The team at our affiliated broker-dealer, RM Securities, conducts diligence on of the issuer, including detailed background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to screening for any criminal background, we may also turn down sponsors due to poor reference checks, even if the background and criminal checks are satisfactory.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent.* When an investor makes an investment with such 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 contingency 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.
* Unless otherwise disclosed, escrow accounts are not required for some investments that accommodate 1031 investments where the property is already acquired.
Our processes typically includes visiting certain properties (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. For certain properties that accommodate 1031 exchange investments, the team will review third-party prepared due diligence reports in lieu of a site visit.
We have formalized processes and checklists for every private placement deal listed on the platform.
Ross Realty Investments
Holding a 50% stake in the joint venture through Ross Turtle Crossing, LLC, Ross Realty is expected to perform the on-site property management and leasing functions.
Founded in 1987 by Barry Ross, Ross Realty Investments, Inc. has grown to be a well-recognized and respected player in the South Florida commercial real estate market. This privately held company specializes in the development, management, and leasing of well-located retail centers in attractive growth areas. Today, the company has a significant portfolio of properties and a track record of success.
This success has been built on successful projects and long term relationships with tenant, brokers, lenders and investors. This full service company consists of four divisions - Development, Acquisitions & Sales, Leasing and Property Management - and focuses on community shopping centers, neighborhood grocery-anchored centers, power centers, stand-alone retailers and office buildings. With corporate headquarters in Davie, Florida on University Drive near Interstate 595, Ross Realty Investments is a preferred source for retail development/redevelopment, acquisitions, sales and leasing.
-
Scott AukerPrincipal, SunCap -
Barry RossPresident, Ross Realty Investments -
Brian MarkPrincipal, SunCap -
AJ Belt, IIIPrincipal, SunCap -
Wadid DaoudPrincipal, SunCap
Mr. Auker focuses on acquisitions and the associated investment underwriting and due diligence requirements at SunCap. He also oversees the capital improvements programs and is actively involved in the asset management of each property to ensure investment performance.
Mr. Auker is an accomplished real estate professional having been involved with the acquisition, development, construction, or management of $1 Billion of assets including one million square feet of commercial projects and 5,000 multi-family units across the Midwest and Eastern United States. His experience includes leading acquisition and development initiatives, land acquisitions, entitlements, project design, debt and equity financing, construction management, leasing and property management, and stabilized project investment sales.
Mr. Auker previously founded ADI, which developed or acquired numerous projects including Puerta de Palmas, a $70 million ground-up development in Coral Gables, and Bahia Delray, a $38 million acquisition in Delray Beach. Mr. Auker was also previously involved with several national developers, including JPI, Altman, and Clark Realty Capital where he led development efforts on numerous projects throughout the country. Mr. Auker also held various construction management positions for Clark Construction, a national commercial construction company.
Mr. Auker received his bachelors degree from Penn State University and his MBA from the American University in Washington, DC.
Barry Ross, President of Ross Realty Investments, Inc., has been a developer, broker and manager of shopping centers and office buildings in South Florida since 1978. Having been an integral part of a development team that successfully completed over 3,000,000 square feet of retail and office project. He has also overseen the management and sales of several million square feet throughout the southern United States.
Ross Realty has remained at the forefront of South Florida’s active Real Estate development and Property Management community. Mr. Ross has consulted with numerous private and institutional owners on a wide variety of real estate problem solving and feasibility study matters. Barry has served on SunTrust Bank’s Advisory Board as a real estate consultant, as well as the City of Hollywood’s Annexation Board and has been a court appointed Receiver for SunTrust Bank’s foreclosed commercial property. Barry served as Chairman of the Board of Unifirst Federal Savings Bank from 1991 to 1998. Unifirst was a $140,000,000 institution with branches in southern Broward County and was purchased in July of 1998 by Republic Security Financial Corp.
Born August 19,1940, Barry graduated from Penn State in 1962. He has worked for Girard Trust Bank, Honeywell Corp. and then went into the family retail and real estate business from 1965 until 1978 when he moved to Florida. Barry’s main functions at Ross Realty are as rain maker, acquisition and development quarterback, and the overall guidance of each department. Annette Pappas has served as Barry’s Administrative Assistant and Closing Coordinator for much of her 18 years at Ross Realty.
