The Property is being acquired at a basis of $119,444 per unit, which compares favorably to recent comparables trading upwards of $160,000 per unit.
Per CoStar, current rents present a 21% discount to submarket averages and appear to offer a compelling mark-to-market opportunity as evidenced by the competitive set.
The Property is well-located, situated 13 miles East of the Portland CBD, and within three miles of a Boeing factory (1,600 employees), an Amazon fulfillment center (1,500 employees), a 100-bed medical center, as well as downtown Gresham. The Property is also across the street from the MAX train station, offering affordable and convenient access throughout the Portland MSA.
Resort-style pool, laundry facilities and a playground.
Cooper Street Capital
Cooper Street Capital (the "Real Estate Company" or "CSC") is a private equity real estate company that applies targeted acquisition strategies and active asset management to provide consistent risk-adjusted returns for investors. By structuring each investment as an individual partnership, Cooper Street Capital allows partners to invest directly. The company is headquartered in Aspen, Colorado and also has an office in San Francisco, California.
CSC’s team is committed to sourcing commercial real estate investment opportunities from across the western United States that have demonstrated strong ﬁnancial performance in the past or that exhibit the potential for gains in the future. In either case, potential acquisitions must be supported by strong market fundamentals. CSC currently oversees $665 million in assets under management throughout Texas, New Mexico, Colorado, and Oregon.https://www.cooperstreetcapital.com/
Brandon Cooper has spearheaded the acquisition of over $450 million worth of real estate assets in the last five years, which includes more than 4,000 multifamily units across the United States. Prior to founding Cooper Street Capital, he was the co-founder of two other real estate investment firms, Maroon Peak Partners and I-95 Ventures. Before his ventures in real estate, Brandon worked for Merrill Lynch and previous to that, The Center for Middle East Peace in Washington, D.C. He graduated Magna Cum Laude from Bates College and was on the cross-country skiing team.
Prior to joining Cooper Street Capital, Matt Cooper worked with the US Delegation to the World Trade Organization (WTO) in Geneva, Switzerland and the Organisation for Economic Co-operation and Development (OECD) in Paris, France. As an economist, Matt executed several large research projects related to the international trade system and the economics of corporate governance frameworks. Matt holds a Bachelor of Arts in Political Science and French Language from the University of Virginia and a Masters of Science in the International Political Economy from the London School of Economics.
Cooper Street Capital currently oversees $426 million in assets under management throughout Texas, New Mexico, Colorado, and Oregon and has sold $289 million in assets since inception.
Currently Under Management:
|Property||Location||Asset Type||Date Acquired||Units||Purchase Price||Current Value / Sale Price|
|Cedar 31||Austin, TX||Multifamily||Apr-17||14||$2,310,000||$3,100,000|
|1515 Clermont||Denver, CO||Multifamily||Jul-17||36||$5,500,000||$7,435,000|
|Gallery Park/Westfal||Portland, OR||Multifamily||Jan-19||93||$18,200,000||$22,730,000|
|Mueller Rose||Austin, TX||Multifamily||Mar-19||181||$18,825,000||$22,000,000|
|CSC Spanish Trails||Austin, TX||Multifamily||Mar-19||40||$6,238,000||$6,450,000|
|CSC Ravens Portfolio||Houston, TX||Multifamily||Apr-19||75||$13,000,000||$14,000,000|
|Barton Ridge||Austin, TX||Multifamily||May-19||37||$6,025,000||$6,850,000|
|Pyramid Portfolio||Albuquerque, NM||Multifamily||Jun-19||34||$1,905,000||$2,300,000|
|Bannister Place||Austin, TX||Multifamily||Jul-19||20||$3,300,000||$3,435,000|
|The French Quarter||Albuquerque, NM||Multifamily||Jul-19||84||$3,400,000||$4,730,000|
