Developer Raises $68M On CrowdStreet To Fund Huge Boston-Area Project
Two retail properties near Assembly Square were purchased in part using the largest CrowdStreet fund-raise to date, and the buyer is planning a major mixed-use project.
A joint venture between Cabot, Cabot & Forbes and Normandy Opportunity Zone Fund LP, a fund sponsored by Cannon Hill Capital Partners, bought 65-75 Mystic Ave. in Somerville for $142M, according to public records.
The partnership said in a press release that the deal was made possible with $68M in equity from CrowdStreet, the real estate crowdfunding platform that has come under scrutiny in recent weeks and announced Monday night its CEO is departing.
The buyers also obtained a loan from Centennial Commercial Finance Group and Lionheart Strategic Management, according to a press release.
“We are pleased to have outstanding cooperation from our capital partners and lenders to take ownership of this exceptional property in the face of today’s challenging financial markets," Cabot, Cabot & Forbes CEO Jay Doherty said in the release.
The release didn't include details of the buyers' plans for the site, and Cabot, Cabot & Forbes declined to answer additional questions about the project.
According to a video pitch on CrowdStreet's website, the project, called Assembly Square Gateway, is planned to include 750 residential units, over 1M SF of life sciences space and ground-floor retail.
The fundraising was for the pre-development stage of the project, which included buying the site and getting the approvals to proceed. These investors could remain in the deal if it moves forward, CrowdStreet co-Head of Investments Ryan Strub said in the video.
"This project will be a welcomed addition to the neighborhood's growing life sciences cluster, a prominent community that embodies a live-work-play atmosphere and prioritizes convenience for its residents," Strub said.
The 11.5-acre property includes a 125K SF retail building that is leased to Home Depot and a 34K SF vacant building that was once home to a Circuit City. That property was envisioned to be a Walmart before plans fell through in 2012.
The properties are minutes away from Somerville's Assembly Square, which is seeing rapid growth from developments like Federal Realty's Assembly Row and BioMed Realty's 1.5M SF Assembly Innovation Park.
“This continues both Cannon Hill’s and CC&F’s longstanding focus on transit-oriented properties in strong submarkets,” Cannon Hill Chief Investment Officer Eric Rubin said in the release. “We are excited to be a part of the continued growth of Assembly Square.”
Atlantic Retail's David Smookler and Peter Considine represented the seller, Milstein Properties, and Atlantic's Tony Ciccolo represented the buyers.
The $68M raise on CrowdStreet marks the largest fundraising effort in the proptech company's history, a CrowdStreet spokesperson confirmed to Bisnow.
One of the previous largest-ever campaigns on CrowdStreet was the $54M raised by Nightingale Properties for a 915K SF Atlanta office building. However, those funds were misappropriated by Nightingale, an independent fiduciary told investors on July 14.
CrowdStreet has received criticism from investors who stand to lose their money from the Nightingale deal, but its executives have maintained that it was a result of illegal behavior on the part of Nightingale rather than an issue with the platform or crowdfunding in general. Monday evening, CrowdStreet revealed CEO Tore Steen was stepping down.
In Monday's press release about the Massachusetts deal, CrowdStreet Managing Director David Govshtein highlighted the experience of the development team.
“The size of the raise indicates there is strong investor interest in well-located commercial real estate offerings with experienced sponsors such as Cabot, Cabot & Forbes and Cannon Hill Capital Partners,” Govshtein said.
Cabot, Cabot & Forbes has either completed or is in the process of completing 11 transit-oriented developments in Massachusetts. The developer has over $1.6B in real estate investments and 60M SF throughout the country, according to its website. Its pipeline includes a $250M, 300K SF life sciences center in Woburn that it filed plans for in July 2022.
The $250M Normandy Opportunity Zone Fund was launched in 2019 by Normandy Real Estate Partners. Normandy was acquired in 2020 by Columbia Property Trust. In July 2022, the opportunity zone fund was acquired by Cannon Hill Capital Partners, a new investment manager led by former Columbia executives.