Mr. Mark is responsible for all aspects of asset management and due diligence at SunCap to ensure the investment performance for each asset. He is actively involved in the acquisition and underwriting process, as well as overseeing the finance and accounting department to ensure the highest level of accurate and comprehensive fiscal reporting.
Mr. Mark has worked in the commercial real estate field since 1997 and has been responsible for overseeing the financial reporting functions for 200+ properties throughout his 17-year career. In addition, Mr. Mark has been involved in over $2 billion worth of commercial real estate transactions.
Mr. Mark earned his CPA license in 1995 and worked at two public accounting firms where he gained tremendous experience in analyzing and evaluating various companies' accounting and control procedures. In 1997, he was hired as Controller and later promoted to CFO of DBR & Associates, LLC, a $1 billion real estate asset and property management company. He was responsible for overseeing the financial reporting for DIM Vastgoed, N.V., a publicly traded real estate fund on the Euronext Stock Exchange in Holland. In addition, he served as the asset manager / consultant for many private clients advising them on acquisition and disposition strategies as well as handling over 500 lease negotiations, including a wide array of national tenants.
Mr. Mark received his bachelors degree at the University of Wisconsin-Madison and a Masters of Science in Accounting from the University of America in Washington, DC.
AJ Belt, III is a Principal at Avison Young and heads the company's Capital Markets division.
With SunCap, Mr. Belt focuses on the capital markets to assure flexible and responsive equity and debt structures. He was a principal in the creation and operation of the publicly traded Dutch retail real estate fund DIM Vastgoed, N V (Euronext Amsterdam Exchange) from 1996 through its sale in April 2010, as well as 18 Dutch partnerships (“Maatschaps”) from 1992 – 2000.
Having started his commercial real estate career in 1983 in the office and industrial market and later expanding into the retail class, A.J.’s deep and broad experience is the foundational strength of SunCap's primary mission…investor advocacy via property stabilization, enhancement and net asset value maximization.
A.J. earned his Bachelor of Science Degree in Business Administration from The University of North Carolina – Chapel Hill (1981).
Mr. Daoud focuses on strategic investor relations at SunCap. He has extensive experience in the international business arena and understands the needs of foreign investors seeking to place capital in the United States.
Mr. Daoud has been involved in many ventures across the globe for over 20 years. He started with Lincoln Electric running their Latin America and West Africa initiatives. Later he founded American Supply, an exporter of industrial equipment to multiple international countries in Latin America, the Middle East, and Asia. Wadid was born in Egypt and has lived in Ghana, Iran, Mexico, Venezuela, Britain, and now the United States.
Mr. Daoud has extensive real estate investment experience. He founded a development company in Mexico which has acquired or developed 26 assets valued at over $35 million. He also heads various land development ventures in Texas which have acquired 10 assets valued at over $7 million.
Mr. Daoud received his bachelors degree from LeTourneau University in Longview, Texas.
| Address | Location | Product Type | Total SF |
|---|---|---|---|
| 5380 Coral Ridge Drive | Coral Springs, FL | Office | 45,000 |
| 6230-6240 Coral Ridge Drive | Coral Springs, FL | Retail | 40,255 |
| 3325 S. University Drive | Davie, FL | Retail | 35,904 |
| 2699 Stirling Road | Fort Lauderdale, FL | Office | 80,000 |
| 1799 N. University Drive | Pembroke Pines, FL | Retail | 3,316 |
| 3105‐3285 N State Road 7 | Margate, FL | Retail | 155,622 |
| 7900-7990 Pines Boulevard | Pembroke Pines, FL | Retail | 88,439 |
| 8333-8411 Pines Boulevard | Pembroke Pines, FL | Retail | 121,000 |
| 16900 Sheridan Street | Pembroke Pines, FL | Retail | 30,000 |
| 3400-3436 E. Atlantic Boulevard | Pompano Beach, FL | Retail | 17,000 |
| 1398 SW 160th Ave | Weston, FL | Office | 29,000 |
| Total | 645,536 |
*Sponsor information and track record were provided by the Sponsor and have not been independently verified by RealtyMogul.com
The Sponsor purchased the Property in October 2015 for $18.5 million. SunCap is performing the administrative and asset management functions, while Ross Realty Investment is performing the on-site property management and leasing functions.
