Jamestown Shuts The Barn Doors On Southern Dairies Fractional Ownership Fund
Atlanta commercial real estate giant Jamestown closed the door last year on the fund it created to court small-dollar investors to buy fractional ownership into the developer’s Southern Dairies creative office project in the popular Old Fourth Ward neighborhood of Midtown Atlanta.
Jamestown only raised $11.2M of its $50M maximum for the Jamestown Invest 1 fund, having issued a total of 1.1 million shares since the fund's inception in 2019, according to a recent Securities and Exchange Commission filing. Amid the severe pullback in the capital markets, the fund won't make any further investments, Jamestown said in the filing.
CEO Matt Bronfman told Bisnow in a statement Wednesday the $50M capital ceiling was never the fund’s actual goal after it purchased a majority stake in the 80K SF Southern Dairies adaptive reuse project along the Atlanta BeltLine Eastside trail in Midtown in 2020.
“We closed the Fund to new investors because we believe we raised sufficient cash to complete the remaining portion of the business plan for Southern Dairies,” Bronfman said in a statement. “We have decided not to pursue an additional acquisition as the current capital market environment has limited opportunities that meet the required investment criteria.”
Jamestown typically raises equity from high net worth German investors to fund its ambitious adaptive reuse projects like Chelsea Market in New York and Ponce City Market in Midtown Atlanta, just across from Southern Dairies.
But Jamestown Invest 1 allowed nonaccredited investors to purchase fractional shares, which Bronfman said was "an innovation to give individual investors in the U.S. the ability to co-invest with us in our properties."
“As an investment category, direct-to-consumer real estate investment is still in its nascent stage, comprising a small portion of industry fundraising,” Bronfman said. “Since its launch in late 2019, Jamestown Invest has attracted more than 500 individual investors. Despite record-high inflation and stock market volatility, Jamestown Invest has delivered distributions to investors for the past nine quarters.”
The fund, which allows for quarterly redemptions for its investors, approved a payout of $69K for eight investors as of June of last year, according to its semiannual report.
As of the end of the first quarter, Southern Dairies was valued by a third-party appraiser at $50.4M, slightly higher in value than the $50.3M the quarter prior, according to the recent SEC filing.
Southern Dairies was 90% leased as of March 31, down from 96% the previous quarter after a 5K SF video production and creative company moved out after its February lease expiration.
“Despite the decrease in occupancy from 96% in the prior quarter, several leasing tours have been completed at the property with prospective tenants,” Jamestown stated in the filing.
