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Clairmont Group
Clairmont Group LLC is a New York based diversified real estate company that is engaged in acquisition, development, management and advisory services. Clairmont employs a fundamental, value-driven investment strategy and invests alongside institutional and private clients in a broad range of real estate and real estate-related investment. Clairmont has deep experience in sourcing, executing and managing real estate transactions. The company specializes in mixed-use, multifamily and hospitality asset classes with consideration given to retail, office and industrial assets.
Clairmont Group invests in all levels of the capital structure that have limited downside risk, while seeking to generate attractive risk-adjusted returns with upside potential through capital appreciation or repositioning where it has intimate knowledge of the market and the position of each asset.
Investment Objectives
- Capital preservation and attractive risk-adjusted returns
- Create long-term value through execution and a hands-on management approach
- Align interests between principals and investors through transparency and significant capital commitment
- Target investment themes based on macroeconomic and real estate market trends
- Identify mispriced opportunities not recognized by the broader market
Value-Added Repositioning
- Opportunities focused on value creation as opposed to “quick flips”
- Properties that are under-managed or under-capitalized
- Opportunities mispriced or undetected by the current market
- Continuation of successful investment practice in all property types
Distressed Situations
- Work within existing capital structures to restructure loans
- Identify properties in special servicing, foreclosure, and bankruptcy
- Maximize returns by adding value through ability to take control of properties
- Fund redevelopment capital necessary to convert properties to their highest and best uses
In-fill Development or Redevelopment
- Longer-term, complicated projects with significant profit potential
- Projects with time horizons beyond the holding period of typical real estate opportunity funds
- Unique opportunities with significant competitive advantage
Sponsor Track Record (includes transactions the management team completed as Principals of other firms prior to joining Clairmont)
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David Lubin, Managing Partner -
Ryan Colbert, Managing Partner
David Lubin has over decade of real estate private equity, investment banking and strategy consulting experience. He has closed over 50 transactions valued in excess of $2.0 billion.
David has worked at large institutional investment companies such as MetLife, Allianz, AREA Property Partners (formally Apollo Management) and C-III Capital Partners. His experience includes investments in core, value-add, opportunistic, distressed real estate, note purchases, development, fund investments, and coinvestments across all major asset classes including: multifamily, hospitality, office, industrial, retail, senior living and real estate operating companies. At C-III Capital Partners, he oversaw investments in multifamily and hospitality.
Additionally, David has worked as a real estate investment banker at BMO Capital Markets. At BMO, he was involved in over $3.6 billion in capital raising and advisory engagements including a $1.6 billion IPO of Douglass Emmett REIT (DEI).
David started his career at Accenture in the Corporate Strategy and M&A group. At Accenture he advised large fortune 500 companies on new market entry strategies, shareholder value analysis, and operational efficiencies.
David Lubin holds a Master’s Degree in Real Estate Development from Columbia University and a Bachelor’s Degree from Cornell University. David also has a New York state real estate broker license and series 7 & 63.
Mr. Colbert has over a decade of institutional real estate equity investment experience in both domestic & international markets and has acquired over $1 billion worth of commercial real estate. His experience includes investments in distressed real estate & note purchases, recapitalizations, JV partner buy-outs and direct secondary investing across all major asset classes.
Mr. Colbert was a Director at Madison Marquette and formerly a Vice President at the Lightstone Group, one of the nation’s largest real estate investment firms. While at Madison Marquette, he closed over $400 million of multifamily, office and retailacquisitions. While at the Lightstone Group, he was responsible for rebuilding the firm’s hospitality portfolio as well as expanding its existing multifamily portfolio, closing over $100 million of acquisitions during his tenure. Prior to joining Lightstone Group, Mr. Colbert was a member of the investment team at Madison International Realty, a real estate private equity firm focused on the acquisition of direct secondary’s and structured equity investments. While at Madison International Realty he was involved in the recapitalization of over $200 million of real estate.
