Substantial rollover exposure from Penn Dutch and Florida Career College

The anchor tenant, Penn Dutch Food Center, occupies 70,358 square feet (45% of gross leasing area) and has a lease that expires in December 2018 with three (3) 5-year options. Florida Career College occupies 28,600 SF (18% of gross leasing area) and has a lease that expires in February 2021 with three (3) 5-year options. The Sponsor believes that the rent for both leases if the options are exercised will be below market. Refer to the "Comparables" section for market leasing comps.

Limited Ingress/Egress

The subject has limited access with no direct ingress/egress from State Road 7. Ingress and egress is available to the site via one curb-cut along NW 31st Street to the south and one curb cut to the west.

Risk of Speculative Outparcel Sale

While no rental revenue from the speculative outparcel is projected for during the hold period, the Sponsor is valuing the 5,000 square foot outparcel at $1.3M and including the value of the speculative outparcel in the exit assumptions at the end of the projected hold period in Year 5. The valuation comes from broker input for ground-lease income of $75,000 ($15 per square foot) with a 5.75% exit cap. Note that no costs have been associated with the entitlement or build-out of an entry for the outparcel during the hold period, since it is assumed the new tenant (ground lease) will build-to-suit their own building.  Additionally, there is currently limited access to the outparcel as the main access point to the speculative outparcel is to the south along NW 31st Street.

Forward-Looking Statements

Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks.  We use words such as “anticipated,” “projected,” “forecasted,” “estimated,” “prospective,” “believes,” “expects,” ”plans,” “future,” “intends", “should,” “can,” “could,” “might,” “potential,” “continue,” “may,” “will,” and similar expressions to identify these forward-looking statements.

Illiquid Investment - Transfer Restrictions & No Public Market

The transferability of membership interests in Realty Mogul 53, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws.  In general, investors will not be able to sell or transfer their interests.  There is also no public market for the investment interests and none is expected to be available in the future.  Persons should not invest if they require any of their investment to be liquid.  This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.

Management Risk

Investors will be relying solely on the managers of Penn Dutch Plaza Sponsor LLC (the entity holding indirect title to the property that SunCap IV - Penn Dutch LLC has invested in) for the execution of its business plan.  That manager in turn may rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of SunCap IV - Penn Dutch LLC (including Realty Mogul 53, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan.

Macroeconomic Retail Risk

The retail asset class is subject to macroeconomic pressures as well competition from e-retailers.

Local Market Conditions May Impact Rental Rates

Local conditions may significantly affect occupancy, rental rates, and the operating performance of a property. Such risks include (but are not limited to): (i) plant closings, industry slowdowns and other facts that affect the local economy; (ii) an oversupply of, or a reduced demand for, similar properties; (iii) a decline in household formation or employment or lack of employment growth, (iv) laws that could inhibit the ability to raise rents or to sell a property; and (v) other economic conditions that might cause an increase in operating expenses, such as increases in property taxes, utilities, compensation of on-site personnel and routine maintenance.

Rising Interest Rates

The Federal Reserve has raised the target range for the federal funds rate from a range of 0% to 0.25% to a range of 0.25% to 0.50%. This, plus the potential for future target increases, could potentially lead to rising interest rates offered by other lenders and could have an effect on the future value of the Property (since higher loan interest rates might mean that potential buyers would face proportionately higher debt service expenses).  

Uncertain Distributions

The manager of SunCap IV - Penn Dutch LLC cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 53, LLC) from either net cash from operations or proceeds from the sale of the asset.  That manager, in its discretion, may retain any portion of such funds for property operations or capital improvements.

Risk of Interest Charges or Dilution for Capital Calls

The amount of capital that may be required by Penn Dutch Plaza LLC, Penn Dutch Plaza Sponsor LLC and Sun Cap IV - Penn Dutch LLC is unknown. Realty Mogul 53, LLC does not intend to participate in a capital call if one is requested by Sun Cap IV - Penn Dutch LLC, and in such event the manager of Sun Cap IV - Penn Dutch LLC may accept additional contributions from other members or from third parties, either of which may dilute the ownership of Realty Mogul 53, LLC in Sun Cap IV - Penn Dutch LLC. Also, the manager of Sun Cap IV - Penn Dutch LLC may obtain a loan from a member or a third party, in this case investors should assume that the repayment of the loan and interest thereon would occur before Realty Mogul 53, LLC receives any distributions from Sun Cap IV - Penn Dutch LLC. Note that the Sponsor has raised an additional $967,565 in cash reserves ($6.22 per square foot) at closing to cover all projected leasing commissions, tenant improvements, and capital improvements (including the anticipated partial roof replacement) during the five year hold period.

General Economic and Market Risks

While the Sponsor has conducted research to justify the intended rental rates and sales price relative to comparable properties in the market, there can be no assurance that investor sentiment will be favorable, or that purchase financing to a buyer will be readily available, when the Sponsor attempts to sell the Property.  The real estate market is affected by many factors, such as general economic conditions, supply and demand for real estate investments, interest rates, the availability of financing, and other factors, all of which are beyond the control of both Realty Mogul 53, LLC and Sun Cap IV - Penn Dutch LLC.

Uncertain Exit Timing

Although it is anticipated that the Property will be sold at the end of the projected hold period which is anticipated to be five (5) years, Realty Mogul 53, LLC will not have any meaningful control over the timing of the sale of the Property, and therefore we cannot offer assurances of when the exit will occur

Interest-Only Loan Period

The loan being used to acquire the Property has an interest-only period during the first 12 months of the loan term, which means that there will be no reduction in the principal balance during that interest-only period

Building was Built in 1989

There is risk associated with deferred maintenance at the Property. The Property Condition Report completed by Velocity Commercial Real Estate Due Diligence Experts has concluded that a recommendation of $0.35 per square foot annually be reserved over the 12-year analysis period. The Sponsor has underwritten an average of $0.76 per square foot (Cap Ex Reserves plus Partial Roof Replacement) annually over the five (5) year holding 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 Investor Document Package for a discussion of additional risks.

The above presentation is based upon information supplied by the Sponsor and others.  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.

The investment will be structured as the purchase of limited liability company membership interests in Realty Mogul 53, LLC, which will in turn purchase membership interests in Sun Cap IV - Penn Dutch LLC.  Sun Cap IV - Penn Dutch LLC indirectly hols title to the Property and is managed by the Sponsor.  Realty Mogul 53, LLC is a special purpose entity pursuing a venture capital strategy, and will be advised by RM Manager, LLC, an exempt reporting adviser and a wholly-owned subsidiary of Realty Mogul, Co.