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Funded
Multifamily
Majestic Bay Townhomes
Des Moines, WA
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By New Standard Equities
14.3%* TARGET IRR 13.3%-15.3%
8.3%* TARGET AVG CASH ON CASH
1.83x* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 years
Estimated First Distribution 7/2019
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Explore this Project
Overview
Value-add acquisition of an 81-unit multifamily community in the Seattle MSA, alongside an experienced repeat Real Estate Company.
Partner

The Real Estate Company is highly experienced, having owned and operated more than 2,400 multifamily units, including over 1,000 in Washington.  Additionally, the company is a repeat partner of RealtyMogul, with the partnership's only full cycle transaction achieving a 31.8% IRR earlier this year.

Market

The area enjoys a strong demographic profile, with a population of over 80,000 and median household income of $59,793 within a three-mile radius (according to CoStar).  Additionally, the submarket has sustained average annual rent growth of 6.2% since 2011, with 3.4% expected during the hold period (according to Axiometrics).

Value-Add

The Real Estate Company has budgeted for interior unit renovations of $12,000 per unit, and an additional $688,500 for exterior and common area improvements.  The significant upside potential coupled with the Property's large average unit size (28% larger than the submarket's average unit size, according to Axiometrics) makes Majestic Bay a rare acquisition.

Property At A Glance
Year Built 1980
# of Units 81
# of Buildings 1
Current Occupancy 92.6%
Parking Ratio 2.2 spaces per unit
Acquisition Price

$18,000,000

Investment Highlights
The Real Estate Company is purchasing the Property for $222,222 per unit, which represents a going-in cap rate of 5.71% on projected year one net operating income
The Real Estate Company has budgeted for interior unit renovations of $12,000 per unit, and $688,500 for exterior improvements
The Real Estate Company is vertically integrated, so it will handle property management in-house
The exit strategy is to sell the Property in five years at an expected cap rate of 5.50%
Management
Cumulative Distributions

New Standard Equities

New Standard Equities "NSE" was formed in 2010 to capitalize on the dislocation in the post‐financial crisis real estate investment market. With significant experience in buying and operating large, institutional-quality multifamily properties throughout the Western U.S., the company is deploying private and institutional capital to purchase and operate apartment assets that offer steady, long-term cash flow to its investors. New Standard Equities’ full-service real estate platform is actively engaged in property management, asset management, construction management and project consultation. NSE has successfully operated multifamily assets in major markets throughout the Western U.S.

The track record below includes all acquisitions completed by New Standard Equities.

RealtyMogul has invested in five prior transactions with NSE, (1) Oak Harbor, (2) Village Fair, (3) Walnut Place, (4) Elysian Glen, and (5) Majestic Bay Townhomes.  Of these, only Oak Harbor has gone full cycle, achieving a 31.8% IRR after being sold in Q1 2019.

http://www.newstandardequities.com/
  • Edward Ring
    Founder / CEO
  • Cyrus Blourtchi
    Chief Financial Officer
  • Julie Blank
    Chief Operating Officer
Edward Ring
Founder / CEO

With over 23 years of real estate and financial consulting experience, Ring’s expertise includes providing strategic leadership for all aspects of the investment process, including sourcing new projects, business plan development, optimizing capital structures and actively overseeing each project’s execution phase from soup to nuts.

Previously, Ring was chief operating officer at Kennedy Wilson Multifamily Management Group, where he was responsible for the acquisition and operation of approximately 11,000 apartment units. At the time of his departure, roughly half of those acquisitions had been sold for a project level profit of over $100 million and had achieved a 1.80 multiple on equity, a 28.5 percent IRR, and an ROI of 55.4 percent. Ring also forged key partnerships with institutional investors, such as The Dubai Investment Group, General Electric, Mitsubishi Corporation, General Motors, AIG, RREEF and Wachovia Securities, among others.

In addition to his background as a real estate professional, Ring is an Emeritus member of the Writers Guild of America (WGA). He wrote for a variety of television comedies for NBC, UPN, Saban Entertainment, VH1 and HBO, where he earned a Cable ACE nomination for his work on “The Larry Sanders Show.”

