Disclosures
The following information is an investment summary provided to prospective investors. This information is not an offering or solicitation to sell a security. Additional information will be provided at the request of the recipient.
The Manager in no way guarantees the projections contained herein. Real estate values, income, expenses and development costs are all affected by a multitude of forces outside the Manager’s control.
This investment is illiquid and only those persons who are able and willing to risk their entire investment should participate. Please consult your attorney, CPA and professional financial advisor regarding the suitability of an investment by you.
Investment Overview
1451 Bagley in Detroit is a new Opportunity Zone (OZ)-eligible investment. The project is a 5,000 SF mixed-use redevelopment in the heart of Detroit’s thriving Corktown neighborhood.
Project Scope
- In Q4 2021, we created a Qualified Opportunity Fund (QOF) called Ballpoint Bagley QOF LLC
- In Q1 2022, Ballpoint Bagley QOF LLC plans to acquire 1451 Bagley, a historic masonry building constructed in the 1860s, through a property company called Ballpoint Bagley LLC
Planned Improvements
- Redevelop the existing 3,000 SF building and add a 2,000 SF addition
- Subdivide into 4 retail bays on the 1st floor and 11 private office suites on the 2nd floor
- Take advantage of changing work trends by marketing affordable private offices toward local remote-eligible workers and small business owners looking for office space close to home
Property Information
- Address: 1451 Bagley, Detroit, MI
- Year Built: 1860s
- Style: Two Story Historic Masonry
- Units:
- Current: 3 Retail, 1 Unrenovated Commercial
- After Improvements: 4 Retail, 11 Office
- SF:
- Current: 2,918 SF
- After Improvements: 5,320 SF
- Zoning: R3 (Low Density Residential)
- Parking: Street
Building on the Success at Bagley & Trumbull
1451 Bagley is located in Corktown at the intersection of Bagley Street and Trumbull Avenue. Over the past decade we have successfully renovated two historic structures and developed a new infill building across the street from 1451 Bagley. Together with our small business owners, we have transformed the area into a lively retail, residential and neighborhood hub.
Six talented women operate a cafe, a barber shop, an oyster bar, a wellness center, a vintage store and an eyeglasses boutique at 1701 Trumbull, 1705 Trumbull and 1512 Bagley.
Talent attracts talent. Due to our success at Bagley & Trumbull we already have Letters of Intent in the works with four entrepreneurs who are ready to move or expand their businesses to 1451 Bagley.
Building on the Success of Corktown
Corktown real estate is hot. Over $1.5B of commercial, retail and recreational development has been recently completed or is under construction within 6 blocks of 1451 Bagley including a 230-key luxury hotel, 1,036 residential units, $950MM office space for high-tech workers and a $100MM riverfront park.
Ford Motor Company will bring thousands of high-tech workers to a new Corktown campus highlighted by their historic renovation of the iconic Michigan Central Station.
Directly across Trumbull Avenue from 1451 Bagley, American Community Developers will build a mixed-use, mixed-income $80MM development with 350 residential units and first floor retail. The new buildings are the largest component of a Choice Neighborhoods Grant that will bring more than $200MM in new investment to Corktown.
Capital Structure
We plan to raise the entire $1.45MM for 1451 Bagley via Opportunity Zone equity or other non-OZ equity looking to ride alongside the OZ business plan.
Sources
| Type | Percent | Amount | Per SF |
|---|---|---|---|
| Debt | 0% | $0 | $0 /sf |
| Equity | 100% | $1,450,000 | $272.56 / sf |
| Total Sources | 100% | $1,450,000 | $272.56 / sf |
Uses
| Use | Amount | Per SF |
|---|---|---|
| Acquisition | $512,000 | $175.46 / sf unimproved |
| Due Diligence | $15,000 | $5.14 / sf unimproved |
| Renovation | $800,000 | $150.38 / sf |
| Soft Costs | $123,000 | $23.12 / sf |
| Total Uses | $1,450,000 | $272.56 / sf |
Equity
- Equity investors will be members of Ballpoint Bagley QOF LLC
- Ballpoint Partners LLC will manage the company and oversee management of the property. Ballpoint Partners LLC is associated with:
- Devon Caldwell and Ryan Zampardo of Inkwell Partners
- Brian Mulloy of Ballet Real Estate
- Ballpoint Bagley QOF LLC will allocate equity to Ballpoint Bagley LLC for the purchase and improvements of 1451 Bagley
Organizational Chart
Fees and Promote Structure
- Given the new product type for us with the small office suites, we’ve decided to not take any upfront development fees on this deal to demonstrate incentive alignment
- The promote structure will be a 70/30 limited partner (LP) / general partner (GP) profit split up to a 15% IRR, 60/40 above a 15% and 50/50 above a 20%
- For capital events, 100% of the capital will go to LPs until their initial capital is repaid before the profit split begins
Summary Return Projections
- Refinance the project two years after stabilization
- Hold the building for 10+ years to take advantage of Opportunity Zone benefits
10 Year Projected Returns - $100,000 Investment
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Investment Basis | $100,000 | $100,000 | $100,000 | $32,084 | $32,084 | $32,084 | $32,084 | $32,084 | $32,084 | $32,084 |
| Distributions from Operations | - | $1,916 | $1,926 | $2,043 | $2,387 | $2,511 | $2,640 | $3,017 | $3,155 | $3,297 |
| Proceeds from Refi | - | - | $67,916 | - | - | - | - | - | - | - |
| Proceeds from Sale | - | - | - | - | - | - | - | - | - | $85,263 |
| Ending Investment Balance | $100,000 | $100,000 | $32,084 | $32,084 | $32,084 | $32,084 | $32,084 | $32,084 | $32,084 | - |
| Cash Flow | ($100,000) | $1,916 | $69,842 | $2,043 | $2,387 | $2,511 | $2,640 | $3,017 | $3,155 | $88,560 |
| Cash on Cash Returns (Operations) | 1.9% | 6.0% | 6.4% | 7.4% | 7.8% | 8.2% | 9.4% | 9.8% | 10.3% | |
| IRR | 11.4% | |||||||||
| Equity Multiple | 1.76x |
10 Year Projected Returns - Entire Deal
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Equity Cash Flow | ($1,450,000) | $39,684 | $1,024,672 | $42,320 | $49,436 | $52,023 | $54,695 | $62,496 | $65,348 | $1,635,072 |
| Return of Capital (ROC) | - | 3.4% | 8.3% | 8.5% | 9.0% | 9.2% | 9.4% | 9.9% | 10.1% | 10.3% |
| Internal Rate of Return (IRR) | 14.6% |
Opportunity Zone
Closing will take place in Q1 2022, so 2022 capital gains will be eligible for Opportunity Zone benefits.