|The Zeno Apartments||Portland, OR||Multifamily||Aug-19||22||$4,250,000||$5,000,000|
|305 Flats||Austin, TX||Multifamily||Aug-19||32||$4,200,000||$4,500,000|
|Cascade Apartments||Austin, TX||Multifamily||Sep-19||198||$31,500,000||$32,000,000|
|Villas Esperanza||Albuquerque, NM||Multifamily||Sep-19||188||$12,250,000||$12,250,000|
|Miller Square||Austin, TX||Multifamily||Sep-19||51||$8,640,000||$8,640,000|
|305 Flats||Austin, TX||Multifamily||Nov-19||32||$4,200,000||$4,200,000|
|Chestnut Park||San Antonio, TX||Multifamily||Dec-19||145||$12,000,000||$12,000,000|
|Arbors and Courtyards||Albuquerque, NM||Multifamily||Dec-19||529||$38,000,000||$41,000,000|
|Barberry Village||Portland, OR||Multifamily||Jan-20||180||$21,500,000||$28,000,000|
|Longhorns Portfolio||Austin, TX||Multifamily||Mar-20||84||$11,000,000||$11,000,000|
|Amber Hill||San Antonio, TX||Multifamily||Mar-20||244||$16,750,000||$20,700,000|
|Blue Vine Apartments||San Antonio, TX||Multifamily||Apr-20||111||$10,050,000||$10,050,000|
|The Lexington Place||Albuquerque, NM||Multifamily||Aug-20||156||$11,750,000||$11,750,000|
|River Park Apartments||New Braunfels, TX||Multifamily||Sep-20||100||$7,800,000||$10,000,000|
|Mesa/Mountain||El Paso, TX||Multifamily||Sep-20||541||$29,000,000||$29,000,000|
|Vista Grande||Albuquerque, NM||Multifamily||Oct-20||168||$11,000,000||$11,000,000|
|Mountaindale||El Paso, TX||Multifamily||Nov-20||88||$5,100,000||$5,100,000|
|Creeks Edge Apartments||Austin, TX||Multifamily||Jan-21||200||$23,000,000||$23,000,000|
|Netherwood Village||Albuquerque, NM||Multifamily||Jan-21||220||$18,500,000||$18,500,000|
|Raintree Village||El Paso, TX||Multifamily||Mar-21||275||$15,750,000||$15,750,000|
|Evergreen Apartments||Santa Fe, NM||Multifamily||Under contract||70||$6,300,000||$6,300,000|
|Alexis Apartments||Las Cruces, NM||Multifamily||Under contract||170||$13,235,000||$13,235,000|
Previously Owned Assets:
|Property||Location||Asset Type||Date Acquired||Units||Purchase Price||Current Value / Sale Price||Sale Date|
|Highland Park||Albuquerque, NM||Multifamily||Feb-13||80||$5,125,000||$6,400,000||Feb-16|
|MP Netherwood||Albuquerque, NM||Multifamily||Aug-13||220||$13,975,000||$18,500,000||Jan-21|
|Citadel Apartments||Albuquerque, NM||Multifamily||Mar-14||233||$9,719,000||$14,792,000||Nov-17|
|I-95 Portfolio||Portland, ME||Multifamily||Jul-14||54||$6,550,000||$9,500,000||Oct-17|
|Bowdoin Realty||Portland, ME||Multifamily||Dec-14||41||$5,630,000||$9,900,000||Oct-17|
|94-96 Winter||Portland, ME||Multifamily||Feb-15||10||$900,000||$1,400,000||Oct-17|
|Bricklight Capital||Portland, ME||Multifamily||Jul-15||45||$4,900,000||$7,100,000||Oct-17|
|East End||Portland, ME||Multifamily||Sep-15||37||$4,300,000||$5,800,000||Oct-17|
|Bricklight, II||Portland, ME||Multifamily||Sep-15||24||$2,730,000||$3,250,000||Jul-16|
|773 Congress||Portland, ME||Multifamily||Sep-15||5||$390,000||$420,000||Aug-16|
|59 Bramhall||Portland, ME||Multifamily||Aug-15||9||$625,000||$750,000||Jul-16|
|CSC Bear Creek||Albuquerque, NM||Multifamily||Jun-16||84||$2,820,000||$3,400,000||Jul-19|
|Bannister Apartments||Austin, TX||Multifamily||May-17||34||$2,485,000||$3,300,000||Jul-19|
|The Goose Nest||Portland, OR||Multifamily||Aug-17||22||$3,075,000||$4,260,000||Aug-19|
|Villas De La Luz||Austin, TX||Multifamily||Jan-18||240||$20,500,000||$25,225,000||Jan-19|
|Courtyards and Arbors||Albuquerque, NM||Multifamily||Feb-18||529||$31,100,000||$38,000,000||Dec-19|
|English Aire/Lafayette||Austin, TX||Multifamily||Aug-18||397||$38,750,000||$45,000,000||Mar-20|
|Sage Canyon||Albuquerque, NM||Multifamily||Aug-18||105||$8,790,000||$10,260,000||Jan-20|
|CSC North Austin||Austin, TX||Multifamily||Jan-19||523||$56,000,000||$62,350,000||Jan-21|
|Rock Creek||Albuquerque, NM||Multifamily||Jun-19||121||$6,875,000||$8,000,000||Sep-20|
|Lexington Realty Capital||Albuquerque, NM||Multifamily||Aug-19||156||$7,400,000||$11,750,000||Aug-20|
The above bios and track record were provided by Cooper Street Capital and have not been independently verified by RealtyMogul.
