Eastern Star Church (ESC) Care, established in 2001 as JEWEL Human Services, provides a variety of services to address the needs of the less fortunate, including a food and clothing pantry, emergency assistance, local/global missions, counseling services, and scholarships. ESC Care also partners with area service organizations to connect both members of the church and the greater Indianapolis community with programs that focus on more specific needs. ESC is compelled by the church’s mission and faith to reach out and work to improve the quality of life in this community. Church-initiated projects involving diverse community partners will focus on:

  • Building a sense of community among neighbors.
  • Enhancing the range of housing options.
  • Growing overall financial security of residents.
  • Enhancing both formal and informal educational

    opportunities.

The current note offering is focused on raising capital for Sunstone, LLC a wholly owned subsidiary of Eastern Star JEWEL Human Services. Funds will be used to develop the Sunstone at Arlington Woods mixed-used building located at 5620 E. 30th Street.

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Anthony L Murdock, Sr., Executive Pastor

Financial Summary

Previous Fundraise Summary

Security Type Loan
Minimum Investment $20,000
Interest Rate Varies
Term 5 years
Payments Interest-only
Payment Frequency Monthly
Balloon Payment At Maturity
Disbursement Late Fees 5.00%
Loan Collateral Unsecured
Seniority Junior
Investor Eligibility All Investors

Offering Materials

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Financials

This is an overview of the previous and planned financings of the business, including the capital needs the business is looking to cover in the current financing.

Funding Uses for Target Raise ($1.7 mil)

Location/Buildout
$277,800
Description Pre-development expenses | Environmental Assessment: $3,000 Land Acquisition: $144,000 ALTA/Topo Survey: $3,800 Legal Fees/Rezoning: $20,000 CM Preconstruction Fees: $18,000 Architect Schematic Fees: $20,000 Geotechnical Services: $2,000 Relocate Utilities: $15,000 Demolish Existing Structures: $15,000 Permits: $25,000 Site Feasibility Design: $12,000
Timing A one-time payment 1 month after investments close.
Other
$264,200
Description Master project contingency costs
Timing 6 monthly payments beginning 6 months after investments close.
Other
$12,000
Description Financing costs | Legal counsel: $5,000 Appraisal Fees: $3,750 Title Insurance: $3,200 Mortgage Filing Fees: $250
Timing A one-time payment 6 months after investments close.

Remaining funding uses include cash buffer and Localstake Marketplace fees. See offering materials for full details.

Q&A

What are the demographics in the surrounding area?

Eastern Star Church’s Main Campus (East 30th Street) neighborhood is blessed with strong assets such as schools, public safety facilities, a library, parks, and available public transportation, but it also has many significant challenges. Data about the area within a one-mile radius of the church paints a bleak picture of the long-term effects of poverty and broken families. High poverty rates and unemployment, low household income and home values, and virtually no access to financial services and healthy food options are all disturbing indicators of a neighborhood in economic decline. 

Eastern Star Church’s Main Campus is on the eastern edge of the 46218 zip code, an area of the city with an overwhelmingly African-American population (73%). According to the U.S. Census Bureau’s 2010-2014 American Community Survey Five Year Estimates:

  • 38.2% of the residents in 46218 (compared to 21% of Marion County residents) are living at or below the poverty line.*
  • Household income for residents is $25,292 (versus $42,378 for Marion County residents).*
  • • Unemployment is 4.6%, compared to 4% for Marion County residents.*
  • The area has a significant lack of healthy food and grocery options as well as minimal choices for non-predatory financial services.

Rather than trying to tackle the overwhelming needs of the entire 46218 area, ESC believes it can make the biggest impact closer to home, and will focus its initial efforts on the one-mile radius around its campus. This radius does extend slightly outside the eastern border of the 46218 area, though the data for the six census tracts that make up the focus area present an even starker picture of a neighborhood in decline:

  • Between 11% and 28% (depending on the census tract) of the nearly 6,000 housing units in this area are vacant.
  • Following the 2008 financial crisis, home real estate prices generally have begun to recover – but not for homeowners in this area. Homes in all six of these census tracks declined in value between 2010 and 2014.
  • Most disturbing, the cost burden for housing (the percent of a residents’ income that is spent on housing) is alarmingly high. Conventional public policy indicators suggest that no more than 30% of a household’s income should be spent on housing; the cost burden in this area varies from 42% to 61%.
What are the main goals of the project?