A graduate of U.C. Berkeley in 1988, Ring went on to earn his MFA from New York University in 1992 and his MBA from UCLA Anderson in 2003. Ring served on the Executive Committee of the Anderson School’s Alumni Association and currently serves on The Board of Governors at Cedars Sinai Medical Center in Los Angeles. He is also a member of Mensa.

Cyrus Blourtchi
Chief Financial Officer

Cyrus Blourtchi brings 26 years of financial accounting and senior management experience to the company, including 19 years in the multifamily industry. Prior to joining New Standard Equities, Cyrus served as Director of Accounting/Controller with Kennedy Wilson Multifamily for seven years.  Prior to that, Cyrus held accounting positions at Welk Real Estate and RCMI in Southern California.

Mr. Blourtchi is responsible for maintaining all aspects of the accounting records for New Standard Equities' assets and management assignments.  He is highly trained in GAAP accounting procedures and professional protocols, including a strict adherence to Sarbanes-Oxley regulatory compliance standards for public investors.​  Cyrus also provided financial accounting services for organizations outside the real estate sector, including spending two years as a finance officer for the United Nations. ​

Julie Blank
Chief Operating Officer

Julie Blank brings 16 years of professional multifamily management and investment consulting experience to her role as Chief Operating Officer. Julie is also a Certified Public Accountant and a CA Licensed Real Estate Agent. She is a reputable leader and strategic thinker with a proactive approach to business and solutions. This allows her to be very effective in developing and executing very detailed asset improvement plans with an eye toward maximizing NOI. Julie has also spearheaded a volume of disposition, acquisition, reposition, and development deals, resulting in profitable execution on the part of ownership. Julie considers herself a professional partner with investors, working through the spirit of harmony to add value to the bottom line.

Track Record

Schedule of Real Estate - New Standard Equities (2011 - Present)
Property Location Purchase Date # of
Units
Purchase
Price
Fountain at Curson Hollywood, CA Jun-11 20 $4,000,000
Crossings at the Bay Long Beach, CA Nov-11 235 $34,500,000
Villa Olivos Canoga Park, CA Aug-12 53 $4,950,000
Parke Pasadena Pasadena, CA Aug-13 22 $3,400,000
Asana at North Park San Diego, CA Sep-14 132 $18,470,000
Anchor Pointe Oak Harbor, WA Aug-15 107 $7,500,000
Rancho Azul San Diego, CA Aug-15 74 $14,000,000
SeaGlass Village Bremerton, WA Mar-16 182 $13,000,000
The Venue Renton, WA Jun-16 284 $41,500,000
Village Fair Bremerton, WA Dec-16 120 $13,250,000
Atlas Port Orchard, WA Feb-17 276 $38,150,000
Duet Lynnwood, WA Oct-17 120 $24,000,000
Elevate at Towngate Moreno Valley, CA Nov-17 227 $27,850,000
Walnut Place Pasadena, CA Oct-17 30 $14,000,000
Elysian Glen Concord, CA Jul-18 120 $34,700,000
Alterra San Jose, CA Jul-18 143 $52,500,000
The Mark Hayward, CA Dec-18 150 $44,000,000
Panorama Bremerton, WA Feb-19 138 $24,000,000
Majestic Bay Townhomes Des Moines, WA Aug-19 81 $18,000,000
Total     2,514 $431,770,000

The bio and track record were provided by the Real Estate Company and have not been verified by RealtyMogul or NCPS

Business Plan

In this transaction, RealtyMogul investors are to invest in RealtyMogul 134, LLC ("The Company"), which is to subsequently invest in Majestic Bay Investors, LLC ("The Target"), a limited liability company that will directly or indirectly own interest in the Property. New Standard Equities (the "Real Estate Company") is under contract to purchase the Property for $18.0 million ($222,222 per unit) and the total project cost is expected to be $20.6 million ($254,321 per unit).

