The Real Estate Company is highly experienced in the area, with eight assets in Austin. Additionally, having owned and operated the Property since 2015, the Real Estate Company has unique insight into pro forma rents and expenses.
A partnership with Austin Affordable Housing Corporation (AAHC) allows us to take advantage of a 100% property tax exemption during the hold period.
Per CoStar, the area enjoys a strong demographic profile, with a population of nearly 300,000 and median household income of over $64,000 within a five-mile radius.
The Housing Authority of the City of Austin ("HACA") shall enter into a 75-year ground lease with Presidium and AAHC (collectively the "Real Estate Company").
Presidium Group was founded in 2002 by Cross Moceri and John Griggs and is a vertically-integrated real estate firm specializing in opportunistic and value-add transactions in Texas. The Real Estate Company has over 12,000 multifamily units under management with a value of $1.6 billion. Cross Moceri has completed over $1.2 billion of real estate investments since 2002. John Griggs has 15 years of experience including the acquisition and integration of over $1 billion of real estate. This transaction would constitute RM's second with Presidium, the first being Serendipity Apartments.
Austin Affordable Housing Corporation ("AAHC") is a nonprofit subsidiary of the Housing Authority of the City of Austin (HACA) created in 2003 to ensure and preserve quality, affordable housing opportunities for low- to moderate-income families in Austin as well as provide financial literacy and homeownership opportunities.http://www.presidiumre.com/
Cross Moceri is a founder and principal of Presidium Group. Mr. Moceri began his real estate investment career by founding Centaurus Investments, LLC in 2002 (the predecessor company to Presidium), focusing on multi-family investments in the Southern United States. Mr. Moceri is primarily responsible for capital formation, acquisitions, financial structuring, and portfolio development. Over the past decade, Mr. Moceri has spearheaded more than $1.2 billion of real estate investments. Mr. Moceri heads the Austin office of Presidium Group.
B.A. University of Notre Dame / J.D. University of Michigan
John Griggs is a founder and principal of Presidium Group and oversees all financial and operational aspects of Presidium Group’s 10,000 unit portfolio. Mr. Griggs is responsible for optimizing the capitalization of the portfolio and also directs asset and property management, construction and investor relations. Mr. Griggs has overseen the acquisition and successful integration of more than $1 billion of real estate assets and supervises over 250 Presidium employees. In addition to his 14 years of direct real estate experience, Mr. Griggs has passed Level 1 of the Chartered Financial Analyst program. Before launching his real estate career, he was a corporate lawyer at Milbank and Wilson Sonsini. Mr. Griggs heads the Dallas office of Presidium Group.
A.B. Stanford University / J.D. University of Michigan
|Presidium Group Track Record - Current Portfolio|
|Project Name||Location||Asset Type||Date Acquired||# of Units||Purchase Price||Forecasted Exit|
|Shenandoah Woods||Houston, TX||Multifamily||2006||232||$5,220,000||$13,920,000|
|Southern Oaks||Houston, TX||Multifamily||2006||198||$4,455,000||$11,880,000|
|Unity Pointe||Houston, TX||Multifamily||2006||109||$2,452,500||$6,540,000|
|Ashley Square||Houston, TX||Multifamily||2006||117||$2,632,500||$7,020,000|
|Inglewood Village||Houston, TX||Multifamily||2006||94||$2,115,000||$5,640,000|
|Oak Lawn Heights||Dallas, TX||Multifamily||2010||137||$1,860,000||$12,330,000|
|Hillcroft Apartments||Houston, TX||Multifamily||2014||381||$14,250,000||$22,678,600|
|Colonial Woods||Houston, TX||Multifamily||2014||112||$3,900,000||$6,720,000|