ESC is compelled by the church’s mission and faith to reach out and work to improve the quality of life in this community. Church-initiated projects involving diverse community partners will focus on: 

Goal 1: Build a sense of community among the people who live and work in this neighborhood. 

Strategic focus areas: 

• Neighborhood Association creation 

• Branding/identity 

• Safety 

• Public sector infrastructure investments 

• Support services 

• Advocacy 

• Food availability 

Goal 2: Enhance the range of housing options available within a one-mile radius of Eastern Star Church. 

Strategic focus areas: 

• Building 25-30 new homes 

• Building a mixed-use facility with rental units, community services, and businesses 

• Rehab of owner-occupied homes 

• Legal partnerships to assist in landlord tenant disputes 

Goal 3: Grow the overall financial security of residents living in this neighborhood. 

Strategic focus areas: 

• Non-predatory financial services 

• Financial education programs 

• Neighborhood business support for hiring local residents 

• Expand job access for people who have been away from the workforce for extended periods of time 

• Assistance with expungements 

• Public and private transportation services 

Goal 4: Enhance both formal and informal educational opportunities available for neighborhood residents. 

Strategic focus areas: 

• Regular educational programs focused on building self-sufficiency skills 

• Leverage church and community resources to help improve K-12 educational institutions 

• After-school programming in school facilities or at the church 

• Job-training certifications 

• Early childhood education in partnership with Day Early Learning and Arlington Woods School 99 

• GED and college-readiness programming 

What is the goal and target market of the Sunstone at Arlington Woods mixed-use facility?

Sunstone at Arlington Woods is being developed as part of ESC JEWEL Human Services mission of providing social services to those in need through The ROCK Initiative. The building is being developed at 5620 E. 30th Street, Indianapolis, IN 46218. The facility will consist of commercial support services on the first floor (i.e., financial, health, food providers, etc.). The first-floor tenants will provide affordable and accessible support services to the residents in the community. The upper two (2) floors will consist of at least 24 apartment units (1-2 BR). Seventy-Five percent of the apartment units will be leased to persons at 80% AMI (Area Median Income) or below; and, at most 25% will be leased to persons at 120% AMI and below per HUD affordable housing guidelines. 

What are the long-term outcomes the project plans to achieve?

The ROCK Initiative represents a long-term plan for comprehensive community development. ESC’s five-year expectations are simple but powerful: 

• Individual/family buyers will move into 25-30 new homes in this neighborhood. This project is already under way, with up to five new homes being built in partnership with Habitat for Humanity scheduled to be completed in 2017. Ultimately, Eastern Star Church and its partners plan 25-30 total units for development over the next five years. 

• A functioning and self-sustaining neighborhood association will be established. A strong neighborhood association of concerned advocates who can effect change will be critical to the overall success of this plan. ESC is committed to recruiting neighborhood leaders, working with them to build skills and trust, and ensuring they are connected with community development resources to ensure that an effective and self-sustaining neighborhood group develops. 

• Eastern Star Church will be one of many financial investors in the neighborhood. ESC has already committed to developing new housing units and to providing staff support to spearhead the initiatives in this plan. However, completion of the entire plan will require ESC to involve many partners. By developing partnerships with the city, corporations, individual investors, and nonprofit organizations, ESC is committed to bringing additional financial investments into this neighborhood to strengthen the community for both residents and employers. 

ESC recognizes that it probably will take a decade or longer for the true impact of this work to be noticeable: The decades-long decline in economic indicators for this neighborhood will be reversed to show positive improvement. Examples include: 

• The percentage of neighborhood residents living in poverty will decline. 

• The median home value of homes in the area will increase. 

• The median income of residents will increase. 

• The percentage of households spending more than 30% on housing costs will decline. 

• The number of family households headed by a husband and wife will exceed the number of family households headed by women with no husbands present. 

• There will be options for non-predatory financial services and healthy grocery choices within walking distance for residents. 

Team

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Anthony L Murdock, Sr.

