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Funded
Multifamily
Windfield Senior Estates & Family Housing
Hadley, MA
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Colony Hills Capital
16.1%* TARGET IRR %-%
12.3%* TARGET AVG CASH ON CASH
3.06x* TARGET EQUITY MULTIPLE
Estimated Hold Period 10 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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Project Summary
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Overview
Acquisition of a value-add 160-unit multifamily community, containing both affordable and market-rate units, in Hadley, MA alongside a local, experienced Real Estate Company.
Occupancy

According to Axiometrics, the Amherst/Hampshire County submarket has a vacancy rate of only 1.8%.  Vacancy has averaged 2.2% since 2012, and is projected at 2.0% through 2023.  Affordable units in the submarket have a 2+ year waitlist.

Market

According to Axiometrics, the Amherst/Hampshire County submarket has enjoyed average annual rent growth of 4.1% since 2006, and 3.7% is projected through 2023.  That said, only 3.0% market rent growth has been underwritten.

Potential Income

With in-place rents 31% below the submarket average, per Axiometrics, there is upside potential. Execution risk is mitigated by 113 affordable units, for which rents are expected to increase to the maximum allowable.

Property At A Glance
Year Built 2000 and 2002
# of Units 160
# of Buildings 5
Current Occupancy 95.6%
Parking Ratio 1.8 spaces per unit
Acquisition Price

$14,035,000

Investment Highlights
The Real Estate Company is purchasing the Property for $87,719 per unit, which represents a going-in cap rate of 6.48% on expected year one net operating income
The Real Estate Company has budgeted for capital improvements in the amount of $481,460 ($3,009 per unit)
Property management is to be handled by Hallkeen Management, which manages more than 8,700 units spread across 95 properties throughout the East Coast. 90% of Hallkeen's properties are a mix of various levels of affordability, and 30% are designated senior housing.
The exit strategy is to sell the Property in 10 years at an expected cap rate of 6.75%
Management
Cumulative Distributions

Colony Hills Capital

Colony Hills Capital offers a specialized focus on one market segment, value-add multifamily housing; mismanaged, underperforming, and undervalued Class A- through B- multifamily assets in growing markets. Their extensive and worldwide network of relationships uncovers significant opportunities, allowing them to respectfully achieve a “win-win” on investing in multifamily properties. Each business plan is property specific; targeted capital improvements and strong hands-on management throughout the hold period maximize asset value and investor returns.

https://www.colonyhillscapital.com/
  • Glenn Hanson
    Founder & Chief Executive Officer
  • David Kaufman
    President & Chief Investment Officer
Glenn Hanson
Founder & Chief Executive Officer

Glenn Hanson, the Founder and majority shareholder of Colony Hills Capital, LLC has over 30 years of experience managing complex organizations. His experience has led to the successful completion of 27 properties since October 2011, which included originating and closing debt and equity, syndication, and collaborative team supervision.

Glenn understands the critical components of a successful commercial real estate team. In just a few years he built a cohesive, productive team. In the past 7 years, under his direction, the team at Colony Hills has sourced and structured 8,700+ units totaling $545 million across the United States. To date, Colony Hills has exited its portfolio investments with every transaction being profitable.

As the primary fund-raiser for Colony Hills, Glenn has built an impressive personal network built on a 35-year career of successful deal flow and continues to cultivate a strong network of business partners from around the globe. This influential network is a result of his persistent quest for dedicated and uncompromising business partners working together to get the deal done.

David Kaufman
President & Chief Investment Officer

David Kaufman is the President, Chief Investment Officer, and a Managing Partner of Colony Hills. He has over 25 years of real estate, capital markets, and operational experience gained from working as a risk-arbitrage analyst for a US-based hedge fund, working for a privately held national real estate firm as an acquisition analyst, and as an owner-operator of his own real estate investment and management business. David has a keen eye for underperforming and undervalued investment opportunities.

Under David’s leadership, the Company has experienced tremendous growth, nearly tripling the assets under management. His brilliant sense for off-market, under-performing, and under-valued investment opportunities has led to the successful purchase and profitable close of all of Colony Hills' real estate investments. He continues to fill their pipeline with well-located assets that offer real opportunities for superior returns. To this day, David holds real estate investments that date back to 1990 and continues to personally invest in the future of Colony Hills.