Mr. Colbert holds a Series 7 & 63 license and completed his dual-undergraduate degree in Political Science & Finance with minors in German Studies & Law at Cornell University.
At A Glance
| Investment Strategy: | Buy and Hold |
| Projected Hold Period: | 5 years |
| Total Project Budget: | $2,872,541 |
| Property Type: | Multifamily |
| # Units: | 23 |
| Distributions to Realty Mogul 54, LLC: | 6% Preferred Return, then 75/25 split |
| Going-In Cap Rate (Year 1): | 6.16% |
| Projected First Distribution: | May 2016 |
| Distribution Schedule: | Quarterly |
| Investor Funding Deadline: | January 8, 2016 |
| Estimated Closing Date: | February 26, 2016 |
Investment Details
Clairmont Group ("Sponsor") plans to acquire, renovate and stabilize the 23-unit multifamily property located at 905-919 Park Ave, Plainfield, NJ ("the Property"). The Property is located in the commuter town of Plainfield,NJ, in close proximity to employment centers, public transportation and other demand drivers.
Location Highlights:
- 1/2 mile from the train station
- 50 minute direct train ride & 25 miles to New York City. Plainfield is closer to Manhattan than South Brooklyn and North Bronx
- 15 miles to Newark International Airport (13th. busiest airport in the United States)
- 15 miles to City of Newark (largest city in New Jersey)
- 15 miles to Port Authority of New York & New Jersey (3rd. busiest port in the United States, 25th. in the world)
- 10 miles to Rutgers University (largest University in New Jersey with enrollment of 66,000 students).
RealtyMogul.com investors are being provided the opportunity to invest in Realty Mogul 54, LLC. Realty Mogul 54, LLC will be making an investment in CG Holdings LLC, which will hold title to the Property (either directly or indirectly). Through CG Holdings LLC, the Sponsor will handle all aspects of the investment including acquiring the property, implementing a capital improvement plan to increase unit count, renovate interiors and common areas, implementing operational efficiencies, and eventually selling the Property. The Sponsor has budgeted $322,000 for capital improvements which will be used, in part, to split some of the larger units into smaller apartments, bringing the total unit count up from 23 to 27, as well as to upgrade the lobby and apartment interiors on a selective basis. According to the Sponsor, they believe that the current ownership has been largely absent and as a result, operations, upkeep and leasing has suffered. With the implementation of professional management, the Sponsor believes that the Property's operations should improve during the hold period.
The Sponsor plans to hold the property for five (5) years before exiting the investment, but the hold period could be longer or shorter. RealtyMogul.com investors have the opportunity to participate as equity stakeholders and earn a share of the cash-flow and appreciation. Investors may expect to receive quarterly updates and distributions, with the first distribution expected in June 2016 and on a quarterly basis thereafter.
Investment Highlights
- As a New York City commuter hub, the Property is surrounded by multifamily drivers
- Acquisition Aligns Well With the Sponsor’s Strengths and Experience: Clairmont Group focuses on tri-state area class B multifamily acquisitions and has managed similar rehab projects in New Jersey, Brooklyn, and Queens.
- In Place Cash Flow With Value-Add Potential Through Renovation Program
- The Property Should Benefit From Implementation of Professional Management and Leasing
Risks and Risk Mitigation*
- 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.
- Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 54, LLC 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. 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.
- Local Market Conditions May Impact Rental Rates: Local conditions may significantly affect occupancy, rental rates, and the operating performance of a property. Such risks include (but are not limited to): (i) plant closings, industry slowdowns and other facts that affect the local economy; (ii) an oversupply of, or a reduced demand for, similar properties; (iii) a decline in household formation or employment or lack of employment growth, (iv) laws that could inhibit the ability to raise rents or to sell a property; and (v) other economic conditions that might cause an increase in operating expenses, such as increases in property taxes, utilities, compensation of on-site personnel and routine maintenance.