In this transaction, RealtyMogul investors are to invest in Realty Mogul 143, LLC ("The Company"), which is to subsequently invest in CSC Barberry Village Realty Capital, LLC ("The Target"), a limited liability company that will hold title to the Property. Cooper Street Capital (the "Real Estate Company") is under contract to purchase the Property for approximately $21.5 million ($119,444 per unit) and the total project cost is expected to be approximately $25.1 million ($139,333 per unit).
The Real Estate Company plans to implement a value-add strategy. This strategy assumes a $2.4 million capital improvement budget tailored to address interior and exterior renovations over three years, resulting in a target renovation premium of $196 per unit (~20% above in-place).
The exterior renovations, budgeted at $754,799, include adding a clubhouse, pool upgrades, landscaping, exterior painting, balcony updates and a signage package. The Real Estate Company plans to spend approximately $1.3 million ($8,341 per unit) on interior renovations for 160 units, including flooring upgrades, cabinet replacements, new black appliances, washer-dryers, bathroom renovations and painting. This budget also includes a 10.0% contingency and a 5.0% construction management fee. The business plan calls for a three-year hold, at which point the Property is expected to sell at a 5.5% cap rate for $30.2 million ($167,966 per unit).
Capital Expenditure Budget
|Private Patios Enclosure (Ground Floor Units)||$167,959|
|Energy Efficient Windows||$67,500|
|Gazebo 12x16 Double Roof Aluminum||$10,000|
|Miscellaneous Repairs/Green Updates||$50,000|
|Interior Renovations||Per Unit|
|GE 24" Dishwasher||$46,280||$356|
|Broan 30" White Range Hood||$6,889||$53|
|GE 30" Electric Stove||$74,945||$577|
|GE 15.5 Cubic Feet Top Mount Fridge||$99,515||$766|
|Bathroom Hardware Package||$40,000||$250|
|Paint & Drywall Rehabilitation||$24,000||$150|
|Kitchen Cabinet Paint/Hardware||$20,000||$125|
|Washer/Dryer Hook-Ups Plumbing||$562,230||$6,247|
|WAC Lighting Link 3 Light 27" Wide LED Bath||$19,120||$120|
|Satco Blink Plus 15" W White 4000K LED||$16,640||$104|
|Construction Manager (5%)||$100,465|
|Contingency Reserve (10%)||$200,930|
|Total Estimated Budget||$2,405,698|
Barberry Village is a class-C garden-style multifamily property located in the Gresham submarket of Portland, OR. Built in 1974, the Property is comprised of one- (68 units) two- (104 unit) and three- (8 units) bedroom floor plans combining to 180 units. Amenities include a resort-style pool, community laundry facilities, and a playground. The Property is 92.5% occupied with in-place rents of $958, which reflects a 21% discount to submarket averages, per CoStar.
The Property is located 13 miles outside of Portland CBD, proximate to I-84 and I-205. Within three miles of the Property are a Boeing factory, an Amazon Fulfillment Center, Mt. Hood Medical Center, and downtown Gresham.
|Unit Type||# of Units||% of Total||Unit Size (square feet)||In-place Rent||Post-reno Rent|
|1 Bed, 1 Bath||68||38%||610||$886||$1,030|
|2 Bed, 1 Bath||104||58%||826||$992||$1,220|
|3 Bed, 1 Bath||18||4%||917||$1,129||$1,350|
Lease Comparables - Post Renovation
|# Units (1x1)||132||23||42||78||52||65||68|
|# Units (2x1)||67||18||49||117||88||68||104|
|# Units (3x1)||14||14||8|
|Distance from Subject||1.5 miles||0.7 miles||1.3 miles||0.1 miles||0.6 miles||0.8 miles||N/A|
|# of Units||182||112||124||79||124||180|
|Distance from Subject||6.1 miles||3.4 miles||2.2 miles||1.7 miles||3.3 miles||N/A|
Sale and Lease Comparable information provided by CoStar, Axiometrics, and the Real Estate Company.
Per Costar, with substantial inventory but limited development, the Gresham/Far East submarket boasts below-average rents and vacancies. Tenants often come here after getting priced out of more expensive urban core areas. The submarket was a hotbed of foreclosures during the housing crisis. Many residents were forced to rent apartments in the area, which has contributed to strong fundamentals. Cumulative rent growth has been rapid, but income restraints may make it difficult to sustain such an accelerated pace of growth.
Until recently, the submarket remained quiet during Portland’s building boom. No new inventory delivered for six consecutive years, but a steady trickle of units began coming on line in 2017. Though these smaller projects have not significantly affected fundamentals, several larger communities are now beginning to come on line. Benefiting from low prices and continued interest from a mix of local and institutional players, submarket sales volume has exceeded $100 million for each of the past five years.