Track Record

Properties Owned and Managed State Asset Type Acq Date # of Units Total Capitalization Sale Price
Riverchase Landing AL Multifamily 10/6/2011 468 $31,914,292 $35,650,000
Wynthrope Forest GA Multifamily 8/17/2012 270 $15,188,369 $20,600,000
Canterbury Townhomes  GA Multifamily 10/1/2015 160 $9,259,460 $12,500,000
Cabana AL Multifamily 5/17/2013 545 $22,219,387 $26,093,250
Pathways AL Multifamily 5/17/2013 244 $15,530,724 $20,943,750
Sandpiper AL Multifamily 5/17/2013 253 $9,553,469 $13,263,000
Windsor Place AL Multifamily 5/17/2013 384 $23,321,832 $30,900,000
Yester Oaks AL Multifamily 5/17/2013 587 $34,165,750 $43,100,000
Key Vista FL Multifamily 8/10/2018 244 $17,650,000 $27,250,000
Windfield Estates MA Multifamily 10/23/2019 160 $15,976,815 TBD
Lakeshire Village GA Multifamily 9/1/2020 284 $26,564,050 TBD
Nottingham Village  TX Multifamily 5/28/2021 317 $54,679,560 TBD
Chapel Run GA Multifamily 7/15/2021 172 $22,850,000 TBD
Fields at Peachtree GA Multifamily 9/15/2021 240 $42,646,162 TBD
City West  TX Multifamily 10/20/2021 510 $82,500,000 TBD
City Park TX Multifamily 1/21/2022 308 $78,762,786 TBD
Paramount at Kingwood TX Multifamily 3/7/2022 372 $73,489,250 TBD
Sub Total       5,518 $576,271,906 $230,300,000
             
Properties Assigned for Fee            
Houston Portfolio (9 Properties) TX Multifamily 12/12/2013 2,594 $250,000,000 Fee Income
Bristol Place (1 Property) LA Multifamily 7/14/2014 312 $38,250,000 Fee Income
Indianapolis Portfolio (7 Properties) IN Multifamily 2/18/2016 2,517 $84,050,000 Fee Income
Sub Total       5,423 $372,300,000  
             
Total       10,941 $948,571,906  

The bio and track record were provided by the Sponsor and have not been verified by RealtyMogul.

Business Plan

In this transaction, RealtyMogul investors are to invest in RealtyMogul 135, LLC ("The Company"), which is to subsequently invest in CHC Residential IX LLC ("The Target"), a limited liability company that will directly or indirectly own interest in the Property. Colony Hills Capital (the "Real Estate Company") is under contract to purchase the Property for $14.0 million ($87,719 per unit) and the total project cost is expected to be $15.5 million ($97,054 per unit).

The Real Estate Company plans to implement a light value-add strategy, for which it has capitalized $481,460 ($3,009 per unit).  Exterior renovations are to include new signage, leasing office renovations, parking lot resealing/restriping, and renovations to the building entrances. Renovations to the unit interiors will be limited to new countertops at Windfield Family Housing and appliance replacement as-needed. Additionally, the Real Estate Company plans to raise the market-rate units to market, and increase the rents in the units governed by the LIHTC program to the maximum allowed. Hallkeen Management will be employed as Property Manager due to the company's extensive experience managing affordable housing. Hallkeen has over 27 years of managing multifamily properties, and is based in Norwood, MA. 90% of Hallkeen's properties are subject to some kind of affordability restriction, and 30% are designated senior housing. Additionally, Hallkeen has an in-house compliance department. Ultimately, the Real Estate Company expects average rental increases of $191 per unit.  The business plan calls for a 10-year hold, at which point the Property will be sold at a 6.75% cap rate for $21.7 million ($135,332 per unit).

