We run extensive background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to never allowing a sponsor with a criminal history / any securities related issue to use the platform, we may also turn down sponsors due to poor reference checks even if background and criminal checks come back clear.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent. When an investor makes an investment with unaffiliated sponsors using the RealtyMogul platform, the investor’s money is transferred directly into a third-party escrow account. All closing conditions in connection with a sponsor’s offering need to be met before the third-party escrow agent will approve releasing investor funds to the issuer or general partner. For example, if an issuer or general partner plans to use funds for a real estate acquisition that does not ultimately transact, the third-party escrow agent will not transfer investor funds to the issuer or general partner, and funds will be returned to investors.
Our controls include visiting every property (or a subset of properties if it’s a fund) to confirm the real estate is what and where the real estate is supposed to be.
We have robust quality controls with detailed checklists and a review of third-party reports.
The Property is being purchased at a favorable basis; the $70 per SF purchase price represents an 18.2% discount to the sale comps' average at a going-in cap rate of 9.88%. With positive leverage to approximately 65% loan-to-cost, quarterly cash distributions are expected to be a significant component of total returns to RealtyMogul investors.
The Property has a strong tenant base with a diversified rent roll. The anchor tenant, Winn-Dixie grocery center, has been a tenant at the Property since 1990 and has signed a fourth amendment last month extending its lease term through January 2030. The next two largest tenants - Harbor Freight and O'Reilly Auto Parts - have four and nine years remaining until their respective lease expirations. Upon acquisition, the weighted average lease term will have been 25 years.
The area enjoys a strong demographic profile, with CoStar projecting 11.0% population growth between 2019 and 2024 within a five-mile radius of the Property. Furthermore, the Tampa/St Petersburg market has a vacancy rate of 4.3% while the Polk County submarket has a vacancy rate of 3.4%. RM has modeled general vacancy of 7.0% to be conservative.
Core Equity Partners
Core Equity Partners (the "Real Estate Company") was founded in 2016 with the goal of acquiring e-commerce resistant neighborhood properties. The Real Estate Company invests in opportunistic retail shopping centers with a focus on discount retail and grocery-anchored assets. Target properties typically have a grocery or discount retail anchor element supplemented with service-oriented tenants. The Real Estate Company sources deals all over the country. Core Equity places an emphasis on traffic patterns, household concentration, and store-level performance from anchor tenants. They are focused on adding value to neighborhood shopping centers in secondary and tertiary markets. Core provides investors a passive real estate investment with steady and predictable cash flows and the highest quality of investor relations.
http://core-equitypartners.com/-
Robert ErlichManaging Partner -
Drew Angel, CCIM, CDPManaging Partner
Robert is the co-founder and Managing Principal of Core Equity Partners. He is responsible for investor relations and company growth for the firm.
Prior to forming Core he served as a director in the New York office of Duff & Phelps as part of the Transaction Opinions practice. He has more than a decade of experience in valuation of real estate and other assets, and played a lead role in the analysis and examination of Lehman Brother's Commercial Real Estate portfolio for its court appointed bankruptcy examiner. He holds a B.S. in business administration with a concentration in finance from Yeshiva University, where he graduated magna cum laude.
Over the past few years, Robert has amassed a portfolio of convenience oriented retail and service single tenant net leased ("STNL") properties, including properties leased to the USPS, Family Dollar, Dollar General, and Advance Auto, among others. Robert manages approximately 1,000,000 sq. ft. of flex and value add retail space together with family offices and other high net worth individuals. Ar Core, Robert focuses his time identifying and analyzing opportunities, structuring transactions and business development.
Drew is the co-founder and Managing Principal of Core Equity Partners, as such he is in charge of the day-to-day operations for the company.
Drew became a real estate professional in 2011 when he specialized in working with private equity groups in managing, leasing, redeveloping, and disposing of foreclosed retail shopping centers. From 2011 to 2013 he worked on multiple high-yielding projects that took shopping center occupancy from below 50% to well over 90%. After which he focused on investment brokerage and development throughout the south.
In 2017, He founded Core Equity Partners, where he currently serves as Managing Principal. Core invests in opportunistic retail shopping centers with a focus on discount retail and grocery-anchored assets. In his role, Drew oversees day-to-day management, leasing, financing, and investor relations of the Core portfolio of investments. Between investment sales brokerage and Core Equity transactions, Drew has overseen over $350,000,000 of transaction volume.