The Real Estate Company plans to implement a value-add and mark-to-market strategy in which it will capitalize $1,760,130 ($21,730) for capital improvements.  Interior renovations are to include new flooring, paint, countertops and cabinetry.  The budget also includes capital for common area and exterior renovations including exterior painting, landscaping, and deferred maintenance.  Upon completion, the Real Estate Company expects average rental increases of $272 per unit.  The business plan calls for a five-year hold, at which point the Property will be sold at a 5.50% cap rate for $25.3 million ($312,047 per unit).

Below is a summary of the capital improvements budget:

Capital Improvements Budget Summary
Common Area/Exterior Improvements Total Per Unit
Deferred Maintenance $183,000 $2,259
Exterior Paint $125,000 $1,543
Interior Hallways $100,000 $1,235
Landscaping $100,000 $1,235
Seal Coat & Slurry $50,000 $617
Roof Reserve $50,000 $617
Elevator Reserve $30,000 $370
Signage & Marketing Collateral $25,000 $309
Package Lockers $20,000 $247
Immediate Repairs per Property Condition Report $5,500 $68
Total Common Area/Exterior Improvements $688,500 $8,500
Interior Unit Improvements $972,000 $12,000
Contingency (1%) $16,605 $205
Construction Management Fee (5%) $83,025 $1,025
Grand Total $1,760,130 $21,730

These amounts are subject to change at the discretion of the Real Estate Company

Property
Property Details

Built in 1980, Majestic Bay (the "Property") is an 81-unit mid-rise townhome community in the city of Des Moines, WA -- part of the Seattle MSA.  The average unit size at the Property is 1,122 square feet, which is 36% larger than the market average and 29% larger than the submarket average (according to Axiometrics).  The Property is constituted of one building on 2.4 acres; its amenities include a basketball court, a BBQ/grill area, and a picnic area.  It is 1.2 miles from central Des Moines and 13.6 miles from Downtown Seattle.  The newly built 1.6 million square foot Des Moines Business Center is 4.8 miles away; its tenants include FAA, K-2 Sports, and Amerisource Bergen.  Additionally, Seattle-Tacoma International Airport is 3.2 miles from the Property.  Within one mile is a drug store, a bank, a Safeway, a veterinary hospital, and several dining options.  Per Trulia, the area has the lowest crime relative to the rest of King County.  The Property is currently 92.6% occupied, and each unit already includes a washer/dryer.

In-place/Stabilized Unit Mix
Unit Type # of Units % of Total Unit Size (square feet) In-place Rent Post-reno Rent
1 Bed, 1 Bath 5 6% 609 $1,294 $1,385
1 Bed, 1 Bath 4 5% 614 $1,213 $1,379
2 Bed, 1.5 Bath 14 17% 1,010 $1,412 $1,750
2 Bed, 2 Bath 28 35% 1,185 $1,568 $1,850
2 Bed, 2 Bath 24 30% 1,240 $1,645 $1,925
2 Bed, 2 Bath (Den) 6 7% 1,380 $1,762 $2,025
Total/Averages 81 100% 1,122 $1,544 $1,816

 

Comparables

The average unit size at the subject Property (1,122 square feet) is significantly larger than the average unit size in the market, and of the comparable set. So, RealtyMogul has included rental rate per square foot and sale price per square foot in the below comparisons for a more relevant comparison.  Additionally, a comparison of RealtyMogul's projected exit and recent townhome sales is included.  The townhome comparables are taken from nearby submarkets with similar demographic profiles to Des Moines, WA.

Lease Comparables
  Marina Club Regatta Skyview 3322 Spinnaker Landing Averages Subject
# of Units 77 86 192 66 105 81
Year Built 1989 1987 1980 1987 1986 1980
Average SF 781 801 1,120 775 869 1,122
Average Rental Rate $1,549 $1,579 $1,836 $1,534 $1,625 $1,816
Average Rent per SF $1.98 $1.97 $1.64 $1.98 $1.87 $1.62
Distance from Subject 0.4 miles 0.8 miles 0.6 miles 0.7 miles 0.6 miles  