Executive Pastor, Eastern Star Church

EDUCATION/CERTIFICATIONS: Ordained Minister, Bachelors of Science Civil

Engineering, Business and Seminary post graduate studies, Licensed Real Estate Broker

EXPERIENCE: 25 years managing development projects with portfolio exceeding $300M.

Management over budgets to date exceeding $100M

PROJECT IMPACT: Project Executive responsible for managing all facets of development

(Acquisition, Pre-Construction, Construction, Post Construction, Leasing)

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Jeffrey A Johnson Sr.

Senior Pastor and CEO, Eastern Star Church

EDUCATION/CERTIFICATIONS: Ordained Minister, Author, Bachelors of Arts Religion, Various honorary Doctorate Degrees and Seminary post graduate studies

EXPERIENCE: 32 years Senior Pastor, CEO of multiple nonprofits with aggregated budgets exceeding $250 Million; Shepherding over 17,000 parishioners; World renowned expository preacher, motivator and leader

PROJECT IMPACT: Executive leadership in all aspects of project

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William Shrewsberry

Board Member

AFFILIATION: Elder (Chairperson), Eastern Star Church; President/CEO/Founder Shrewsberry & Associates, LLC

EDUCATION/CERTIFICATIONS: Bachelors of Science Business Management, Masters of Science Business Management

EXPERIENCE: Strong community developer, former deputy mayor. Has over 40 years management in public and private sectors

PROJECT IMPACT: Executive leadership support, community relations, business and financial analysis and decision making

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Randall Lewis

Board Member

AFFILIATION: Elder (Finance Chair) Eastern Star Church; Executive Director Krannert Professional Development Center (Purdue University)

EDUCATION/CERTIFICATIONS: Bachelor of Science Management/Accounting, Master of Business Administration, Certified Public Accountant (Inactive)

EXPERIENCE: 30 years business experience including executive financial management in Fortune 50 corporations, small business ownership and business advisory

PROJECT IMPACT: Executive leadership support, business and financial analysis and decision making

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Lukau Matuka

Board Member

AFFILIATION: Elder (Communications Chair), Eastern Star Church; Genesys Marketing Regional Team Lead with top customer engagement platform business

EDUCATION/CERTIFICATIONS: Bachelor of Science Business Marketing, Master of Business Administration

EXPERIENCE: 10 years of experience in sales, marketing, customer account management and leading teams in organizational development in the software and retail industry. Responsible for bringing over $80 million in projected pipeline sales revenue for Genesys, formerly Interactive Intelligence.

PROJECT IMPACT: Executive leadership support, strategic planning, communications, marketing and decision making

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James S. Poore II

Board Member

AFFILIATION: Elder (Vice Moderator), Eastern Star Church; McDonald’s Owner/Operator

EDUCATION/CERTIFICATIONS: Bachelor of Science Agricultural Economics, Master of Business Administration

EXPERIENCE: 17 years sales and marketing experience including Director/VP level with Fortune 500 company.

PROJECT IMPACT: Executive leadership support, marketing, business and financial analysis and decision making

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David Pack, Trinity Financial Consulting

Service Provider

EDUCATION/CERTIFICATIONS: Bachelors of Science in Accounting, Indiana State University; Commissioned Officer US Army

EXPERIENCE: 28 years practicing commercial banking, financial consulting and banking executive. Represents various company owners, religious and not for profit organizations in real estate projects, business acquisitions & expansion. Have helped over 300 clients and $5B in financial loan packages.

PROJECT IMPACT: Financial analysis and consulting for interim and permanent financing

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Howard Stevenson, Stevenson Legal Group

Service Provider

AFFILIATION: Managing Partner, Stevenson Legal Group, LLC

EDUCATION/CERTIFICATIONS: Doctor of Jurisprudence, Indiana University Robert McKinney School of Law; Bachelors of Arts, Indiana University; Adjunct Law Professor (Land Use Law), Registered Civil Mediator

EXPERIENCE: 24 years practicing law including real estate law, represent various private, religious and governmental clients in real estate projects including $900 Million Lucas Oil Stadium and Expansion of Convention Center Project.

