Key Deal Points

Centra Capital Partners provides the opportunity for accredited investors to make an investment in approximately 39 residential lots as part of Phase II of a ground up-development of the Meadows at Hugo. 

Centra Capital Partners is targeting the following projections for this investment:

Preferred Return: 8%

Targeted Equity multiple: 1.33

Targeted IRR: 17.8%

Targeted Investment Period: 2 years

Capitalization

The objective of the project is to develop and build 39 single-family homes to be sold with a targeted investment period of 2 years. 

The land will be acquired for $2,055,123 with additional development costs of $1,368,301, including city fees, engineering, utilities, street installation and landscaping, totaling $3,423,424. The total estimated cost of construction is $8,965,821, with an additional G&A expense of $1,185,288.

This will be funded with an equity capital raise of $2,000,000, debt financing of approximately $2,396,397 with an additional line of credit to cover construction costs. The debt will be provided by Bridgewater Bank with terms to repay the entirety of the loan by project completion with a projected 7% interest.

The first distributions are projected to commence in the 1st quarter of the second year of the project, with distributions continuing on a quarterly basis until return of capital. All capital is projected to be returned by the end of year 2. At this time, and once the sponsor's catch up is paid, additional distributions are made at a 70/30 split (in favor of investors).

The table below shows the full two year projected distributions of preferred return, return of capital and pro-rata share of 70% of profits.

Total projected investor level IRR over the two year period is 17.8%, projected equity multiple is 1.33x, and projected ROI is 32.9% - so for every $100,000 invested, we are projecting total returns will be $32,871.

There are no offering updates at this time.

Distribution Waterfall*

The projected distributions from net operating proceeds and capital events are structured as follows:

Tier 1:

8% preferred return. Investors to receive their 8% preferred return once cash is available from operations, estimated starting in the 1st quarter of the second year of the project. 

Tier 2:

Return of capital. 100% of profits pro-rata to Partners until all their capital is returned.

Tier 3:

Sponsor to receive a cumulative distribution of 30% of all amounts distributed of the preferred return as a Catch Up

Tier 4:

Remaining profits to be distributed 70% to the investors and 30% to the Sponsor.

In this project, we intend to use bank debt provided by Bridgewater Bank, a regional bank in Minnesota. The General Partner has historically done much of its lending with this bank. 

Development Loan:

• We secure a development loan from the bank, which covers 70% of the total cost of the development budget.
• The projected interest rate on this loan is 7%.
• We repay this loan at closing at 120% of the cost of the lot where the home was built.
• This ensures that not only do we cover the loan amount, but we also have some profit margin built into the repayment.

Line of Credit:

• In addition to the development loan, we have a revolving line of credit to cover the costs of construction, which allows us to borrow up to 80% of the construction cost. 
• The interest rate on the line of credit is also 7%.
• We also repay the line of credit upon closing at 100% of the cost to build that home. 
• This covers the construction expenses and ensures that the line of credit is repaid in full.

Financial Strategy:

• Our financial strategy is to use the development loan to acquire the land and cover initial development costs.
• We repay this loan at a profit when we sell a lot.
• The revolving line of credit provides flexibility to manage construction expenses.
• We repay the line of credit in full when we close on a home. 

Benefits to the Investor:

• Our debt structure is designed to provide a buffer for profitability.
• Repayment terms ensure that we not only cover the debt but also generate profit.
• The use of a line of credit offers flexibility and efficiency in managing construction costs.
• By securing loans at reasonable interest rates, we maximize returns for our investors.

Overall, our debt structure is carefully planned to optimize financial efficiency and profitability in our project.

We will be charging a 2% annual Capital Management Fee which is budgeted to $40,000 per year. 

We will also charge a 2% developer fee which is budgeted to $67,126 for the project. 

The total in fees are $147,126.

The Minneapolis-St. Paul single-family housing market has seen incredible growth in recent years, based on a number of compounding factors. 