Drew holds business degrees in financial analysis and economics from the University of Arkansas. He earned the prestigious CCIM designation at the age of 25, making him one of the youngest designees in the country. Drew is also one of only four Arkansas CDP (Certified Developer) designees with the ICSC.
| Property | City, State | Asset Type | Acq Date | Units or SF | Purchase Price | Current Value/Sale Price |
| Imperial Plaza | Auburndale, FL | Retail | 2/1/2020 | 125,000 | $9,050,000 | $12,350,000 |
| Gateway Plaza | Christiansburg, VA | Retail | 2/20/2020 | 170,000 | $7,700,000 | $10,000,000 |
| Richneck Center | Newport News, VA | Retail | 6/1/2021 | 64,000 | $3,850,000 | $7,250,000 |
| Rainelle Plaza | Rainelle, WV | Retail | 6/30/2019 | 14,000 | $850,000 | $1,650,000 |
| Marion Square | Fairmont, WV | Retail | 6/30/2019 | 123,600 | $4,150,000 | $7,000,000 |
| Family Dollar | Galveston, TX | Retail | 8/1/2018 | 9,500 | $985,000 | $1,450,000 |
| Dollar General | Gramercy, LA | Retail | 7/1/2018 | 12,000 | $520,000 | $875,000 |
| Eton Square | Tulsa, OK | Retail | 1/20/2020 | 55,000 | $5,300,000 | $5,600,000 |
| Manchester Square | Columbus, GA | Retail | 1/1/2021 | 174,500 | $10,200,000 | $11,000,000 |
| Fulton Crossing | Corinth, MS | Retail | 10/1/2021 | 179,905 | $7,700,000 | $8,000,000 |
| Village Plaza | Hot Springs, AR | Retail | 2/1/2017 | 55,000 | $3,000,000 | $3,900,000 |
| Shoppes at Gloucester | Gloucester, VA | Retail | 8/1/2018 | 74,863 | $5,200,000 | $5,750,000 |
| Peckville Center | Peckville, PA | Retail | 6/30/2017 | 62,506 | $5,250,000 | $6,300,000 |
| Total | 13 | 1,119,874 | $63,755,000 | $81,125,000 |
The above track record information was provided by the Real Estate Company and has not been independently verified by RealtyMogul.
In this transaction, RealtyMogul investors are to invest in RealtyMogul 144, LLC (the "Company"), which is to subsequently invest in Core Imperial Plaza, LLC ("the "Target), a limited liability company that will indirectly own interest in the Property. Core Equity Partners (the "Real Estate Company") is under contract to purchase the Property for $9.1 million ($70/SF) and the total project cost is expected to be $9.7 million ($75/SF).
The business plan is to implement a value-add strategy whereby the Real Estate Company will acquire, renovate, manage leasing, and generally reposition the Property more favorably within the submarket and its competitive set over a ten-year hold period. With the added benefit of new upgrades and long-term stability with the anchor, there is an opportunity to increase leasing activity and push rental rates across the Property. The Real Estate Company intends to engage a local leasing agent while also internally marketing the Property to national tenants through existing relationships. With respect to leasing momentum, a new lease was signed in September 2019 and two vacant spaces remain. While the seller will fund the majority of capital expenditures, we have allocated $719,000 in capital reserves over the ten-year hold period and have capitalized an additional $108,000 in working capital. This is more than enough to cover the partial roof replacement, which should cost a total of $327,500 per the PCA, and HVAC package unit replacements.
Imperial Plaza (the "Property") is a Class B, 129,807 NRSF neighborhood shopping center situated in the Polk County submarket of the greater Tampa/St Petersburg MSA. Built in 1978, the Property is anchored by Winn-Dixie and complemented primarily by value-oriented service tenants. Winn-Dixie, Harbor Freight, O'Reilly Auto Parts, and Fresenius Medical Care collectively comprise nearly 70% of the Property's income. Winn-Dixie has been a tenant at the Property since 1990 and has executed an eight-year lease extension this year through January 2030. As negotiated, this extension calls for Winn-Dixie to spend a minimum of $1,000,000 on a remodel of its existing space. Additionally, the seller has agreed to reseal and stripe the parking lot, paint the building, and convert parking lighting to LED. The cost of these improvements will be escrowed at closing. The Property sits on the signalized intersection of Havendale Blvd and E Derby Ave, servicing approximately 27,000 vehicles per day.