PROJECT IMPACT: Responsible for all legal aspects of project

About Sunstone, LLC (An Eastern Star Church ROCK Initiative)

Entity Sunstone, LLC
Entity Type LLC
State Organized Indiana
Founded November 2017
Employees 1
Website

Headquarters

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Risks & Disclosures

Closing procedures for the Offering

The Notes are offered by the Company on a best efforts, minimum-maximum basis as described in this Offering Circular. The Offering will be open to Investors until the earlier of (i) the date the Company has closed on the sale of Notes for the Maximum Offering Amount, (ii) 12 months from commencement of the Offering (the "Expiration Date"), or (iii) the Company terminates the Offering in its sole and absolute discretion.

The Offering is contingent upon the Company having received subscriptions for the Minimum Offering Amount of Notes no later than the Expiration Date. Subscriptions for Notes by officers or managers of the Company (or their affiliates or related persons) will be counted in determining whether the Minimum Offering Amount has been attained.

All funds received from Investors will be held in an Escrow Account established by the Company with Fifth Third Bank (the "Escrow Agent") until the Minimum Offering Amount has been satisfied. Once the Minimum Offering Amount has been received by the Escrow Agent, an initial closing will be held at which the Escrow Agent will transfer the escrowed funds to the Company, net of the placement agent’s fee, for the uses outlined in the Offering Materials, and Notes will be issued to the subscribing Investors.

Investor funds received after the initial closing will be held in the Escrow Account until such time as the Manager, in its sole discretion, chooses to release those Investor funds at an interim closing. At each interim closing, the Escrow Agent will transfer the escrowed funds to the Company, net of the placement agent’s fee, for the uses outlined in the Offering Materials and Notes will be issued to the subscribing Investors.

If the Minimum Offering Amount has not been received by the Company by the Expiration Date, all funds deposited in the Escrow Account will be promptly returned to the subscribing Investors. Investor funds will not earn interest while held in escrow, and no interest will be returned with Investor funds if the Offering is not completed.

Securities to be offered to investors

Sunstone, LLC, an Indiana limited liability company (the "Company"), is offering its unsecured promissory notes (which we refer to as the "Notes"). The Company was formed by Eastern Star Jewel Human Services Corporation, an Indiana non-profit domestic corporation (the "Manager"). The Company owns real estate located at 5620 E. 30th Street, Indianapolis, Indiana 46218 (the "Property") and has contracted with Rock Property Management, LLC (the "Developer") to develop and manage Sunstone at Arlington Woods, a mixed-use housing and commercial facility to be constructed on the Property (the "Project"). The Company, the Manager and the Developer are all affiliates of Eastern Star Church, which is undertaking the Project in furtherance of its Rock Initiative to improve the quality of life in the 46218 community.

The Company hereby offers the Notes for sale (the "Offering") to investors who meet certain qualifications ("Investor"), seeking to raise a minimum of $1,000,000 (the "Minimum Offering Amount") up to a maximum of $2,600,000 (the "Maximum Offering Amount"). The net proceeds raised in the Offering will be used to fund the Project, as shown on the Sunstone Cash Sources and Uses Report. That Report and other information about this Offering and the Project (the “Offering Materials”) are being provided to you on the Localstake Marketplace Platform at www.localstake.com.

Securities laws being utilized and investor qualifications

This Offering is made in reliance upon exemptions from registration under Regulation D under the federal Securities Act of 1933, as amended (the "Securities Act"), and exemptions from registration under applicable state securities laws. The Notes will be offered and sold only to Qualified Investors who must meet one of the following criteria and certain other qualifications:

(i) "accredited investors" as defined in Rule 501(a) of Regulation D;

(ii) persons who have, either alone or with a purchaser representative, such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risks of the prospective investment, or

(iii) persons whose investment in the Notes would not exceed any percentage or dollar limit imposed by the exemption from being relied upon in their state of residence.

Subscribing for an investment and transferring funds

The minimum subscription amount the Company will accept from a prospective Investor is $20,000. The Company reserves the right to reject any subscription for Notes for any reason or for no reason.