All rents are net effective

Sale Comparables
  Brittany Park Timber Heights Des Moines Station Driftwood Apartments Averages Subject
Date Apr-19 Jul-18 Apr-18 Sep-17    
Year Built 1970 1966 1978 1978 1973 1980
# of Units 43 34 95 382 139 81
Gross Building Area 35,583 26,488 62,650 270,300 98,755 89,570
Purchase Price $8,300,000 $6,084,000 $17,200,000 $53,996,300 $21,395,075 $18,000,000
$/Unit $193,023 $178,941 $181,053 $141,352 $173,592 $222,222
$/SF $233 $230 $275 $200 $234 $201
Cap Rate     5.00% 5.25% 5.13% 5.71%
Distance from Subject 2.7 miles 2.6 miles 1.1 miles 2.8 miles 2.3 miles  
Exit Value Comparables - Townhomes
  1303 Boise St. 3838 Spadoni Ln. 3307 44th St. 3858 Spadoni Ln. 3421 Harborcrest Ct. Averages Subject
Date Jun '19 Jun '19 Apr '19 Nov '18 Oct '18    
Submarket South Tacoma North Tacoma North Tacoma North Tacoma North Tacoma   Des Moines
SF 1,218 1,280 1,280 1,280 1,243 1,260 1,122
Year Built 1984 1991 1988 1991 1986 1988 1980
$/Unit $324,950 $389,900 $355,000 $374,219 $339,719 $356,758 $312,047
$/SF $266.79 $304.61 $277.34 $292.36 $273.31 $282.88 $278.12
Distance from Subject 16.0 miles 14.6 miles 15.0 miles 14.6 miles 13.6 miles 15.1 miles  

Sale and lease comps were obtained from CoStar, Axiometrics, and Zillow

Location

Market Overview

Per CoStar, the Seattle apartment market is hot, and justifiably so.  The metro attracts both foreign and domestic interests, and in terms of job growth, Seattle has outperformed the national average this cycle with many additions in high paying sectors like tech and life sciences.  Well-paid newcomers are contributing to outsized demand growth, a trend that is expected to continue, especially in and around job nodes in the urban core and the Eastside. However, not everyone works for high-end tech firms and this has spurred demand for lower-end units in the urban core and peripheral submarkets. The city of Seattle has become increasingly unaffordable for many locals and recent legislation incentivizes developers to build more affordable units in exchange for higher density in many neighborhoods.

Per Axiometrics, effective rent increased 0.9% from $1,762 in 4Q18 to $1,778 in 1Q19, and annual effective rent growth was 1.8% in 2018. Annual effective rent growth is forecast to be 2.8% in 2019, and average 3.4% from 2020 to 2024. Annual effective rent growth has averaged 3.7% since 1Q95. The market's annual rent growth rate was above the national average of 2.5%. The market's occupancy rate increased from 95.3% in 4Q18 to 95.5% in 1Q19, and was up from 95.2% a year ago. For the forecast period, the market's occupancy rate is expected to be 95.3% in 2019, and average 94.9% from 2020 to 2024. The market's occupancy rate has averaged 95.3% since 1Q95.

Submarket Overview

Per CoStar, the Des Moines area has some of the lowest rents in the metro and is characterized by older assets. Vacancy is among the tightest in the metro due to strong population growth and a large renter population. Properties in the submarket offer investors high yields in a central location poised for continued growth. 

Per Axiometrics, effective rent increased 0.5% from $1,364 in 4Q18 to $1,371 in 1Q19. The submarket's annual rent growth rate of 3.9% was above the market average of 1.8% in 2018. Annual effective rent growth is forecast to be 3.5% in 2019, and average 3.4% from 2020 to 2024. The annual effective rent growth has averaged 3.9% per year since 1Q95. The submarket's occupancy rate increased from 95.2% in 4Q18 to 95.6% in 1Q19, and was down from 95.7% a year ago. The submarket's occupancy rate was above the market average of 95.5% in 1Q19. For the forecast period, the submarket's occupancy rate is expected to be 95.3% in 2019 and average 94.8% from 2020 to 2024. The submarket's occupancy rate has averaged 95.1% since 1Q95.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Amount
Debt $15,300,000
Equity $5,300,000
Total Sources of Funds $20,600,000
Uses of Funds Amount
Purchase Price $18,000,000
Real Estate Company Acquisition Fee $180,000
Broker Dealer Fee $80,000
Loan Fee $137,700
CapEx Budget $1,760,130
Working Capital $57,491
Tax/Insurance Reserve $108,879
Closing Costs $275,800
Total Uses of Funds $20,600,000