| Tenant | SF | % of Total SF | Rent/SF | Lease Start | Lease Expiration | Lease Type |
| Winn-Dixie | 52,870 | 40.7% | $6.50 | 10/31/1990 | 01/14/2030 | NNN |
| Harbor Freight | 20,468 | 15.8% | $6.15 | 6/20/2013 | 1/15/2024 | NNN |
| O'Reilly Auto Parts | 11,457 | 8.8% | $7.83 | 12/01/2014 | 12/31/2028 | NNN |
| Fresenius Medical | 7,972 | 6.1% | $12.82 | 6/03/2015 | 6/30/2025 | NNN |
| Beauty Outlet | 5,227 | 4.0% | $10.10 | 7/01/2017 | 10/05/2022 | NNN |
| Rent-A-Center | 4,500 | 3.5% | $9.35 | 2/09/1998 | 9/30/2021 | NNN |
| Subway | 2,088 | 1.6% | $18.79 | 10/01/1985 | 9/30/2020 | NNN |
| Auburndale Tax Service | 2,006 | 1.5% | $10.84 | 9/23/1998 | 10/31/2023 | NNN |
| FireBunny Games | 1,781 | 1.4% | $13.50 | 10/01/2019 | 10/31/2023 | NNN |
| Metro PCS | 1,427 | 1.1% | $12.93 | 10/01/2011 | 9/30/2022 | NNN |
| Tavoir Laundromat | 1,397 | 1.1% | $10.76 | 5/02/2016 | 7/31/2021 | NNN |
| Hungry Howie's | 1,234 | 1.0% | $14.84 | 4/01/1990 | 3/31/2025 | NNN |
| Pro Nails | 1,200 | 0.9% | $18.75 | 3/04/1998 | 4/30/2021 | NNN |
| Advance America | 1,200 | 0.9% | $13.79 | 10/01/2003 | 9/30/2020 | NNN |
| Hong King | 1,060 | 0.8% | $19.80 | 5/20/2003 | 5/16/2023 | NNN |
| Vacant | 13,920 | 10.7% | N/A | |||
| Total | 129,807 | 100.0% | $7.34 |
MAJOR TENANTS
Winn Dixie - 52,870 SF
Founded in 1925, Winn-Dixie grocery stores, liquor stores and in-store pharmacies serve communities throughout five southeastern states - Alabama, Florida, Georgia, Louisiana and Mississippi. Winn-Dixie Stores, Inc. is a subsidiary of Southeastern Grocers, which is one of the largest supermarket chains based in the Southeast.
Harbor Freight - 20,468 SF
Harbor Freight Tools USA Inc. operates a chain of tool and equipment retail stores. The company offers auto parts, shop equipment, hand and air tools, power tools, outdoor products, welding equipment, and various related products. Harbor Freight Tools serves customers worldwide.
O'Reilly Auto Parts - 11,457 SF
O'Reilly Auto Parts owns and operates retail auto parts stores. The company provides private-label and generic automotive products for domestic and imported cars, including new and remanufactured automotive replacement parts, maintenance items, and accessories. O'Reilly Auto Enterprises serves customers in the United States.
Fresenius Medical - 7,972 SF
Fresenius Medical Care Holdings Inc. operates as a holding company. The company, through its subsidiaries, provides kidney and renal care services. The company offers hemodialysis and peritoneal dialysis machines, dialyzers, fluid management, and disposables, as well as renal pharmaceuticals. Fresenius Medical Care Holdings serves clients globally.