To subscribe for a Note, you must first execute and deliver to the Company a Subscription Agreement and Qualified Investor Questionnaire, which includes the form of Note and the selection of a form of payment as specified on the Localstake Marketplace Platform. . If your subscription is accepted, you will be required to formally execute your personal Note, which will set forth the specific terms, conditions and restrictions applicable to you. You should not complete the purchase of a Note unless you have completely and thoroughly reviewed the provisions of the Subscription Agreement and the Note. If any of the terms, conditions, or other provisions of the Subscription Agreement or the Note are inconsistent with or contrary to the information provided in the Offering Materials, the Subscription Agreement or the Note will control.

Fees for placement agent services

Localstake Marketplace LLC ("Localstake") is serving as placement agent for the Offering. As compensation for its services, Localstake will receive a placement fee equal to two percent (2.0%) of funds raised in the Offering, not to exceed $30,000. A minimum placement fee of $5,000 will be charged if the Offering is canceled by the Company.

Forward-looking statements

This Offering Circular and the other Offering Materials made available to prospective investors contain forward-looking statements. Forward-looking statements are not statements of historical fact, but rather statements regarding operational and financial plans, terms and strategies of the Company and other projections or predictions of the future that are based on various assumptions that may not prove to be accurate. Statements in the Offering Materials that include words or phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” and similar expressions or the negatives thereof or any other variations thereon or comparable terminology are forward-looking statements. Due to various risks and uncertainties, including those set forth in the following “Risk Factors” section, actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements.

General real estate industry risks

The Company will be subject to all the risks inherent in developing and investing in real estate assets. A major risk of owning real estate is the possibility that the Project will not generate sufficient rental income or other income to meet expenses, including debt service or other required payments, or will decrease in value. Additional risks may include, without limitation, general and local economic and social conditions, the supply and demand for comparable properties, energy shortages and costs, declines in neighborhood property values, changes in tax, zoning, building, environmental and other applicable laws, real property tax rates, changes in interest rates and the availability of mortgage funds which may render the sale of properties difficult or unattractive. Such risks also include fluctuations in operating expenses, which could adversely affect the ability of the Company to meet debt service obligations under the Notes. These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development activities once undertaken, any of which could have an adverse effect on the Company.

Environmental liabilities

Federal, state and local laws may impose liability on a property owner for releases, or the otherwise improper presence on the premises, of hazardous substances without regard to fault or knowledge of the presence of such substances. A property owner may be held liable for environmental releases of such substances that occurred before it acquired title and that are not discovered until after it sells the Property. Although the Company has had an environmental assessment of the Property performed, if any hazardous substances are found at any time on or around the Property, the Company may be held liable for all cleanup costs, fines, penalties and other costs regardless of whether it owned that Property when the releases occurred or the hazardous substances were discovered. If losses arise from hazardous substance contamination that cannot be recovered from a responsible party, the financial viability of the Project may be substantially affected. In an extreme case, the Project may be rendered worthless, or the Company may be obligated to pay cleanup and other costs in excess of the value of the Project.

Need for long term debt

The Company has secured a letter of intent from the Indianapolis Neighborhood Housing Partnership (the "Senior Lender") for $500,000 (a "Senior Loan"). The Senior Loan imposes certain conditions on the Project, including compliance with maximum rent requirements the Company is able to charge its tenants. Limitations on rental revenue may adversely affect the Company’s ability to pay debt service and the financial viability of the Project.

Any Senior Loan documents will likely contain various representations, covenants (affirmative and negative) and other provisions. Such restrictions, while relatively common in today's real estate financing market, increase the risks of an investment in the Company. If the Company fails to satisfy the covenants, the Senior Lender may declare the Senior Loan in default and could also foreclose on the Property, in which case, Investors could lose their entire investment in the Company.

Need for additional financing

The Company is looking to raise $754,000 in additional equity financing for the Project outside of this Offering. The Company may also take on long term debt to cover the difference between the total estimated Project costs of $3,354,000 and the total financing raised through this Offering and other sources. If the Company’s gross proceeds from this Offering and other financing sources do not cover estimated Project costs, completion of the Project may be delayed indefinitely, jeopardizing the Company’s ability to make interest payments and repay principal on the Notes.