About Opportunity Zones
Want to learn more about Opportunity Zones? Here are a few resources from the web:
As Opportunity Zone Window Closes, The Case For Investment Is Stronger Than Ever from Forbes
Tax Benefits Of Opportunity Zone Investment from Rocket Mortgage
Opportunity Zones Frequently Asked Questions from the IRS
Inkwell Partners LLC
Devon Caldwell and Ryan Zampardo
- Inkwell Partners has successfully acquired and developed high-quality properties at attainable price points throughout Detroit
- Their disciplined approach allows them to effectively manage risk while providing long term growth for investors and neighbors alike
- Ballet already owns the building at 1451 Bagley
- We are partnering with Inkwell to assist with financing and development of the site
- Inkwell and Ballet will purchase the building via the new property company
- Ballet will remain a sponsor alongside Inkwell
Detroit
Top 10 Private Employers
General Motors Co.
Henry Ford Health System
Little Caesars Pizza
Rocket Mortgage
Detroit Medical Center
Blue Cross Blue Shield of Michigan
DTE Energy
Ally Financial
Comerica Bank
Huntington Bank (dual HQ to be completed in 2023)
Cost of Living
- 12.4% below national average
Population
- 640,000 in the City of Detroit
- 27th in USA
- 4.4MM in the Detroit MSA
- 14th in USA
- Grew 2.23% from 2010 to 2020
Corktown Neighborhood
With an eclectic mix of Victorian-era homes, historic commercial buildings like Michigan Central Station and new infill architecture, Corktown has been a magnet for talented restaurateurs, entrepreneurs and makers. The dining and drinking scene makes Corktown a lively neighborhood for visitors and residents alike.
Top 10 Eats
- Folk Cafe
- Mink Oyster Bar
- Slow’s BBQ
- Ima
- Takoi
- Supergeil
- James Oliver
- Green Dot Stables
- Ottava Via
- Mudgie’s
Top 10 Drinks
- Batch Brewing Company
- Two James Distillery
- Motor City Wines
- Sugar House
- PJ’s Lager House
- Nemo’s
- Nancy Whiskey
- McShane’s Pub
- LJ’s Lounge
- Cork & Gabel
Top 10 Shops & Services
- Mama Coo’s
- Meta Physica Wellness Center
- Spectacle Society
- The Bearded Lady
- Skinphorea
- Social Tykes
- Eldorado General Store
- George Gregory
- Brightly Twisted
- Detroit Barbers
Location within Metro Detroit
Location within Detroit
Transportation Access within Detroit
Location within Corktown
Higher Education in the City of Detroit
- Ecumenical Theological Seminary - 1.5 miles
- Wayne State University - 2.3 miles
- College for Creative Studies - 3.1 miles
- Sacred Heart Major Seminary - 4.1 miles
- University of Detroit Mercy - 7.5 miles
- Pensole Lewis College - 9.2 miles
- University of Michigan, Detroit Center for Innovation - 1.0 miles
- New $300MM Graduate School will break ground in 2023
Higher Education in the Greater Detroit Area
- University of Michigan, Dearborn - 9 miles
- Lawrence Technological University - 15 miles
- Madonna University - 19 miles
- Cranbrook Academy of Art - 21 miles
- Oakland University - 26 miles
- Concordia University, Ann Arbor - 34 miles
- University of Michigan, Ann Arbor - 37 miles
- University of Michigan, Flint - 60 miles
- Kettering University - 61 miles
- Michigan State University - 82 miles
Lifestyle
Groceries
- Folk - 0.1 miles
- Honey Bee Market - 0.7 miles
- Plum Market - 1.2 miles
- Whole Foods - 1.9 miles
- Meijer - 1.9 miles
Healthcare
- Harper University Hospital - 2.2 miles
- Hutzel Women’s Hospital - 2.2 miles
- Children’s Hospital of Michigan - 2.2 miles
- Detroit Receiving Hospital - 2.5 miles
- Henry Ford Hospital - 3.0 miles
Fun Facts
Detroit is the first and only UNESCO City of Design in the USA
Detroit is the oldest inland metropolis in North America founded by King Louis XIV of France in 1701
Detroit is the only city in the USA where four major professional sports teams play in the downtown core – all arenas are a few blocks apart
Detroit has the second largest theater district in the USA with more than 13,000 theater seats
Michigan has the most lighthouses and the longest coastline of any state in the conterminous USA
Additional Information
Download the Investment Profile.
Download the Conceptual Design.
Please contact us if you want to invest hello@balletrealestate.com.