In this transaction, RealtyMogul.com investors will invest in Realty Mogul 53, LLC. Realty Mogul 53, LLC will subsequently invest in SunCap IV - Penn Dutch LLC which indirectly holds titles to the Property.
The Sponsor is currently implementing the following value-add strategy:
- Add value through contractual rent growth
- Implement moderate new leasing as the property is already stabilized at 95.5% occupancy.
- Take advantage of mark to market opportunities as tenant's leases expire
- Implement a moderate capital improvement program including the upgrade of the current monument signage, landscape upgrades, and a fresh paint scheme.
- The Sponsor has investigated the entitlement process and market feasibility to create a new 4,000 – 6,000 square feet outparcel on the northeast corner of the Property. The Sponsor intends to sell the speculative outparcel at the end of the hold period along with the base building retail center and existing Brightstar outparcel. Note that RealtyMogul.com has underwritten no rental income during the hold period for the speculative outparcel. The Sponsor could add additional value through the sale of one/both of the aforementioned outparcels before the end of the projected hold period resulting in returns higher than the pro-forma base case.
- Since acquiring the Property, the Sponsor has executed on a new 10-year lease for 7,532 square feet to Camp Canine, giving Realty Mogul 53, LLC investors the benefit of accretive new leasing at the same cost basis as the original SunCap investor.
RealtyMogul.com, along with SunCap, ("SunCap" and the "Sponsor"), is providing the opportunity to invest in Penn Dutch Plaza, a 155,622 square foot grocery anchored retail center in Margate, FL (the "Property").
The Property was purchased in October 2015 by Penn Dutch Plaza LLC, a wholly owned subsidiary of Penn Dutch Plaza Sponsor LLC (a 50/50 joint venture between SunCap IV - Penn Dutch LLC and Ross Penn Dutch Plaza LLC ("Ross Realty"). Since the Sponsor has already completed the acquisition of the Property, the RealtyMogul.com investment will be a post-closing syndication to replace a portion of SunCap's 50% stake in the Property.
The Sponsor's strategy is to add value through contractual rent growth, take advantage of mark to market opportunities as tenant's leases expire, implement a moderate capital improvement program, and sell the Property in approximately five (5) years. The principals of SunCap have closed on over $2 billion in acquisitions.
Penn Dutch Plaza is a 95.5% occupied 155,622 square foot grocery anchored shopping center with a mix of national and local retailers. The center is anchored by Penn Dutch Food Center with YouFit Health Club and Florida Career College as junior anchors. Encompassing 19.9 acres, the Property was built in in 1989 and has a parking ratio of 6.06 per 1,000 square feet. The Property features concrete block construction with extended covered walkways supported by concrete columns with storefronts of bronze aluminum with glass windows and doors. The Property features 1,500 linear feet of frontage to State Road 7.
There is currently one existing separately parceled outparcel on the southeast east corner of the Property. The outparcel is contains a 3,368 square feet building which is occupied by Brighstar Credut Union through September 2018.
The Property is currently leased to 18 tenants, refer below for the tenant summary and tenant descriptions:
| Penn Dutch - Main Tenant Summary | |||||
| Tenant | Square Footage | % Square Foot | In-Place Rent ($/SF) | Lease Expiration | Remaining Options |
| Penn Dutch Food Center | 70,358 | 45% | $5.00 | Dec-18 | 3 x 5 yrs |
| Florida Career College | 28,600 | 18% | $12.57 | Feb-21 | 3 x 5 yrs |
| You Fit | 17,500 | 11% | $10.00 | Dec-26 | 1 x 5 yrs |
| Non-anchor/junior anchor in-line tenants | 24,700 | 16% | $22.76 | Various | Various |
| Sponsor post-close leasing (1) | 7,532 | 5% | $15.00 | May-26 | 2 X 5 yrs |
| Available space | 6,932 | 5% | |||
| Property Total | 155,622 | 100% | $10.33 | ||
(1) - Sponsor recent leasing: Camp Canine has executed a 10-year lease to rent 7,532 square feet commencing June 2016 for $15.00 NNN.