Below is a summary of the capital improvements budget:

Capital Improvements Budget
Exterior/Common Area Improvements Total Per Unit
Signage and Branding $30,000 $188
Dumpster Corrals $10,000 $63
Landscaping $20,000 $125
Leasing/Common Area Renovations $35,000 $219
Entry Ways $55,000 $344
Seal/Stripe $50,000 $313
Dog Park $15,000 $94
Fitness Equipment $10,000 $63
Picnic Table/Grilling Station $15,000 $94
Common Area Paving $30,000 $188
Total Exterior/Common Area Improvements $270,000 $1,688
Interior Unit Improvements    
Countertops $40,000 $250
Total Interior Unit Improvements $40,000 $250
Construction Management Fee (6%) $18,600 $116
Contingency (49%) $152,860 $955
Grand Total $481,460 $3,009

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

Property
Property Details

Windfield Senior Estates & Family Housing (“The Property”) is a 160-unit, Class-B residential community built in 2000 and 2002. The Property is located in Hadley, MA, approximately 25 miles North of downtown Springfield, MA and 95 miles West of downtown Boston, MA. It is comprised of two residences, Windfield Senior Estates and Windfield Family Housing. Windfield Senior Estates contains two buildings with a total of 80 units, while Windfield Family Housing is comprised of three buildings also with a total of 80 units. Within one mile of the Property is Amherst College, UMass Amherst, University Business Park, a golf course, a post office, and numerous dining and retail options. 

Of the 80 units in Windfield Family Housing, 47 command market rents.  The remaining 33 are encumbered by the use and occupancy restrictions associated with the Low-Income Housing Tax Credit (LIHTC) program. Per the LIHTC program, the Property must rent either a minimum of 20% of the rental units to households whose incomes are at or below 50% of the area median gross income (AMI) or rent a minimum of 40% of the rental units to households whose incomes are at or below 60% of AMI. The LIHTC restrictions at the Property run in perpetuity (99 years). In addition to the LIHTC guidelines at Windfield Family Housing, 11 units at the Property are also subject to the HOME Investment Partnership Program. This program includes an Affordable Housing Restriction that dictates that three of the 11 units must be rented to families whose annual income is less than 50% of the AMI, while the remaining eight units must be rented to families whose income is less than 60% of AMI. The restriction runs for 30 years, terminating in 2032. However, the units will subsequently revert back to the restrictions dictated by the LIHTC program.

All 80 units at Windfield Senior Estates are subject to LIHTC restrictions. Additionally, tenants must be at least 62 years of age.

 A tabular summary of the units at the Property can be found below.

Property Details
Unit Type # of Units Avg SF/Unit Avg Rent
(In-Place)
Avg Rent (Stabilized)
Senior Living 80 640 $761 $880
1 L Home 50% Family 1 780 $592 $617
1 H Home 60% Family 1 780 $665 $670
1 LIHTC Family 2 780 $775 $816
2 L Home 50% Family 1 1,060 $721 $742
2 H Home 60% Family 2 1,060 $793 $822
2 LIHTC Family 2 1,060 $957 $969
2 + den LIHTC Family 4 1,135 $991 $982
3 L Home 50% Family 1 1,190 $897 $892
3 H Home 60% Family 4 1,190 $975 $1,022
3 LIHTC Family 9 1,190 $1,080 $1,109
3 + den H Home 60% Family 1 1,422 $1,075 $1,083
3 + den LIHTC Family 5 1,422 $1,096 $1,109
1 Bed FM Family 4 780 $894 $1,160
2 Bed FM Family 15 1,135 $1,098 $1,451
3 Bed FM Family 22 1,190 $1,279 $1,836
3/den Bed FM Family 6 1,422 $1,425 $1,711
Total/Averages 160 901 $935 $1,126
Comparables

Rent Comps
  The Boulders Southpoint Mill Valley Hawkins Meadow Averages Subject (Proforma)
Submarket Amherst Amherst Amherst Amherst   Amherst
CoStar Rating B C B B   B
Units 256 182 148 120 167 47
Year Built 1974 1968 1992 1967 1975 2000/2002
Average SF 844 870 1,267 809 947 1,167
Average Rental Rate $1,449 $1,230 $2,109 $1,500 $1,572 $1,640
Average Rental Rate PSF $1.72 $1.41 $1.66 $1.85 $1.66 $1.40
Distance from Subject 1.0 miles 1.0 miles 1.2 miles 1.7 miles 1.2 miles  