|Entro at Midtown||Dallas, TX||Multifamily||2014||404||$24,400,000||$41,000,000|
|The Branch at the Medical Center||San Antonio, TX||Multifamily||2015||426||$24,000,000||$32,670,252|
|The Verge||Dallas, TX||Multifamily||2015||217||$14,115,000||$22,785,000|
|The Link||Dallas, TX||Multifamily||2015||514||$26,620,000||$46,000,000|
|Ascent at Lake Worth||Ft. Worth, TX||Multifamily||2016||265||$17,100,000||$28,561,251|
|Cottonwood Creek||Dallas, TX||Multifamily||2016||270||$21,000,000||$34,099,974|
|The Linear||Dallas, TX||Multifamily||2016||370||$22,500,000||$37,365,620|
|Spice Creek||San Antonio, TX||Multifamily||2016||192||$12,100,000||$20,213,363|
|Brunswick Portfolio||Brunswick, ME||Multifamily||2017||407||$45,000,000||$56,368,179|
|Clover on Park Lane||Dallas, TX||Multifamily||2017||343||$19,500,000||$31,630,525|
|Vantage at Harlingen||Harlingen, TX||Multifamily||2017||288||$26,025,000||$29,919,300|
|Villas at Tension Park*||Dallas, TX||Multifamily||2017||442||$23,800,000||$33,407,315|
|The Vue*||Austin, TX||Multifamily||2017||156||$17,500,000||$21,473,996|
|The Marc||College Station, TX||Multifamily||2018||478||$21,670,000||$36,758,641|
|Ballpark - East, West and South||Austin, TX||Multifamily||2018||810||$124,000,000||$163,514,442|
|Balcones Club*||Austin, TX||Multifamily||2018||312||$38,350,000||$47,410,334|
|Lift*||Farmers Branch, TX||Multifamily||2018||95||$8,300,000||$10,835,694|
|The Elliott**||Pflugerville, TX||Multifamily||2018||272||$43,463,395||$51,773,951|
|University Village/Estates*||Austin, TX||Multifamily||2019||846||$131,500,000||$167,953,411|
|Revelstoke**||Fort Worth, TX||Multifamily||2019||408||$61,523,096||$79,695,554|
* = Recapitalization of Equity and Debt
** = Development Project/Under Construction
Note: The management overview and track record detailed above was provided by the Sponsor and has not been verified by RealtyMogul.com or NCPS.
In this transaction, RealtyMogul investors are to invest in Realty Mogul 149, LLC ("The Company"), which is to subsequently invest in Violet Holdings, LLC ("The Target"), a limited liability company that will indirectly own interest in the Property. Presidium purchased the Property for $12.7 million ($79,375 per unit) in May 2015 and plans to sell the Property to Housing Authority of City of Austin (“HACA”) for $22.0 million ($137,500 per unit) in April 2020. Presidium's cost basis is reportedly $17.0 million ($106,250 per unit). HACA shall then enter into a 75-year ground lease with Presidium and AAHC (collectively the "Real Estate Company"). Through the Real Estate Company's partnership with AAHC, the Property will be exempt from annual property taxes.
Presidium’s business plan is to continue driving value through the implementation of a $1.3 million ($8,319/unit) capital improvement plan, pushing rents from the current level of $1,034 per unit to $1,076 in Year 1. With unit and exterior improvements, the Real Estate Company plans to increase rents by an additional 3% each year thereafter. A joint venture will be formed between the Limited Partners (RM included), Presidium, and AAHC for the recapitalization of The Violet. The AAHC's minority position allows for the Property to be exempt from yearly property taxes, and in turn, save an average of $300,000 in property tax expense per year. To comply with AAHC requirements under the structure and to ensure the partnership receives the property tax exemption, at least 51% of the units at The Violet will be set aside for households earning 80% of the area median income. However, this restriction will not affect the Real Estate Company's ability to maintain and increase rent as 100% of the units fall well below this threshold. There is also a 10.0% and 10.0% construction management fee. The business plan calls for a five-year hold, at which point the Property is expected to be sold at a 4.75% cap rate for $26.7 million ($166,567 per unit).