Dependence on a single income producing asset

The Project is expected to be, for the foreseeable future, the Company’s only asset. As a result, the Company will not have diversified sources of revenue. The prospects of the Company depend upon the Project maintaining its occupancy, rental, and resale value or increasing in such value. The typical risks relating to an investment in real estate will apply to the Project and its ability to meet debt service obligations. These include, but are not limited to:

• Changes in the general economic climate and market conditions of the United States and Indianapolis, Indiana;

• Changes in the occupancy or rental rates of the Project;

• A failure to lease the Project in accordance with the projected leasing schedule;

• Limited availability of mortgage funds or fluctuations in interest rates which may render the sale and refinancing of the Project difficult;

• Unanticipated increases in real estate taxes and other operating expenses;

• Competition from other similar housing and commercial properties;

• Environmental considerations;

• Zoning laws and other governmental rules and policies; and

• Uninsured losses including possible acts of terrorism or natural disasters.

Due to the lack of diversification, any one or more of the preceding factors could materially adversely affect the value of the Project. If the value of the Project were to decrease and the Company were to choose to sell the Project, liquidate and distribute its remaining assets after paying other creditors senior to the Investors in the Notes, Investors might not recover the amount of their investment, if Investors were to receive any funds at all.

Dependence on rental income

The Company's income and operating results may vary significantly from projected amounts and fluctuate substantially from month to month due to several factors, many of which are likely to be outside of the Company's control. These factors, each of which could adversely affect results of operations, include:

• Unexpected expenditures for development, construction and other expenses;

• Lease price reductions by the Company, regulations or its competitors or changes in how rent is priced;

• Actual leasing income could be lower than projected rental income due to lower than expected rental demand;

• A Tenant may terminate a lease early;

• Collection of rent may occur in a subsequent year than the year projected due to the requirement or the failure of a Tenant to make rent payments when due;

• Actual expenses could be in excess of projected expenses;

• Changes in the demand for or supply of competitive properties;

• Environmental controls and other governmentally imposed restrictions;

• Changes in state or local tax rates and assessments;

• Changes in general or local economic conditions and acts of God or other calamities;

• The Company's ability to attract, train and retain qualified personnel;

• Change in federal or state laws and regulations;

• Timing and number of strategic relationships that are established;

• Loss of key business partners.

Any projections of the Company's future operating costs will be based upon assumptions as to future events and conditions, which the Company believes to be reasonable, but which are inherently uncertain and unpredictable. The Company's assumptions may prove to be incomplete or incorrect and unanticipated events and circumstances may occur. Due to these uncertainties and the other risks outlined in this section, the actual results of the Company's future operations can be expected to be different from those projected and such differences may have a material adverse effect on the Company's prospects, business or financial condition.

Any projections that prepared or provided by the Company will not be prepared with a view toward public disclosure or complying with the published guidelines of the American Institute of Certified Public Accountants or the Securities Exchange Commission regarding projected financial information. Under no circumstances should such information be construed to represent or predict that the Company is likely to achieve any particular results. The cautionary statements made should be read as being applicable to all related forward-looking statements wherever they appear.

Investments in property requiring substantial construction carry significant risks

Because the Property requires substantial construction efforts, there are additional risks relating to the nature of such construction efforts. Construction risks include, but are not limited to, the timeliness of the project’s completion, the integrity of appraisal values, and the length of the ultimate construction process. If construction work is not completed (due to contractor abandonment, unsatisfactory work performance, or various other factors) and all available financing has already been expended, then in the event of a default the Company may in some instances borrow significant additional funds to complete the construction work. Any such investment could potentially require that it be repaid by the Company prior to the Investors being paid back on their investment; in such event, the ability of the Investors to realize on their investment would be materially adversely affected. Default risks also exist where it takes the Developer longer than anticipated either to construct the Property, or if the Company does not receive sufficient proceeds from the planned financings to repay the Note Investors in full. Investments involving properties with such development or significant rehabilitation business plans have an increased risk of failure.

No operating history

The Company was formed in November 2017 and has no previous operating history or past financial information. The Company has not generated any income to date. The Project is currently in an early phase of construction and is not generating rental income. Due to the Company’s lack of operating history and the development status of the Project, the Company is unable to forecast its income with any assurance of accuracy. Therefore, we cannot provide any assurance that the Company will be able to achieve projected income levels or projected interest payments to Investors.