Please note that the Sponsor's equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Estimated Proceeds: $15,300,000
  • Estimated Rate (Floating): One Month Libor plus 2.36%
  • Term: 3 years
  • Interest Only: 5 years
  • Exit Fee: 1.0% of outstanding loan amount
  • Extension Options: Two (2) one-year extension options (0.5% fee for the first, 1.0% fee for the second)

There can be no assurance that a lender will provide debt on the rates and terms noted above, or at all. All rates and terms of the debt financing are subject to lender approval, including but not limited to possible increases in capital reserve requirements for funds to be held in a lender controlled capital reserve account.

Distributions

The Target intends to make distributions to investors (the Company and Real Estate Company, collectively, the "Members") as follows: 

  1. To the Members, pari passu, all excess operating cash flows to an 8.0% IRR to the Members;
  2. 70.0% / 30.0% (70.0% to Members / 30.0% to Promote) of excess cash flow to a 15.0% IRR;  
  3. 60.0% / 40.0% (60.0% to Members / 40.0% to Promote) of excess cash flow and appreciation thereafter.  

Note that these distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).

The manager of The Company may receive a portion of the promote. Distributions are expected to start in March 2020 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Real Estate Company, who may decide to delay distributions for any reason, including maintenance or capital reserves. 

Cash Flow Summary
  Year 1 Year 2 Year 3 Year 4 Year 5
Effective Gross Revenue $1,627,115 $1,818,510 $1,913,977 $1,993,403 $2,071,797
Total Operating Expenses $599,468 $621,001 $640,129 $659,264 $678,871
Net Operating Income $1,027,647 $1,197,509 $1,273,848 $1,334,138 $1,392,926
RealtyMogul 134, LLC Cash Flows
  Year 0 2019 2020 2021 2022 2023 2024
Distributions to RealtyMogul 134, LLC Investors ($2,025,000) $29,632 $138,494 $183,727 $176,393 $173,129 $3,004,104
Net Earnings to Investor
- Hypothetical $50,000 Investment
($50,000) $732 $3,420 $4,536 $4,355 $4,275 $74,175
Fees

Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:

One-Time Fees
Type of Fee Amount of Fee Received By Paid From Notes
Acquisition Fee $180,000 Real Estate Company  Capitalized Equity Contribution 1.0% of the Property purchase price
Broker-Dealer Fee $80,000 North Capital (1) Capitalized Equity Contribution Greater of $50,000 or 4.0% of the equity raised by RealtyMogul 134, LLC
Construction Management Fee 5.0% of costs Real Estate Company Capitalized Equity Contribution  
Recurring Fees
Type of Fee Amount of Fee Received By Paid From Notes
Management and Administrative Fee 1.0% of amount invested in RealtyMogul 134, LLC RM Manager, LLC Distributable Cash RM Manager, LLC is the Manager of RealtyMogul 134, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2)
Asset Management Fee 1.0% of Effective Gross Income Real Estate Company Distributable Cash  
Property Management Fee 3.0% of Effective Gross Income Real Estate Company Distributable Cash  

(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.

(2) Fees may be deferred to reduce impact to investor distributions.

The above presentation is based upon information supplied by the Real Estate Company or others.  Realty Mogul, Co., RM Manager, LLC, and The Company, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein.  The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

Documents
Disclaimers/FAQs
Disclaimers

Forward-Looking Statements

Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated”, “projected”, “forecasted”, “estimated”, “prospective”, “believes”, “expects”, “plans”, “future”, “intends”, “should”, “can”, “could”, “might”, “potential”, “continue”, “may”, “will” and similar expressions to identify these forward-looking statements.