- Management Risk: Investors will be relying solely on the Sponsor for the execution of its business plan. The Sponsor may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of CG Holdings LLC (including Realty Mogul 54, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the Sponsor has significant operating experience, CG Holdings LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 54, LLC is pursuing a venture capital strategy through its investment in CG Holdings LLC, and the manager of Realty Mogul 54, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.
- Manager of Realty Mogul 54, LLC Will Participate in Sponsors' Promote Interest: The manager of Realty Mogul 54, LLC will be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the property realized upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 54, LLC. Investors must recognize and agree to waive and bear the risk of this conflict of interest.
- Uncertain Distributions: The Sponsor cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 54, LLC) from either net cash from operations or proceeds from the sale or refinancing of the asset. Sponsor, in its discretion, may retain any portion of such funds for tenant improvements, tenant refurbishments and other lease-up costs or for working capital reserves. Sponsor expects to make distributions quarterly.
- Risk of Interest Charges for Sponsor Capital Calls: The amount of capital that may be required by CG Holdings LLC from Realty Mogul 54, LLC is unknown, and although CG Holdings LLC does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or additional capital. Realty Mogul 54, LLC does not intend to participate in a capital call if one is requested by CG Holdings LLC, and in such event the manager of CG Holdings LLC may accept additional contributions from other members of CG Holdings LLC. Amounts that the manager of CG Holdings LLC advances on behalf of Realty Mogul 54, LLC will be deemed to be a manager loan at an expected interest rate of 10%. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 54, LLC's interest in CG Holdings LLC will suffer a proportionate amount of dilution.
- Uncertain Exit Timing: Although it is anticipated that the Property will be sold at the end of the expected five (5) year hold period, Realty Mogul 54, LLC will not have full control over the timing of the sale of the Property, and therefore we cannot offer assurances of when the exit will occur. If the Property is not sold after ten (10) years, Realty Mogul 54, LLC may have the right, subject to other contractual limitations such as the loan on the property, to force a sale of the Property or force a sale of the interests of Realty Mogul 54, LLC in CG Holdings LLC.
- General Economic and Market Risks: While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not investor sentiment and the capital markets will be favorable to the property at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the Sponsor.
*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.
| Address: | 905-919 Park Ave Plainfield, NJ 07060 |
| Year Built: | 1945 |
| Current Occupancy: | 100% |
| # of Units | 23 units |
| Stories: | 4 |
Plainfield, New Jersey is a multifamily commuter market (25 miles to New York City) with low vacancy and a growing population. The Property itself is located half a mile from the train station, which provides access to New York City, and across the street from Plainfield High School, City Hall, and the Plainfield Library Plainfield is located within Union County, New Jersey. Union County ranks 92nd. among the highest income and 74th. by personal per-capita income counties in the United States. Union County is part of the New York metropolitan area and is the third most densely populated county in New Jersey. 10% of Fortune 500 companies and 3% of Fortune 1000 Companies are headquartered within 30 miles of the Property. 13 Fortune 1000 companies are located within 10 miles of the Property.
Demographic information below provided by www.onboardnavigator.com.
Northern New Jersey Multifamily Overview
Source: Marcus & Millichap Apartment Research Market Report
- An upswing in development could not overtake apartment demand during the last year, pushing vacancy down by 30 basis points to 2.2%.
- Assets in Union County and Essex County recorded vacancy rates that were pressured by increases in supply, with vacancy rising 180 basis points to 2.7% and 200 basis points to 4.0%, respectively. Weakness in these counties was based more on the timing of completions than a lack of demand for the offerings.
- Cap rates are down marginally on a year-over-year basis to the high-5% range, while core areas in Bayonne and Fort Lee can sink into the low-5% range. More suburban locations can trade into the mid-6% range, underscoring the urban preference of investors.
- Along with rising occupancy, properties in Morris County enjoyed a 3.0% lift in average effective rents to $1,786 over the past year. Union County experienced a similar expansion; rents hit $2,098 per month, up 2.9% year over year.
Union County Effective Rent and Occupancy Rate Change
Chart provided by Axiometrics
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