An investment in the Loan Series I is speculative and involves a high degree of risk

An investment in the Notes is speculative and involves a high degree of risk. Persons unable to bear the risk of loss of their entire investment should not invest in the Notes. In making an investment decision, you must rely on your examination of the Company, the Project and the terms of the Offering and the Notes, including the merits and the risks involved. Investors must be prepared to bear the economic risk of an investment in the Notes for an indefinite period of time and must be able to withstand a total loss of their investment. We urge you to carefully read the Risk Factors.

The Loan Series I have not been registered under the Securities Act

The Notes offered by the Company have not been registered under the federal Securities Act or any applicable state securities laws. Neither the United States Securities and Exchange Commission (the “SEC”), nor any state securities commission, or other regulatory authority, has recommended, approved, or disapproved investment in the Notes, nor have any of these authorities passed upon or endorsed the merits of this offering or the accuracy, completeness, or adequacy of the Offering Materials. Any representation to the contrary is a criminal offense.

Investors will be subject to certain suitability requirements

The Company will not accept any subscription for Notes until a prospective investor, by delivering an executed Qualified Investor Questionnaire and Subscription Agreement (the “Subscription Agreement”), represents that the prospective investor is a qualified investor and meets certain standards. Persons who are not qualified investors are not permitted to invest. The fact that a person is a qualified investor represents the minimum suitability requirement for an investor, and compliance with those standards does not necessarily indicate that the Notes would be a suitable investment for that person. The Company may make further inquiry and obtain such additional information as it deems appropriate as to the suitability of an investment in Notes for a prospective investor.

There is no market for the Loan Series I and no such market is expected to develop

The Notes are an illiquid investment. There is no active trade market for the Notes and no such market is expected to develop following the Offering. In addition, the Notes may be transferred or resold only with the consent of the Company and the Administrative Agent, and only if the Company has received an opinion of counsel satisfactory to it that such a transfer or resale is exempt from registration under the federal Securities Act and applicable state securities laws. Investors may be required to bear the financial risks of the investment in the Notes for an indefinite period of time. Persons who may have a need for liquidity from their investments should not invest in the Notes.

Only the Offering Materials may be relied upon in connection with this Offering

No person has been authorized to provide any information or to make any representations about the Offering or the Notes other than the information expressly set forth in this Offering Circular and the other Offering Materials, or which is contained in documents furnished by the Company upon request. No such information or representations, if given or made, should be relied upon.

The Offering Materials do not purport to be all-inclusive

This Offering Circular and the other Offering Materials provided to Investors do not purport to be all-inclusive or contain all of the information that you may wish to have in order to evaluate an investment in the Notes. You must rely on your own examination of the Company and the terms of the Offering, including the merits and risks involved in purchasing the Notes. We urge you to consult your own counsel, accountants, and other advisors and carefully review and consider all of the Offering Materials provided and the other information that you acquire. You should not construe any statements made in the Offering Materials as investment, tax or legal advice.

No solicitation in any state or other jurisdiction in which such solicitation is not authorized

This Offering Circular and the other Offering Materials made available to prospective investors in Notes on the Localstake Marketplace Platform do not constitute an offer to sell, or a solicitation of an offer to buy, any security in any state or other jurisdiction in which such an offer or solicitation is not authorized. Except as otherwise indicated, the Offering Materials speak as of the date on the cover page of this Offering Circular. Neither access to the Offering Materials nor any sale of the Notes shall, under any circumstances, create an implication that there has been no change in the Company's affairs after the date the Offering begins.

The Company will be available to you to answer questions and furnish additional information

The Company will make available to you, upon request, copies of material agreements and other documents relating to the Company and the Project, and will afford you the opportunity to ask questions and receive answers from the Company concerning its business and financial condition. The Company will also provide you an opportunity to meet with representatives of the Company to obtain other additional information. Any additional information or representations given or made by the Company in connection with the Offering, whether oral or written, are qualified in their entirety by the information set forth in the Offering Circular and the other Offering Materials.