All rents are net effective and have been adjusted for utilities

Only market-rate rents and comps are shown

Sale Comparables
  Clark House Mason Manor Stony Brook Lodge Averages Subject
Date Mar '17 Jun '18 Oct '18   Sep '19
Submarket Amherst Springfield Amherst   Amherst
Costar Rating C C B   B
Units 100 48 32 60 160
GBA (SF) 94,560 44,000 28,985 55,848 144,136
Year Built 1978 1960 N/A 1969 2000/2002
Purchase Price $12,500,000 $4,150,000 $2,800,000 $6,483,333 $14,035,000
$/Unit $125,000 $86,458 $87,500 $99,653 $87,719
$/SF $132 $94 $97 $108 $97
Cap Rate N/A N/A N/A N/A 6.51%
Distance from Subject (mi.) 1.3 miles 10.5 miles 8.2 miles 6.7 miles  

Sale and lease comps were obtained from CoStar and Axiometrics

Location

Market Overview

Per CoStar, Springfield has a proud history, having been used as the location of the United States' first national armory. This led to a proliferation of private gun makers along the Connecticut River Valley, sometimes referred to as "Gun Alley". During the industrial revolution, Springfield’s precision manufacturing prowess led to other manufacturing innovations such as the first successful motorcycle company and the discovery of vulcanized rubber. The area around Springfield/Hartford is now known as the ‘knowledge corridor’ due to this history of innovation and its significant number of universities. The major universities are UMass Amherst, Westfield State University, Western New England University, Amherst College, Smith College, Mount Holyoke College, Hampshire College, and Springfield College. This sector is typically unimpacted by business cycles, helping to stabilize the local economy. The biggest story in Springfield in the past few years is MGM’s $950 million casino and hotel complex in downtown Springfield, which opened in August 2018. The casino is making annual payments to the city, which the city is using to enhance its police force; the mayor of Springfield announced that it is graduating 60 police officers from its academy this year, its largest class in 20 years. 

Per Axiometrics, effective rent increased 0.1% from $1,195 in 1Q19 to $1,196 in 2Q19, and annual effective rent growth was 3.7% in from 3Q18 through 2Q19. Annual effective rent growth is forecast to be 3.8% in 2019, and average 3.0% from 2020 to 2022. Annual effective rent growth has averaged 3.5% since 1Q95. The market's annual rent growth rate was above the national average of 2.7%. The market's occupancy rate decreased from 98.1% in 1Q19 to 97.5% in 2Q19, and was down from 97.7% a year ago. The market's occupancy rate is expected to be 97.7% in 2019, and average 97.5% from 2020 to 2022. The market's occupancy rate has averaged 96.6% since 1Q95.

Submarket Overview

Per Axiometrics, effective rent decreased 0.6% from $1,359 in 1Q19 to $1,351 in 2Q19. The submarket's annual rent growth rate of 3.5% was below the market average of 3.7% from 3Q18 through 2Q19. Annual effective rent growth is forecast to average 3.7% from 2019 through 2022. The annual effective rent growth has averaged 3.9% per year since 2Q97. The submarket's occupancy rate decreased from 98.2% in 1Q19 to 97.3% in 2Q19, and was down from 98.0% a year ago. The submarket's occupancy rate was below the market average of 97.5% in 2Q19. For the forecast period, the submarket's occupancy rate is expected to increase to 97.5% for 2019 and average 97.4% from 2020 to 2022. The submarket's occupancy rate has averaged 95.0% since 2Q97.