Lease Comps
| FireBunny Games | Brenda's Nails | Rita Staffing Inc | Curves | Dan's Fan City | Quest Diagnostics | Total/Averages | Subject | |
| Submarket | Polk County | Polk County | Polk County | Polk County | Polk County | Polk County | Polk County | |
| Tenant Lease Size | 1,781 SF | 958 SF | 1,500 SF | 4,300 SF | 1,200 SF | 1,980 SF | 1,953 SF | |
| Building NRSF | 129,807 SF | 14,149 SF | 18,000 SF | 18,177 SF | 8,300 SF | 137,127 SF | 54,289 SF | 129,807 SF |
| Year Built | 1978 | 1983 | 1988 | 1985 | 2003 | 1957 | 1982 | 1978 |
| Rental Rate (NNN) | $14.00/SF | $12.00/SF | $14.00/SF | $12.00/SF | $12.00/SF | $15.00/SF | $13.17/SF | $12.42/SF* |
| Date Signed | 9/16/2019 | 3/26/2019 | 3/26/2019 | 9/11/2018 | 10/25/2017 | 2/1/2017 | ||
| Distance from Subject | 0.2 miles | 3.8 mi | 5.3 mi | 5.7 mi | 7.1 mi | 3.7 mi |
*Weighted average of tenants excluding Winn-Dixie, Harbor Freight, and O'Reilly Auto Parts
Sales Comps
| Chain O' Lakes Plaza | Eastside Village | 117 N 7th St | Heart of Florida Shopping Center | Eagle Ridge Mall | Total/Averages | Subject | |
| Sale Date | 1/25/2018 | 11/21/2017 | 7/16/2019 | 6/7/2019 | 8/12/2019 | ||
| Submarket | Polk County | Polk County | Polk County | Polk County | Polk County | Polk County | |
| Building Class | B | B | C | C | B | B | |
| Building SF | 14,600 | 74,980 | 10,080 | 131,501 | 30,476 | 129,807 | |
| Year Built | 1972 | 1979 /1990 | 1962 | 1984 | 1996 | 1,979 | 1978 |
| Purchase Price | $1,350,067 | $7,000,000 | $800,000 | $11,000,000 | $2,355,000 | 4,501,013 | $9,060,000 |
| $/SF | $92/SF | $93/SF | $79/SF | $83/SF | $77/SF | $85/SF | $70/SF |
| Cap Rate | - | 9.00% | - | 8.11% | - | 8.56% | 9.88% |
| Distance from Subject | 5.9 mi | 8.2 mi | 11.7 mi | 11.9 mi | 15.2 mi |
Market Overview
Per CoStar, employment growth in Polk County has been picking up steam, with its annual growth rate exceeding the national average since 2012. With relatively strong population growth and job creation largely in lower-income sectors, median incomes remain among the lowest in Florida. The metro's population is not highly educated; only about 11% of the population has a bachelor's degree or higher. The housing market is also a soft spot, as the median home price is still about 15% below its prerecession peak. Since 2011, the home values have been steadily rising, though the metro still maintains some of the lowest prices in Florida. The Polk County metro area is rife with advanced educational opportunities and contains a sizable student population from Southeastern University, Florida Southern College, and Florida Polytechnic University.
With Polk County's strategic location on I-4 attracting warehouse and distribution centers, the trade employment supersector has been a particularly bright spot for the metro. In 2015, Amazon entered the metro by adding a one million SF fulfillment center that brought in 2,000 jobs to the Polk County area. Walmart recently opened its two-building, two million SF distribution center in Davenport, immediately hiring 550 people. Walmart is expected to hire an additional 1,000 workers once these centers reach full employment. In addition to trade employment, a small office-using employment base exists. Publix Supermarkets, the metro's largest private employer with more than 8,000 workers, is also headquartered in Polk County. The Polk County metro receives a tourist boost from Legoland Florida Resort, a 145-acre theme park built in 2011. Growth in the submarket is further fueled by the development of the USA Water Ski and Wake Sports headquarters and the $42 million SunTrax project, which are located five and seven miles away from the Property, respectively. Fueled by strong job and population growth rates over the foreseeable future and a limited new supply pipeline, Polk County is well-positioned to maintain healthy fundamentals over the near term.