Major Tenants
Penn Dutch Food Center is a family owned (3rd generation) specialty supermarket chain that has served the South Florida community since 1975. With two locations in Hollywood and Margate, Penn Dutch has captured an expansive trade area as a meat superstore of South Florida and serves over 30,000 shoppers each week. The chain has a loyal and wide customer base and was voted Best Butcher Shop and Deli in the “Herald’s Best of Broward/Dade” as well as Best Fresh Seafood by New Times Magazine in 2003. Featuring a full-service butcher shop and smokehouse, Penn Dutch offers a wide selection of fresh meats and seafood that are rare to find at a traditional supermarket in addition to common grocery items. Since much of the prepared foods, meats, and seafood are procured in-house, their prices are competitive with or below major grocer competition.
Serving as the anchor for the Property, Penn Dutch Food Center occupies 70,358 square feet (45.2%) through December 2018 with three remaining options of five years each at fixed rents of $5.25 NNN, $5.50 NNN, and $5.75 NNN per square foot, respectively. Only roughly 20,000 square feet of the total 70,358 square feet space is used for retail. The remainder of Penn Dutch’s current space is wholesale processing, packaging, and distribution – the in-house preparation of their foods, meats, and seafood which give them a competitive advantage against major grocer combination. A combination of their significantly below market rent, location, and unique use contribute to a package that would be difficult to replicate at another location. At a rental rate of $5 per square foot NNN, Penn Dutch is currently significantly below market average for comparable anchor space of approximately $9.95 per square foot NNN (based on market leasing comps).
Florida Career College (IEC US Holdings, Inc.) has specialized in career training in Florida since 1982. Acquired by International Education Corporation in 2014, FCC currently operates 12 schools throughout the state of Florida. FCC offers beginning to advanced training in many areas such as Medical Front Office & Billing, Medical Assistant Technician, Cosmetology, Patient Care Technician, Nursing, Information Technology, HVAC (Heating Ventilation & Air Conditioning) Health Services Administration, X-ray Technician, Pharmacy Technician and Computer and Network Technician. Florida Career College occupies 28,600 square feet (18.4%) in Penn Dutch Plaza with a lease that runs through February 2021 with three remaining options of five years each at fixed rents of $16.75 NNN, $19.27 NNN, and $22.15 NNN per square foot, respectively. Much like Penn Dutch, a significant delta exists between the tenant's current rent and market rents as their current rental rate of $12.58 per square foot NNN compares favorably to market leasing comparables for educational space of $16.12 per square foot NNN.
YouFit Health Clubs is a gym and health club brand focused on simplicity and a no-frills experience with updated, modern equipment and essential gym services without the exorbitant fees and services offered by some of the more luxury health club brands. YouFit operates under a franchise model with franchisees having access to unified marketing strategies, site selection and design assistance, education and training, and cost control/monitoring. Founded in 2008 by South Florida native Rick Berks, the chain has quickly expanded to 97 locations spanning 13 states across the nation. A local franchisee of YouFit Health Club originally opened in 15,500 square feet in the Penn Dutch Plaza location in 2010. The Tenant recently expanded to 17,500 square feet (11.2%) with a current lease expiration of December 2026 and has one, five-year option.