Demographic Information

Demographics
  1 Mile 3 Miles 5 Miles
Population (2019) 1,963 36,496 53,724
Population (2024) 2,058 37,071 54,642
Average Age 40 30 34
Median Household Income $44,736 $42,557 $55,695
Average Household Size 2.2 2.4 2.4
Median Home Value $350,769 $365,567 $345,441
Population Growth 2019-2024 4.84% 1.58% 1.71%

Demographic information above was obtained from CoStar.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Amount
Debt $11,228,000
Equity $4,300,696
Total Sources of Funds $15,528,696
Uses of Funds Amount
Purchase Price $14,035,000
Real Estate Company Acquisition Fee $280,700
Broker Dealer Fee $140,000
Loan Fee $89,824
CapEx Budget $481,460
Working Capital $25,000
Escrows $112,736
Closing Costs $363,976
Total Uses of Funds $15,528,696

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: $11,228,000
  • Estimated Rate (Fixed): 4.00%
  • Term: 12 years
  • Interest Only: 3 years
  • Prepayment Penalty: Yield Maintenance

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. 75.0% / 25.0% (75.0% to Members / 25.0% to Promote) of excess cash flow to a 16.0% IRR;  
  3. 50.0% / 50.0% (50.0% to Members / 50.0% 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 Year 6 Year 7 Year 8 Year 9 Year 10
Effective Gross Revenue $1,890,096 $2,106,965 $2,189,186 $2,254,860 $2,322,282 $2,391,720 $2,463,237 $2536,892 $2,612,752 $2,690,881
Total Operating Expenses $979,986 $1,041,353 $1,044,104 $1,073,987 $1,104,987 $1,136,451 $1,169,095 $1,202,718 $1,237,350 $1,237,020
Net Operating Income $910,109 $1,092,612 $1,145,082 $1,180,873 $1,217,524 $1,255,269 $1,294,142 $1,334,174 $1,375,402 $1,417,861
RealtyMogul 135, LLC Cash Flows
  Year 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Distributions to RealtyMogul 135, LLC Investors ($3,535,000) $48,649 $359,554 $462,572 $459,160 $368,770 $397,711 $427,515 $458,209 $489,819 $522,373 $6,814,206
Net Earnings to Investor
- Hypothetical $50,000 Investment
($50,000) $688 $5,086 $6,543 $6,494 $5,216 $5,625 $6,047 $6,481 $6,928 $7,389 $96,382
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 $280,700 Real Estate Company  Capitalized Equity Contribution 2.0% of the Property purchase price
Broker-Dealer Fee $140,000 North Capital (1) Capitalized Equity Contribution Greater of $50,000 or 4.0% of the equity raised by RealtyMogul 135, LLC
Construction Management Fee 6.0% 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 135, LLC RM Manager, LLC Distributable Cash RM Manager, LLC is the Manager of RealtyMogul 135, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2)
Asset Management Fee 2.0% of Effective Gross Income Real Estate Company Distributable Cash  
Property Management Fee 4.0% of Effective Gross Income Hallkeen Management Distributable Cash  

(1) North Capital Private Securities Corporation (“NCPS”), a registered broker-dealer who will act as placement agent for interests in the Company will be paid a fee as outlined above. NCPS will pay a referral fee to Mogul Securities, LLC (“MS”), an affiliate of the Manager and RealtyMogul, Co., for referring the transaction pursuant to a referral agreement between NCPS and MS. Certain employees of Realty Mogul, Co., an affiliate of Manager are registered representatives of, and are paid commissions by, NCPS.

(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.


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 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 96% occupied as of July 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.


Lease-Up Risks

As of July 2019, the Property had a 96% occupancy level, and the Sponsor intends to implement a capital improvement plan involving the renovations of certain units and a leasing program in its effort to maintain its current occupancy level. The Sponsor intends to renovate some of the units within the Property, in order to increase the current rental rates. There can be no assurance that such renovations will be consummated on a timely basis, that such work will not materially adversely affect other aspects of the operation of the Property, or that the planned rental rate increase will have favorable results to meet the goals the Sponsor projected. Any delays or adverse effects of such 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 3 years of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.


Prepayment Penalty

The loan for the acquisition or the Property, or any subsequent loan placed the Property, may involve a prepayment penalty. The Target may therefore have additional costs associated with the payoff of any loan that may result in an inability to take advantage of more favorable financing terms that may become available to it during the term of any such permanent loan or could incur additional loan payoff costs upon sale. If the Target seeks alternative financing, there can be no assurance that the Target will be able to obtain such refinancing on a timely or favorable basis.


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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