McMenamins is transforming a vacant 1930s art deco school in downtown Bothell into a community hub for locals and travelers. The redevelopment company formed Anderson School Properties LLC to renovate the space and is planning to break ground in late November. Final construction details are being finalized to develop a 73-room hotel, an on-site brewery, a swimming pool, a movie theater, restaurants, and much more during the next year. But founders and brothers Mike and Brian McMenamin took a very different path in getting the Anderson School Project started and it’s proving historic for Washington business owners.
For the very first time they allowed outsiders to invest in their redevelopment project, taking full advantage of a new Securities and Exchange Commission ruling on raising capital. Rule 506(c) allows company owners to advertise their projects through television, newspapers, and the internet to attract investors. Before the 506(c) ruling general solicitation was not allowed. In other words, 506(c) made it possible for the McMenamin brothers to launch a crowd-funded capital campaign as long as they worked with accredited investors. Meaning, individuals with $1 million or more in net worth or greater than $200,000 in annual income, or qualified banks, partnerships, corporations, nonprofits, and trusts. McMenamins’ new funding strategy has proven successful.
In late August they closed the equity offering with 23 investors who will receive an 8 percent per annum, noncompounded, preferred return. The average investment was about $274,000 and almost all the investors were from the Northwest. Together they raised 6.3 million. Another million was contributed by McMemamins. Rule 506(c) went into effect in September 2013 and Anderson School Properties LLC was one of the first companies to take advantage of it.
“The renovation of the Anderson School is moving forward thanks to a group of investors who, like us, believe in downtown Bothell and the power of public spaces to bring community together,” said Mike McMenamin in a statement. “When finished, it will be a place filled with local art and history, good music, and great food and drink, where we hope everyone can feel at home.”
McMenamins isn’t new to business in the Northwest. The family-run company started with a single neighborhood pub in 1983. Today, it owns and operates seven locations in Washington and 45 locations in Oregon. McMenamins is best known for converting rundown historic buildings into happening hubs while preserving the building’s old-feel charm.
Learn more about the business and this new project with the video below.