Recent data from the Minneapolis Area Realtors Association shows the economy is improving, unemployment is falling, and the housing prices are on the rise. The median sales price of a home rose 2.2% in November 2023 compared to the same time in 2022, with 58,366 housing units for sale out of a metro area with nearly 3.7 million people.

According to Redfin, over the past five years home values in Minneapolis have increased by more than 20% and the average number of days a home is on the market is 23. 

These factors, combined with organic population growth in the region, is accelerating demand for high-quality single-family housing. We feel that these demographic trends are likely to drive opportunities for the Project and similar developments throughout the region.

THE LOCATION

The Meadows at Hugo is in the growing community of Hugo, along Hwy 61, only 30 minutes from Minneapolis. The entire project includes 87 total lots for development into single-family homes. Phase I consists of 48 lots, with 42 already sold as of December 2023. Phase II will develop the remaining 39 lots. Hugo offers great schools, abundant open spaces, paved trails, and numerous lakes.

Parks & Rec

Hugo has over 470 acres of parkland, 20 parks with recreation amenities, 15 miles of city trails, and 5 miles of regional trails. Clearwater Creek Preserve, Frog Hollow Park and Rice Lake are some popular options to check out.

Lions Park

Lions Park is a 10-acre, centrally located community park. It features a large picnic shelter, tennis/pickleball court, skate park, playground, pavilion, two ball fields, grassy open space, and off-street parking. The park has ongoing plans to improve the space.

Fishing

There are many lakes to enjoy in Hugo, such as Oneka Lake, Sunset Lake, and Egg Lake. You’ll find a variety of fish species, from largemouth bass to black crappie to northern pike, perch, pan fish and more.

Oneka Ridge Golf Course

Oneka Ridge features 18 holes of championship golf, offering stunning views of the surrounding natural beauty. Golfers can enjoy a challenging yet enjoyable round of golf while appreciating the picturesque landscapes and well-maintained fairways and greens.

Wild Wings Game Farm

A place to celebrate the outdoor arts of hunting, sportsmanship and marksmanship. Here residents can hunt or hone their shooting at one of ten clay courses or several ranges for target practice.

Tamarack Nature Center

A 320-acre preserve with more than four miles of paths, paved trails and boardwalks. With forests, prairies, ponds and play areas, there is something for everyone! Located within the Bald Eagle-Otter Lakes Regional Park.

Pine Tree Apple Orchard

A family-run farm offering seasonal fruits and activities, such as pick your own strawberries, corn maze, pick your own pumpkins, homemade bakery, fresh cider, gifts and more!

Good Neighbor Days

A family-friendly annual festival featuring carnival rides, a parade, craft vendors, bingo, a beer garden, fireworks, and more.

Tour De Hugo

An annual bike ride through the city of Hugo. There are several different routes to choose from, each with treats, rest areas and an after party!

We plan to build and sell three different single family home models during the Phase II development of the Meadows at Hugo. 

The Meadows at Hugo Phase I began in 2021 with the development of 48 lots.

As of December 2024, 42 of the 48 homes have been sold, hitting our annual targets.

2024 Targets & Actuals

                  Target        Actual

Starts:           21              29

Sales:            23              26

Closings:       19              20

In order to invest in The Meadows at Hugo you must be an accredited investor as defined by the Securities and Exchange Commission, (SEC), here.

As part of the application process to invest using the secure investor portal, it will require the submission of a third-party verification letter qualifying you as an accredited investor. The SEC requires that we take steps to verify each investor's accreditation status.

These letters can be produced by a registered broker, investment advisor, licensed attorney or certified public accountant.  

If you would like to obtain an accredited investor verification letter by yourself, we recommend the use of VerifyInvestor. 

Select "Verify Yourself" upload the required documents and complete to process to obtain your verification letter that you can upload into your secure investor portal with Centra Capital Partners.

For a short but detailed video on how to proceed through the investment process here at Centra Capital Partners, please click here or watch below