Dec 21, 2019

Comment deleted.

Dec 21, 2019

I am in a development deal with the sponsor, the sponsor appears to have missed projected irrs completely and have issued capital call in an amount equal to 40% of initial contribution.

Oct 17, 2019

Oct 15, 2019

Currently in a development deal that, best case, is looking like return of principal. Most likely case is total loss.  Development deals are inherently higher risk but this is in their local area and expertise.

Oct 15, 2019

I understand risk of development deal. However, Sponsor is expected to provide accurate and timely information and have mitigation plan identifyed and ready for execution. Northstar has demostrated complete failure in above aspects through Citadel at Colfax project.

Specifically:

1. Peforma model 6% construction cost loan whereas Sponsor obtained 12% which was not informed to the investors, along with its negative impact to performa or cash position or increase risk of capital call. 

2. Given that project was already underway, I am not sure if Sponsor did sloppy work in modeling the performa or worst , all ready knew about on-going rate and didn't take corrective action.

3. Only when one look through successive quarter report, one can see that project was going south.  Individual report are sugar-coated to down play impact of negative delopment. 

Oct 14, 2019

Disclaimer: while the sponsor's fees/waterfall are reasonable, they mean nothing compared to the critical facts highlighted below, and the scores in "Communication/Performance". Overall I give this sponsor a ZERO star rating. This review is based on Citadel at Colfax: a large (~22 acre) new development in Denver. There are several critical reasons for the low rating:

1) Offering materials had a critical mis-representation - the entire 'crown jewel' of this development was a low-income housing tax credit (LIHTC) that Northstar sought for developing a low-rent home for military veterans. Citadel would have land sold at-cost to the developer, and in return, Citadel would receive a LIHTC from the state/local gov't agencies, which would be a sizable source of returns for the overall project. They clearly noted in the offering literature dated 12/15/17 that if this LIHTC is not obtained, the project underwritten returns would be "lower", but they never provided an estimate as to how much lower. It turns out, in a project update in March 2018, they state that they were notified in September 2017 that the LIHTC application was denied! This was 3 months before the offering literature dated 12/15/17 that was pitched to investors on RealCrowd! So the offering materials had an impossibly-high underwritten IRR that was not achievable by their own admission - but they never bothered to disclose this to investors!

2) Communication of price adjustments unacceptable - One parcel they were developing was for a Quick Serve Restaurant (QSR). This property had an LOI in the offering literature dated 12/15/17 at $25.75/sq ft. An update a few months later merely had an update referencing the QSR property at a $25.00 sales price (no comment or clarification whatsoever as to why the price dropped $.75/sq ft). Then, the next update referenced a sales price of $22.00/sq ft - again, no reason or expalantion as to why it dropped in price. Nearly ONE YEAR later, during a capital call conference call (see comment later regarding this), they finally provided an explanation as to why the QSR price dropped 14.5%: "they were offered a price reduction if they closed by Dec 31, 2018". The pad sale still hasn't closed nearly one year later, yet they are apparently still being offered the price reduction for a sale by 12/31/18. Unacceptable for lack of clarity, and no explanation on follow-up questions why the price reduction wasn't rescinded, considering pad sale still hasn't closed nearly one year later.

3) Communication of pad sales - For the QSR, they kept extending the date of the pad sale, eventually to December 2018. In the project update for Dec 2018, they said the QSR pad sale "closed". Yet, the next month, they merely said that the 'closing was extended one month' for easement issues. How do you tell investors a transaction for a pad sale "closed" - then walk it back the next month, with no explanation? It's as if the sponsor thinks investors are all clueless and don't bother looking at how this month's update changed from prior months! If that's not bad enough, as of October 2019 - nearly one year later - it STILL hasn't closed! And current updates merely say "we hope to close by end of 2019". Similar pad sale issues with a hotel development, which also had an LOI in the December 2017 offering documentation, and nearly 2 years later, still hasn't sold! Note that this is not Northstar's first land development, and they are a very large firm with plenty of experience.

4) 40% Capital Call: no communication or equity by GP - In an update in August 2019, they tell us out of the blue that a capital call may be required in the following month. No previous comments in any prior updates for 18 months that the project was running over budget, or had higher unanticipated costs. No color as to possible amounts, or what will be the determining factor if a call is even required. Then, about 2 weeks later, investors are hit up with a 40% capital call, requested in 2 weeks! How do you not know if a call is required, only to tell investors to pony up 40% more just a few weeks later! An amount this large should have been known that a call would be required just a few weeks before, at the August update. Also, Northstar only arranged a conference call to discuss this capital call after being inundated with investors' inquiries after not even so much as providing a single document showing where all of this money went, or why a 40% capital call was even required! Then, during the capital call, an investor asked how much additional equity Northstar was contributing in the call. They answered: $0, because the original offering documentation outlined a specific amount of GP equity, and 'they can't deviate from this offering literature amount'. Can you believe this!??! And on top of it, current projections show a 0% IRR with current underwriting, assuming all investors contribute a capital call, and they actually sell some pad sales.

5) Communication of project financing - We are told out of the blue, several months into the project, that the project financing didn't close as expected. No more updates regarding project financing (a critical aspect for a new land development, given no pad sales or other sources of revenue). Then, several months later, we are merely told that "project financing closed", and "updated projections would be provided". No updated projections were provided, and we are not told of the new financing terms until a year later during the capital call conference call: a 12% interest rate, compared to 5.75%-6% of the underwriting! 

6) Financial statements do not exist - We are not provided any clear traditional financial statements on the project - realizing it's a land development, there are still consolidated categories that can be issued, but we are merely given a grand total lump sum "total costs" in about 2 categories. no breakdown or justification showing where the overages existed or arose from.

There are other frustrations from this investment, but the above are by far the most critical and worst. I am hearing from other investors on 2 other Northstar projects that capital calls were issued as well, so capital calls seem to be common with this sponsor, although they were not to the extreme 40% call that this project has seen.

Bottom line: I will never invest with this sponsor again. I don't know if I will be contributing to the capital call, as I expect this to be a 100% TOTAL LOSS investment, given where the project is at, and how dissatisfied other investors are in the mismanagement of this project.