Anchor Lease Comparables
| Property | City | State | Tenant | Built | SF | Lease Date | Term | Base Rent (NNN) |
| 500-648 Riverside Drive | Coral Springs | FL | Dick's Sporting Goods | 2014 | 50,000 | Feb-14 | 10 years | $15.00 |
| 500-648 Riverside Drive | Coral Springs | FL | BJ's Wholesale Club | 2014 | 86,576 | Mar-14 | 20 years | $10.00 |
| 9201 West Flagler Street | Unincorporated MD | FL | Walmart | 2014 | 112,534 | Aug-14 | 20 years | $7.55 |
| 3551 W Hillsboro Blvd | Deerfield Beach | FL | Hobby Lobby | 2014 | 46,500 | Jan-15 | 15 years | $10.25 |
| Total/Average | 73,903 | 16 years | $9.95 | |||||
| Subject | Margate | FL | Penn Dutch | 1989 | 70,358 | Dec-02 | 16 years | $5.00 |
School Lease Comparables
| Property | City | State | Tenant | Built | SF | Lease Date | Term | Base Rent (NNN) |
| 600 East Coast Avenue | Lantana | FL | Palm Beach Maritime Charter | 1971 | 34,177 | Aug-13 | 20 years | $17.14 |
| 2800 North Palm Avenue | Cooper City | FL | Renaissance Charter School | 2012 | 75,567 | Aug-12 | 20 years | $14.24 |
| 22665 SW 112th Ave | Unincorporated MD | FL | Palm Glades Charter School | 2012 | 47,588 | Sep-12 | 10 years | $19.94 |
| 6701 West Sunrise Boulevard | Plantation | FL | Renaissance Charter School | 1970 | 72,849 | Aug-13 | 20 years | $15.10 |
| Total/Average | 57,545 | 18 years | $16.12 | |||||
| Subject | Margate | FL | Florida Career College | 1989 | 28,600 | Jun-10 | 10.5 years | $12.58 |
Grocery Anchored Retail Center Sale Comps
| Property | City | State | Anchor | Built | SF | Sale Date | Purchase Price | $/SF | Cap Rate |
| 8100-8268 Wiles Rd | Coral Springs | FL | Publix | 1998 | 104,241 | Jun-14 | $ 12,380,000 | $ 119 | 6.8% |
| Palm Lakes Plaza | Margate | FL | Publix | 1979 | 109,752 | Jan-13 | $ 14,183,086 | $ 129 | 5.5% |
| 4001 W Commercial Blvd | Tamarac | FL | Publix | 1972 | 234,000 | Jul-14 | $ 28,500,000 | $ 122 | 6.8% |
| Pompano Marketplace | Pompano Beach | FL | Walmart | 1989 | 239,200 | Mar-15 | $ 46,800,000 | $ 196 | 6.0% |
| Sawgress Center | Coral Springs | FL | Publix | 2000 | 83,800 | May-11 | $ 14,864,986 | $ 177 | 5.7% |
| Total/Average | 154,199 | $ 23,345,614 | $ 151 | 6.2% | |||||
| Subject | Margate | FL | 1989 | 155,622 | Aug-20 | $ 24,204,773 | $ 156 | 7.6% |
Outparcel Sale Comps
| Property | City | State | Proposed Use | Acres | Sale Date | Purchase Price | $/SF | Notes | |
| 5700 Coconut Creek Pky | Margate | FL | Retail/Bank | 0.92 | Sep-15 | $ 1,390,000 | $ 35 | 49,900 VPD | |
| 8101 W Broward Blvd | Plantation | FL | Not available | 1.30 | Under contract | $ 2,200,000 | $ 39 | 59,000 VPD | |
| Total/Average | 1.11 | $ 1,795,000 | $ 37 | ||||||
| Subject | Margate | FL | Speculative | 0.80 | $ 1,304,000 | $ 37 | 60,000 VPD | ||
Penn Dutch Plaza is located within northwestern Broward County approximately two miles west of the Florida Turnpike (which has an interchange at Sample Road) and five miles west of Interstate-95. The Property lies on the northern fringe of the City of Margate and borders the City of Coral Springs to the north. With the City of Coconut Creek to the east, this site sees bustling daily traffic from three major submarkets in South Florida. These cities comprise a large portion of the desirable suburban communities that characterize northwestern Broward County. Bordered by both the Sawgrass Expressway and Florida’s Turnpike, the Coral Springs-Margate-Coconut Creek area is a direct beneficiary of this highly accessible location 20 minutes from both the Boca Raton and Ft. Lauderdale employment centers, and 45 minutes from Downtown Miami.
Penn Dutch Plaza is situated at the corner of State Road 7 (U.S. Highway 441) and Northwest 31st Street near Sample Road; one of the area’s most heavily traveled north/south thoroughfares with daily traffic counts of 48,000 vehicles per day and 60,000 vehicles per day on Sample Road. The property is accessed from State Road 7 via a lighted interchange with Northwest 31st Street. This location is the epicenter of commercial development within the submarket and contains over 1.4 million square feet of retail complemented by 675,000 square feet of office and light industrial spaces. National retailers in the area include Walmart, Lowe’s, Home Improvements, JoAnn’s Fabrics, Office Depot, Burlington Coat Factory, Toys R Us, Ross Dress for Less, Publix, and Winn Dixie. Lexus, Just to the northwest of the subject property is Coral Landings III, a new power center anchored by Best Buy, Home Goods, and Aldi Supermarket. Lexus, Infiniti and Toyota also have dealerships at this intersection. Seminole Casino Coconut Creek and two large charter schools are also nearby. The immediate neighborhood has dense residential development, including a new 240-unit luxury apartment complex by FCI Residential slated for opening in first quarter 2016.