Demographic Information
| 1 Mile | 3 Miles | 5 Miles | |
|---|---|---|---|
| Population (2019) | 5,686 | 38,089 | 92,074 |
| Population (2024) | 6,270 | 41,914 | 102,198 |
| Average Age | 37.9 | 39.7 | 40.5 |
| Median Household Income | $33,053 | $40,615 | $40,543 |
| Average Household Size | 2.7 | 2.6 | 2.5 |
| Median Home Value | $79,539 | $113,328 | $117,202 |
| Population Growth 2019-2024 | 10.27% | 10.04% | 11.00% |
Demographic information above was obtained from CoStar.
| Sources of Funds | Amount |
|---|---|
| Debt | $6,300,000 |
| Equity | $3,433,246 |
| Total Sources of Funds | $9,733,246 |
| Uses of Funds | Amount |
| Purchase Price | $9,060,000 |
| Real Estate Company Acquisition Fee | $181,200 |
| Broker Dealer Fee | $112,000 |
| Loan Fee | $63,046 |
| Working Capital | $107,778 |
| Tax/Insurance Reserve | $42,222 |
| Closing Costs | $167,000 |
| Total Uses of Funds | $9,733,246 |
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
The expected terms of the debt financing are as follows:
- Estimated Proceeds: $6,300,000
- Estimated Rate (Fixed): 3.80%
- Term: 10 years
- Interest Only: None
- Amortization: 25 years
- Extension Options: N/A
- Prepayment Penalty: Open prepayment
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.
The Target intends to make distributions to investors (the Company and Real Estate Company, collectively, the "Members") as follows:
- To the Members, pari passu, all excess operating cash flows to an 9.0% preferred return;
- 75.0% / 25.0% (75.0% to Members / 25.0% to Promote) of excess cash flow to a 15.0% IRR;
- 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 September 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.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Effective Gross Revenue | $1,246,489 | $1,220,345 | $1,256,215 | $1,276,335 | $1,383,691 | $1,385,641 | $1,404,452 | $1,408,370 | $1,416,237 | $1,369,902 |
| Total Operating Expenses | $351,072 | $353,233 | $357,592 | $361,431 | $368,359 | $371,625 | $375,518 | $378,916 | $382,485 | $384,195 |
| Net Operating Income | $895,415 | $867,111 | $898,622 | $914,899 | $1,015,333 | $1,014,014 | $1,028,938 | $1,029,454 | $1,033,751 | $985,708 |
| Year 0 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Distributions to RealtyMogul 144, LLC Investors | ($2,830,000) | $233,437 | $223,829 | $242,910 | $292,027 | $249,848 | $295,050 | $348,716 | $353,707 | $374,843 | $179,844 | $4,817,158 |
| Net Earnings to Investor - Hypothetical $50,000 Investment |
($50,000) | $4,124 | $3,955 | $4,292 | $5,159 | $4,414 | $5,213 | $6,161 | $6,249 | $6,623 | $3,177 | $85,109 |
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 | $181,200 | Real Estate Company | Capitalized Equity Contribution | 2.0% of the Property purchase price |
| Broker-Dealer Fee | $112,000 | North Capital (1) | Capitalized Equity Contribution | Greater of $50,000 or 4.0% of the equity raised by RealtyMogul 144, LLC |
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
|---|---|---|---|---|
| Management and Administrative Fee | 1.0% of amount invested in RealtyMogul 144, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of RealtyMogul 144, 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 | 3.5% 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.
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.
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.
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.
Lease-Up Risks
As of January 2020, the Property had an 89.3% occupancy level, and the Sponsor intends to implement a capital improvement plan involving the general renovation of the Property and a leasing program in its effort to maintain and increase its current occupancy level. The Sponsor intends to renovate 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.
Expiring Retail Leases
There can be no assurance that the current retail tenants (including the anchor tenant) will renew their existing leases, that any retail vacancy will be successfully released, or that any new leases will contain retail rental rates and/or terms that are as favorable to the Property as the current leases. In the event that anchor tenant (or any of the other current tenants) do not renew their lease(s), failure to release any vacant retail unit(s) immediately at rental rates and terms that are favorable as the current leases could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment.
Repairs May Be Required
The improvements on the property were built in 1978. Older buildings may require significant repairs. Required repairs could have a significant adverse impact on the investment returns to the Company.
Anchor Tenant Credit and Restructure Execution Risk
The anchor tenant (Southeastern Grocers, the parent company of Winn-Dixie), filed for Chapter 11 bankruptcy in March 2018 and closed 94 locations across the U.S. However, the company successfully completed its financial restructuring three months later and has emerged from bankruptcy protection. It is currently rated Ba2 by Moody's, a step below investment grade. If the anchor tenant is not able to execute on its restructuring plan it may have material adverse effect on the Sponsor Entity’s financials, the Company, and the Company’s investors.
*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.