Each prospective investor must evaluate the federal, state and local tax implications of investing in the Notes based on his or her own tax position

Any discussion of federal income tax matters contained in the Offering Materials was written by the Company for this Offering. It is not intended or written to be used, and cannot be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the U.S. government. Since the income tax consequences of an investment in Notes may not be the same for all investors, prospective investors are encouraged to consult their own tax advisors, lawyers, or accountants with specific reference to their own tax situations, including the application and effect of federal, state and local tax laws and possible changes in such laws following this Offering.

Prospective Investors should consider potential state and local tax consequences of an investment in the Notes. Each Investor is urged to consult the investor's own tax advisor to determine whether the state in which the Investor is a resident will impose additional tax implications. Depending upon applicable state and local laws, tax benefits that are available for federal income tax purposes may not be available to Investors for state and local income tax purposes. These Offering Materials make no attempt to summarize the state and local tax consequences to potential Investors.

The Company could lose its tax-exempt status

The Company is a non-profit and has been determined to be exempt from federal income tax under section 501(a) of the Internal Revenue Code as an organization described in section 501(c)(3). If the IRS were to come to a determination that the Company no longer meets the requirements of a tax-exempt entity, there may be a material adverse effect on the Company’s business, results of operations, prospects, and financial condition. Any different characterization of the Company could significantly affect the amount, timing, and character of income, gain or loss recognized in respect of a Note.

Conflicts of interest

The Company is subject to various conflicts of interest arising out of its relationships with the Manager and their affiliates, including Rock Property Management, LLC, the Developer for the Project. The Company and the Developer are under common ownership, with the Manager acting as the Manager of both entities. Because the Company was organized by the Manager and the Project will be operated by the Developer under delegated authority from the Manager, these conflicts will not be resolved through arms-length negotiations but through the exercise of the Manager's judgment and the Company's investment objectives and policies.

Disputes may be resolved only through mandatory binding arbitration

The Note provides that any claims or disputes between the Noteholder and the Company and its affiliates and agents (including Localstake) must be resolved by confidential mandatory binding arbitration before JAMS or another comparable private alternative dispute resolution service and forum provider.

Investors are required to indemnify and reimburse the Administrative Agent; There will be little or no recourse against the Administrative Agent.

The Manager is entitled to indemnification out of the Company’s assets for actions or omissions to act by such Manager on behalf of the Company that are authorized under the organizational documents of the Company. Additionally, there are very limited circumstances in which the Manager of the Company can be held liable to the Company. Accordingly, it may be very difficult for the Company or any Investor to pursue any form of action against the Manager of the Company.

Investors are reliant on the Administrative Agent for servicing and collections

The Investors will not be able to pursue collection against the Company themselves. If the Administrative Agent were to become subject to a bankruptcy or similar proceeding or were to otherwise become unable to perform its duties under the Note, enforcement of Investors’ rights could be uncertain, recovery of funds due on the Note may be substantially delayed, and any funds recovered may be substantially less than the amounts due or to become due on the Note. There is no provision in the Notes for a party to replace the Administrative Agent.

The Notes are an illiquid investment

There is no active trade market for the Notes and no such market is expected to develop following the Offering. In addition, the Notes may be transferred or resold only with the consent of the Company and the Administrative Agent, and only if the Company has received an opinion of counsel satisfactory to it that such a transfer or resale is exempt from registration under the federal Securities Act and applicable state securities laws. Investors may be required to bear the financial risks of the investment in the Notes for an indefinite period of time. Persons who may have a need for liquidity from their investments should not invest in the Notes.

The Notes are subordinated, unsecured obligations of the Company

The Notes are unsecured obligations of the Company. Any rights that the Investors may have under the Notes will likely be subordinated to other senior creditors of the Company. In the event of a default under the Notes, Investors may have no recourse against the assets of the Company. As such, Investors should carefully consider whether they can withstand a total loss of their investment.

An investment in the Company involves a high degree of risk, and should be regarded as speculative. Prospective investors should carefully consider these investment risks, among others, in addition to the other information presented in the Offering Materials, in evaluating the Company for investment. The risks listed herein are not a complete list of potential risks facing the Company and it may encounter unexpected risks in the future, which, may adversely affect its performance.

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