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Completed Equity
Retail
Grocery Anchored - Penn Dutch
Margate, FL
INVESTMENT STRATEGY
Core Plus
INVESTMENT TYPE
Equity
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100% funded
Offered By Ross Realty Investments
16.7%* TARGET IRR 16.7%-%
8.8%* TARGET AVG CASH ON CASH
2.0* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 years
Estimated First Distribution 6/2016
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
Property at a glance
Year Built 1989
Total Square Feet 155,622
Current Occupancy 95.5%
Number of Tenants 18
Parking Ratio 943 spaces (6.06 spaces/1,000 rentable square feet)
Acquisition Price

$18,500,000

Access

Two points of entry along NW 31st Street to the south and west of the Property

Investment Highlights
Experienced Sponsor focused on Southeast U.S. retail properties
Well located grocery anchored property
Asset purchased below replacement cost
Management
Cumulative Distributions

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 Auker
    Principal, SunCap
  • Barry Ross
    President, Ross Realty Investments
  • Brian Mark
    Principal, SunCap
  • AJ Belt, III
    Principal, SunCap
  • Wadid Daoud
    Principal, SunCap
Scott Auker
Principal, 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, Ross Realty Investments

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.

Brian Mark
Principal, SunCap

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
Principal, SunCap

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).

Wadid Daoud
Principal, SunCap

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.

Track Record

Ross Realty - Local Assets Managed

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

Business Plan

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.
Property

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.

Property Details

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.

Comparables

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 
Location

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

Photos
Financials
Sources & Uses

Total Capitalization
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
Debt Assumptions

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).
Distributions

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.

Cash Flow Projections
  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
Fees

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.

Disclaimers
Disclaimers

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.

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