bedford-Stuyvesant fund is the first in a series of neighborhood investment funds that will invest in a portfolio of residential and mixed-use properties providing investors with steady income, asset diversification and professional management.
CityShares Bedford-Stuyvesant, will invest in this historic Brooklyn neighborhood which has and continues to experience robust housing demand due to its distinctive housing stock, access to mass transit and proximity to growing employment centers in and beyond the iconic borough.
CityShares founder Seth Weissman, commenting on the launch of the Bedford-Stuyvesant fund, said “CityShares is creating a new alternative investment asset class that is being marketing directly to accredited investors globally and in the U.S. Similar to an index fund that tracks a specific segment of the stock market, CityShares invests in a diversified portfolio of properties within a specific neighborhood allowing investors to express their optimism in the growth of a neighborhood and capture income and potential appreciation while holding a diversified basket of properties under professional and active management.”
CityShares plans to roll out a series of neighborhood funds for other New York City neighborhoods including Harlem, Crown Heights, Bushwick and possibly Greenpoint. The funds will effectively allow accredited investors to own a slice of the Big Apple for $100,000; significantly less than the current average sales price of a Manhattan apartment which has topped $1.75 million.
The CityShares Bed-Stuy fund requires a minimum investment of $100,000 for accredited investors only. There are no geographic restrictions and any accredited, U.S. or global investor is eligible to participate in these neighborhood investment funds.
“The fund investors are able to purchase assets in a diverse portfolio of properties within these communities without having to incur the associated expense, concentration risk and management headaches of being a full-scale property manager and landlord. To my knowledge, no other fund or investment vehicle for investing in N.Y.C. residential real estate offers these advantages,” said Mr. Weissman.
“Unlike an investment in a REIT or other type of sector fund, CityShares investors will have complete transparency on all their properties in the fund including rent rolls, payment histories, and other relevant information.
A CityShares investor will know exactly what buildings he or she is investing in and will be encouraged to visit the properties and ‘kick the tires.’ We also offer investors the freedom to choose only the neighborhoods or properties they want to invest in.”
Historically, New York City has been a secure investment destination for domestic and foreign capital, and now with the robust demand for housing and retail space that has spread rapidly to the city’s outer boroughs, the long-term investment opportunity in the multi-family and mixed-use real estate market is extremely compelling. CityShare’s investment strategy is to acquire mixed-use and/or multi-family rental buildings with strong cash-flow and capital appreciation potential, which it plans to hold on to for seven to 10 or more years to maximize each neighborhood’s full appreciation value.
According to Mr. Weissman, “CityShares allows investors to participate in NYC real estate at a fraction of the cost of purchasing an apartment, brownstone, or commercial property.
“For our initial Bed-Stuy fund,” Mr. Weissman explained, “CityShares is targeting annual returns in the 12 percent plus range with 60 to 80 percent of that return coming from current rental income and the balance from appreciation driven by an active management strategy and market appreciation. Longer term, we are looking at a long term gross annual return of 10-12 percent with approximately 70 percent of the return from current income (rental income) and the balance from appreciation driven by net operating income growth. This is the kind of investment you would want in your investment portfolio or IRA.”
CityShares was founded in 2013 by Seth Weissman, age 30, a seasoned but young real estate investor who has already begun to make his mark on the New York City real estate landscape. He is also a managing partner at Weissman Equities, a Manhattan-based real estate fund that targets compelling value-added real estate investments. With his brother, Mr. Weissman created New York’s first furnished micro-apartments out of a former rooming house and reimagined an iconic resort town, The Pines on Fire Island, for the 21st century.
Mr. Weissman was named as one of its “30 under 30″ rising stars of commercial real estate by Real Estate New York in 2008. Prior to co-founding Weissman Equities with his brother in 2008, he worked in the real estate private equity group of Perry Capital, a $15 billion multi-strategy hedge fund, and for Goldman Sachs in its investment banking division.
Update: CityShares does not currently offer a neighborhood fund for Harlem, but is planning to eventually have one (adding that they don’t know the timing as of yet). Last, they will be sure to reach out to HW once the Harlem fund is live.