Below is a summary of the capital improvements budget:
Capital Improvements Budget Summary:
|Exterior Renovations||Total||Per Unit|
|Paint and carpentry||$350,000||$2,188|
|Parking lot reseal/stripe||$75,000||$469|
|Other mechanical renovations||$55,000||$344|
|Subtotal Exterior Renovations||$800,000||$5,000|
|Subtotal Interior Renovations||$300,000||$1,875|
|Construction Management Fee (10%)||$121,000||$756|
|Total Estimated Budget||$1,331,000||$8,319|
These amounts are subject to change at the discretion of the Real Estate Company
The Violet Apartments (the "Property") is a 160-unit Class B multifamily apartment community located in Austin, TX, approximately seven miles south of Downtown Austin. The Property offers a swimming pool, fire pit, club room, business center, fitness center, and community laundry facilities. The Property consists of twelve low-rise structures, with 1x1 (108 units), 2x1 (16 units), and 2x2 (36 units) floorplans. The Property is located between I-35 and South Congress Ave, both heavily traveled thoroughfares providing easy access throughout the metro and to Austin's major employment hubs. The Property is a block away from Century South Shopping Center, which has over twenty shops including Big Lots, Gold's Gym, and KFC. The Property is also located within half a mile of several nearby retailers including H-E-B, Walgreens, 7-Eleven, and Jack in the Box.
The Property was built in 1984 and under Presidium's ownership, received $2.5 million in interior and exterior renovations. Renovations began in late 2015 and included full exterior carpentry and paint, new signage, a leasing office and fitness renovation, a pool renovation, dog park construction, backyard construction, carport construction, a landscaping overhaul, and unit interior renovations. Historic average occupancy has remained north of 95% over the years with a steady rent growth average of 3.9% since 2017.
In-place/Stabilized Unit Mix:
|Unit Type||# of Units||% of Total||Unit Size (square feet)||In-Place Rent||Post-Reno Rent|
|A1 Original - 1x1||1||1%||481||$840||$874|
|A1 Premium - 1x1||43||27%||481||$892||$928|
|B1 Original - 1x1||3||2%||575||$982||$1,021|
|B1 Premium - 1x1||61||38%||575||$971||$1,010|
|C2 Premium - 2x1||16||10%||847||$1,191||$1,238|
|D2 Original - 2x2||1||1%||917||$1,225||$1,274|
|D2 Premium - 2x2||31||19%||917||$1,237||$1,287|
|E2 Original - 2x2||1||1%||1,100||$1,289||$1,341|
|E2 Premium - 2x2||3||2%||1,100||$1,370||$1,424|
|Marquis Soco||Soco||Terrace Cove||Arts at Turtle Creek||The Reserve||Arts at South Austin||Total/Averages||Subject|
|Submarket||Sweetbriar||Sweetbriar||Bluff Springs||Garrison Park||South Manchaca||West Congress||South Austin|
|# Units (1x1)||92||16||180||47||73||55||77||108|
|# Units (2x1)||-||16||24||-||-||28||23||16|
|# Units (2x2)||48||74||100||48||49||57||63||36|
|Distance from subject||0.2 mi||0.5 mi||1.0 mi||1.5 mi||2.0 mi||2.4 mi|
|Cannon Oaks||SoCo at Alpine||Terraces at Southpark Meadows||Grace Woods||Establishment||Iron Rock Ranch||Cascade||Total/Averages||Subject|
|Submarket||Bluff Springs||SoCo||Southpark Meadows||Parker Lane||Dawson||Mary Moore Park||Travis Heights||South Austin|
|Distance from Subject||1.2 mi||3.1 mi||3.1 mi||3.2 mi||3.3 mi||4.0 mi||4.3 mi|
Sale and lease comparable information provided by CoStar, Axiometrics, and the Real Estate Company.