Market Overview
Market and submarket statistics per CBRE 3rd quarter 2015 report, refer to the attached market report for details
- Direct vacancy has plunged to 6.6% in Broward County, a 260 basis point drop from the 9.2% rate seen in 2010
- Average asking lease rate have increased 6.1% year-over-year in Broward County
- Competition for well-positioned space remains robust as developers respond with new top-tier product and a host of properties across Broward and Palm Beach Counties undergo strategic redevelopment
- The unemployment rate in both Broward and Palm Beach Counties continues to drop, while a steady increase in international trade through Port Everglades will allow the local economy to continue its recovery.
Submarket Data as of Q3 2015
- Total Inventory: 9,031,252 square feet
- Direct Vacancy: 8.0%
- Q3 2015 Net Absorption: (20,658) square feet
- 2015 YTD Net Absorption: 80,376 square feet
- Under Construction: 0 square feet
- Average Asking Lease Rate: $19.93 NNN
Demographic Information
| Demographics | 1 Mile | 3 Miles | 5 Miles | |
| Population (2015) | 17,159 | 149,598 | 385,081 | |
| Growth (2015-2020) | 5.64% | 7.97% | 7.63% | |
| Median HH Income (2015) | $55,762 | $51,078 | $49,837 | |
Demographic information above was obtained from CoStar
| Debt | $13,055,000 |
| Equity | $7,067,600 |
| Total Sources | $20,122,600 |
| Purchase Price | $18,500,000 |
| Acquisition Fee to Sponsor (2%) | $370,000 |
| Partial Roof Replacement | $300,000 |
| Cap Ex Reserve | $292,565 |
| Tenant Improvements/Leasing Commissions | $225,000 |
| Loan Fees | $180,700 |
| Tenant Improvements/Leasing Commissions Reserve | $150,000 |
| Closing Costs | $83,235 |
| SunCap Closing Costs | $53,600 |
| Seller Credit | ($32,500) |
| Total Uses | $20,122,600 |
The executed debt financing terms are as follows:
- Proceeds: $13,055,000 (65% loan to cost)
- Lender: NCB
- Term: Five years with one two-year option provided (a) notice of the election to exercise the Extension Option on or prior to August 1, 2020, (b) no event of default, (c) a Debt Service Coverage Ratio (DSCR) of no less than 1.20x for the 12-month period preceding the date of notice in as described in (a), (d) no material change with respect to the SunCap principles with regards to net worth. The extension term shall be at the greater of a 4.18% fixed rate or the yield on two-year US Treasuries as of the date which is ten days prior to the expiration of the initial term plus a 265 basis point spread.
- Extension Option Fee: None
- Interest-Only Period: one (1) year
- Reserves
- Replacement reserves of $0.35 per square foot annually
- $150,000 initial deposit for TI/LC reserve. $84,000 per annum up to $400,000 cap.
- If Penn Dutch renews & center is 90% occupied – reduce cap to $150,000 (assumed in underwriting)
- If Penn Dutch renews & center is below 90% occupied – reduce cap to $200,000
- If reserve goes below either of the caps then borrower shall replenish back to the $150,000 or $200,000 cap
- Amortization: 30 years
- Interest Rate: 4.18% Fixed
- Recourse: None except bad-boy carve outs
- Prepayment Fee: 4% in months 1-12, 3% in months 13-24, 2% in months 25-36, 1% in months 37-48
- Assumption Fee: 1%
- Bright-Star Credit Union sale of parcel is allowed based upon a 75% release price of the sales contract after commissions or appraisal (higher of).
- NCB will allow an additional release of another parcel, subject to NCB approval, at 75% of the sale contract after commissions or 75% of the appraisal (higher of). All proceeds shall down the outstanding loan balance and the loan must continue to provide a minimum 1.35 Debt Service Coverage Ratio (DSCR).
