At A Glance

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.

Property Details

Address:	905-919 Park Ave Plainfield, NJ 07060
Year Built:	1945
Current Occupancy:	100%
# of Units	23 units
Stories:	4

Location

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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