The Austin metro has been rated as the best place to live according to U.S. News and World Report for the past three years thanks to exceptional job growth, migration, and desirability. Low business costs, pro-business policies, and a high quality of life are the cherries on top of the deep bench of tech talent in Austin generated by the University of Texas at Austin, which regularly ranks as one of the best schools in the world for STEM graduates. Tech companies from Silicon Valley have been relocating their HQs to or opening satellite locations in Austin (Silicon Hills) for years. Two of the largest recent examples are Apple, which announced another expansion to its $1 billion campus in Northwest Austin, and Zoho, which is relocating from the East Bay to Southeast Austin. Austin's employment continues to grow at about twice the national rate, and strong growth should continue. With the 20-34-year-old population approaching 500,000, nearly a quarter of Austin's population consists of millennials. While the metro boasts one of the strongest economies in the nation this cycle, it has also been one of the most development-heavy markets in the country this cycle. In fact, nearly 35% of the inventory has delivered since 2010. However, the Midtown Austin submarket has demonstrated healthy performance. Per Axiometrics, rent growth in the South Austin submarket has averaged 2.9% over the past five years and currently sits at 6.7%. Multifamily vacancy in the submarket has dropped from a peak of 8.2% in Q2 2009 to 4.6% in Q4 2019. 2,200 units are currently under construction, representing 7.5% of the total 30,000 units of multifamily space in the submarket.
|Sources of Funds||Amount|
|RM 149 Investor Equity||$8,698,446|
|Total Sources of Funds||$24,098,446|
|Uses of Funds||Amount|
|Real Estate Company Acquisition Fee||$200,000|
|Broker Dealer Fee||$260,000|
|Taxes & Insurance||$29,792|
|Total Uses of Funds||$24,098,446|
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: $15,400,000
- Estimated Interest Rate (Fixed): 3.38%
- Term: 5 years
- Interest Only: 5 years
- Prepayment Penalty: TBD ($1.0% of OLB underwritten)
- Extension Options: N/A
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 10.0% IRR to the Members;
- 85% / 15% (85% to Members / 15% to the Real Estate Company) of excess cash flow to a 15.0% IRR;
- 70% / 30% (70% to Members / 30% to the Real Estate Company) of excess cash flow to a 20.0% IRR;
- 50% / 50% (50% to Members / 50% to the Real Estate Company) 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 July 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|
|Effective Gross Revenue||$2,072,812||$2,162,935||$2,228,027||$2,295,086||$2,363,056|
|Total Operating Expenses||$682,760||$697,077||$710,785||$724,791||$739,061|
|Net Operating Income||$1,390,052||$1,465,858||$1,517,242||$1,570,295||$1,623,994|
|Distributions to RealtyMogul 149, LLC Investors||($2,020,000)||$121,497||$179,958||$203,479||$215,939||$215,939||$2,398,857|
|Net Earnings to Investor
- Hypothetical $50,000 Investment
Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Acquisition Fee||$200,000||Real Estate Company||Capitalized Equity Contribution||0.9% of the Property purchase price|
|Disposition Fee||1.0% of Gross Sale Proceeds||RM Advisor, LLC||Distributable Cash||RM Advisor, LLC is the Manager of MogulREIT II and a wholly-owned subsidiary of Realty Mogul, Co.|
|Broker-Dealer Fee||$260,000||North Capital (1)||Capitalized Equity Contribution||Greater of $50,000 and 4.0% of the equity raised by RealtyMogul 142, LLC|
|Construction Management Fee||7.0% of Construction Costs||Real Estate Company||Capitalized Equity Contribution|
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Management and Administrative Fee||1.0% of amount invested in RealtyMogul 149, LLC||RM Manager, LLC||Distributable Cash||RM Manager, LLC is the Manager of RealtyMogul 149, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2)|
|Asset Management Fee||2.0% of Effective Gross Income||Real Estate Company||Distributable Cash|
|Property Management Fee||3.0% of Effective Gross Income||Real Estate Company||Distributable Cash|
(1) North Capital Private Securities Corporation (“NCPS”), a registered broker-dealer who will act as placement agent for interests in the Company will be paid a fee as outlined above. NCPS will pay a referral fee to Mogul Securities, LLC (“MS”), an affiliate of the Manager and RealtyMogul, Co., for referring the transaction pursuant to a referral agreement between NCPS and MS. Certain employees of Realty Mogul, Co., an affiliate of Manager are registered representatives of, and are paid commissions by, NCPS.
(2) Fees may be deferred to reduce impact to investor distributions.
The above presentation is based upon information supplied by the Real Estate Company or others. Realty Mogul, Co., RM Manager, LLC, and The Company, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.
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