SunCap IV - Penn Dutch LLC will make distributions to Realty Mogul 53, LLC as follows: pro rata share of cash flow up to an 8% Internal Rate of Return (IRR) hurdle with an 85/15 (Investor/Sponsor) split to a 13% IRR, then a 70/30 (Investor/Sponsor) split to a 17% IRR, any cash flows thereafter will be distributed on a 55/45 (Investor/Sponsor) basis. Note that the return of initial capital occurs only upon a capital event. Realty Mogul 53, LLC will distribute 100% of its share of excess cash flow (after expenses) to Realty Mogul investors.
Order of Distributions to Realty Mogul 53, LLC (Operating Income, Refinance, and Sales Proceeds)
- To all members pari passu until members have received an 8% IRR
- To all member pari passu until member contributions have been returned upon a capital event (sale and/or refinance).
- All distributions above an 8% IRR and up to a 13% IRR will be split 85% to investors pari passu and 15% to Sponsor
- All distributions above a 13% IRR and up to a 17% IRR will be split 70% to investors pari passu and 30% to Sponsor
- Any excess balance will be split 55% to investors pari passu and 45% to Sponsor.
Investor distributions are projected to start in June 2016 and be distributed 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 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Effective Gross Revenue | $2,132,259 | $2,384,355 | $2,475,521 | $2,547,961 | $2,617,040 |
| Operating Expenses | $745,893 | $804,236 | $829,245 | $854,043 | $879,332 |
| Net Operating Income | $1,386,366 | $1,580,099 | $1,646,276 | $1,693,918 | $1,737,708 |
| Net Cash Flow (After Reserves & Debt Service) | $756,667 | $731,832 | $800,009 | $1,029,651 | $973,441 |
| Distributions to Realty Mogul 53, LLC Investors | $72,168 | $68,608 | $75,932 | $102,384 | $1,522,725 |
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 |
|---|---|---|---|---|
| One-Time Fees | ||||
| Acquisition Fee | $370,000 (2% of purchase price) | Ross Realty Investments, Inc. and Avison Young - Florida, LLC, an affiliate of SunCap IV - Penn Dutch LLC | Capitalized Equity Contribution | Each entity received half of the fee |
| Broker-Dealer Fee | $40,000 | North Capital (1) | Sun Cap IV - Penn Dutch LLC / Realty Mogul 53, LLC | SunCap IV - Penn Dutch LLC and Realty Mogul 53, LLC shall each pay half of the fee |
| Leasing Commissions | Standard leasing and renewal commissions | Ross Realty Investments, Inc. | Operating Cash Flow | |
| Sale Commissions | One-half (1/2) of all standard sale commissions | Ross Realty Investments, Inc. and Avison Young - Florida, LLC | Operating Cash Flow | Each entity is entitled to half of the sale commissions paid to Ross Realty Investments, Inc. |
| Recurring Fees | ||||
| Property Management Fee | 3.5% of gross rents collected | Avison Young Property Management (USA), LLC, an affiliate of SunCap, and Ross Realty Investments, Inc. | Operating Cash Flow | Each entity is entitled to receive half of the fee |
| Asset Management Fee | 1.0% of gross rents collected | SunCap Opportunity Fund | Operating Cash Flow | |
| Management and Administrative Fee | 2.0% of investment assets in Realty Mogul 53, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of Realty Mogul 53, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2) |
Notes:
(1) Certain employees of Realty Mogul, Co. are also registered representatives of, and are paid commissions by, North Capital Private Securities Corporation, a Delaware Corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital, Co. are parties to a profit sharing arrangement.
(2) Fees may be deferred to reduce impact to investor distributions.
The above presentation is based upon information supplied by the Sponsors. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 53, LLC, 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.
RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe information on this Page is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete and subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.
Risk of InvestmentThis investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.
No Reliance on Forward-Looking Statements; Sponsor AssumptionsSponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.
Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.
No Reliance on Past PerformanceAny description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.
Sponsor’s Use of DebtA substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.
Sponsor’s Offering is Not RegisteredSponsor’s securities offering will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement”). In addition, the offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership interests) are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.
No Investment AdviceNothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
1031 Exchange RiskInternal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.