Per Axiometrics, effective rent in the Portland MSA increased 1.7% from $1,401 in 2Q19 to $1,434 in 3Q19, which resulted in an annual growth rate of 2.9%. Annual effective rent growth has averaged 2.7% since 2Q96. The market's annual rent growth rate was below the national average of 3.0%. Out of the 150 markets ranked by RealPage nationally, Portland-Vancouver-Hillsboro, OR-WA was 32nd for quarterly effective rent growth, and 79th for annual effective rent growth for 3Q19.
The market's occupancy rate increased from 96.1% in 2Q19 to 96.3% in 3Q19, and was up from 96.2% a year ago. The market's occupancy rate was below the national average of 96.4% in 3Q19. The market's occupancy rate has averaged 95.0% since 2Q96.
Nearby Development - Rockwood Rising
The City of Gresham Redevelopment Commission is developing over 200,000 square feet of new commercial, office and retail space, including over 100 new apartment homes 0.1 miles from the Property. Rockwood Rising is expected to be a bustling center featuring a market hall, a public plaza, and “Innovation Hub” offering job hunting assistance, technical training, and space for small business owners. The project is expected to deliver in 2021.
|1 Mile||3 Miles||5 Miles|
|Median Household Income||$44,252||$50,253||$54,060|
|Average Household Size||2.9||2.7||2.7|
|Median Home Value||$226,697||$254,503||$269,102|
|Population Growth (2019-2024)||4.69%||4.75%||4.95%|
Demographic information above was obtained from CoStar.
|Sources of Funds||Amount|
|Total Sources of Funds||$25,080,000|
|Uses of Funds||Amount|
|Real Estate Company Acquisition Fee||$215,000|
|Broker Dealer Fee||$160,000|
|Lender Origination Fee||$178,800|
|Taxes and Insurance Reserve||$99,879|
|Other Closing and Pursuit Costs||$470,623|
|Total Uses of Funds||$25,080,000|
Please note that the Real Estate Company's equity contribution may consist of friends and family equity and equity from funds controlled by the Real Estate Company.e
The expected terms of the debt financing are as follows:
- Estimated Proceeds: $17,880,000
- Estimated Rate (Floating): 30-Day LIBOR + 275 basis points
- Amortization: None
- Interest Only: Full term
- Term: 2 years
- Extension Options: Two (2) one-year options to extend (0.25% fee for each)
- Exit Fee: 1.0%
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.
Barberry Village, LLC intends to make distributions to Realty Mogul 143, LLC as follows:
- To the Members, pari passu, all excess cash flows and appreciation to a 10.0% IRR to the Members,
- 70.0 / 30.0 (70.0% to the Members / 30.0% to Promote) of excess cash flows 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).
Realty Mogul 143, LLC will distribute 100% of its share of excess cash flow (after expenses and fees) to the members of Realty Mogul 143, LLC (the RealtyMogul.com investors).
Distributions are expected to start in December 2020 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Sponsor, who may decide to delay distributions for any reason, including maintenance or capital reserves.
|Year 1||Year 2||Year 3|
|Effective Gross Revenue||$2,163,684||$2,349,551||$2,568,888|
|Total Operating Expenses||$989,438||$1,012,425||$1,036,764|
|Net Operating Income||$1,174,246||$1,337,126||$1,532,124|
|Distributions to RealtyMogul 143, LLC Investors||($4,040,000)||$149,239||$238,695||$6,028,176|
|Net Earnings to Investor
- Hypothetical $50,000 Investment
Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Acquisition Fee||$215,000||Real Estate Company||Capitalized Equity Contribution||1.0% of the Property purchase price|
|Broker-Dealer Fee||$160,000||North Capital (1)||Capitalized Equity Contribution||Greater of $50,000 or 4.0% of the equity raised by RealtyMogul 143, LLC|
|Construction Management Fee||5.0% of Capital Expenditure Budget||Real Estate Company||Capitalized Equity Contribution|
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Management and Administrative Fee||1.0% of amount invested in RealtyMogul 143, LLC||RM Manager, LLC||Distributable Cash||RM Manager, LLC is the Manager of RealtyMogul 143, 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) 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.
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.
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.
Oregon Rent-Control Law (Senate Bill 608)
Oregon's new rent-control law passed in February 2019 may reduce Property revenues as it caps rent increases over a 12-month period to seven percent (7%) plus inflation throughout the state (based on the Consumer Price Index for Western states), which for the remainder of 2019 amounts to a rent increase cap of approximately 10.3 percent (10.3%).
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.
The loan being used to acquire the Property is expected to have an initial two (2) year term plus two one (1) year extensions. However, the Sponsor Entity anticipates the Investment Period to be approximately three (3) years. The Investment Period length potentially creates capital markets risk in the event that market conditions deteriorate over the next two (2) 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 or be refinanced after the acquisition or on the rate and terms anticipated. Any delays or adverse effects of a lack of suitable refinancing options could adversely affect the Property’s financial results or 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 two (2) years of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.
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.
(877) 781-7062Contact Investor Relations