Non-Transferability of Securities

The transferability of membership interests in The Company are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Moreover, the estimated investment holding period described herein is only a projection, and there can be no assurance when or if an investment may be liquidated. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.


Floating Interest Rate

The loan being used to acquire the Property is expected to have a floating rate based on the London Interbank Offered Rate (“LIBOR”). If LIBOR increases the interest payments due on the loan are expected to increase as well. This could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment.


Apartment Complex - Competition

Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses. The Property will compete with other residential alternatives to attract tenants, including but not limited to other apartment units that are currently available for rent, new apartments that are built and condominiums/houses that are for rent or sale. If development of apartment complexes by other operators were to increase, due to increases in availability of funds for investment or other reasons, then competition with the Property could intensify. If the Property is not able to successfully compete with the competitive residential alternatives in the local or regional area this could adversely affect the ability of Target Entity to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Escrow Contingency

All funds from investors will be held in a non-interest-bearing escrow account with Broker-Dealer as escrow agent for the benefit of the investors in accordance with Rule 15c2-4 under the Exchange Act. All investor funds will be transmitted directly by wire or electronic funds transfer via ACH to the escrow account maintained by the escrow agent per the instructions in the Subscription Agreement. Upon certification by Broker-Dealer and acceptance by the Company that all contingencies have been met, the investor’s funds will be promptly transmitted to the Company. If the contingencies fail to be satisfied during the offering period, we will instruct the Broker-Dealer to return all funds to the investors without interest, deduction, or setoff, and all of the obligations of the investor hereunder shall terminate.


Capital Call Risk

The amount of capital that may be required by the Target from the Company is unknown, and although the Target does not require that the Company and its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or sell additional equity. The Company does not intend to participate in a capital call if one is requested by the Target, and in such event the manager of the Target may accept additional contributions from other members of Target or from new members. In the event that the manager of Target advances any capital on behalf of the Company, it will be deemed to be a manager loan at an interest rate that cannot be determined at this time. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case the Company's interest in Target will potentially suffer a proportionate amount of dilution.


Renovation Risks

The Property was 93% occupied as of June 2019, and the Target intends to implement a capital improvement plan involving the interior and exterior renovation of the Property, and a leasing program in its effort to add value to the Property. The Target intends to renovate all or some of the units within the Property and increase the current rental rates of such renovated units. There can be no assurance that, (i) the renovations will be consummated on a timely basis, (ii) the renovations will be completed satisfactorily, (iii) such work will not materially adversely affect other aspects of the operation of the Property, and (iv) the planned rental rate increase will have favorable results to meet the goals the Target projected. Any delays or negative results of the renovation work or rental increase efforts could adversely affect the Property’s financial results or occupancy levels, including its business operations and thus the value of the Company’s investment.


Interest-Only Loan Period

The loan being used to acquire the Property is expected to have an interest-only period during the first 5 years of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.


Washington Environmental Risks

Washington is subject to frequent and sometimes debilitating natural disasters, including but not limited to severe drought, earthquakes, and fires. The Property is located in an earthquake fault zone, and as such, there is increased risk of damage to, or total destruction of, the Property from an earthquake. There can be no assurance that Real Estate Company and the Target are properly insured for any such damage caused to the Property or its business operations. As a result, the business and financial condition of the Target, and thus the Company and its investors, may be materially adversely affected.


Finance Term

The loan being used to acquire the Property is expected to have an initial three (3) year term with two (2) one-year extensions. However, the Sponsor Entity anticipates the investment term to be approximately 5 years. The investment term length potentially creates capital markets risk in the event that market conditions deteriorate over the next three (3) years impacting the Sponsor’s ability to sell the Property or obtain replacement financing. There can be no assurance that the Property would qualify for a loan extension.


The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Issuer Document Package for a discussion of additional risks. The above presentation is based upon information supplied by the Real Estate Company and others. Realty Mogul, Co., RM Manager, LLC, and The Company, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

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