Berkshire Property Holdings (the "Real Estate Company") was founded in 2013 by Hamza Kuraishi and Zamir Kazi and is headquartered in Miami, Florida. It is a real estate investment firm specializing in multifamily acquisitions and re-developments throughout the USA. It currently operates in California, Florida, Georgia and Texas. In a short space of time, Berkshire Property Holdings has established an excellent reputation for moving swiftly and decisively when identifying undervalued and under-performing assets in strategic locations. The company's strategy has been to operate in markets where it sees significant growth potential. The company believes that its success hinges on careful market selection, strong sourcing capabilities, comprehensive due diligence, detailed financial analysis, and methodical execution. Berkshire Property Holdings uses it’s veteran acquisition team’s market expertise to target assets in high growth submarkets and then create value through a combination of rebranding, renovating, and revitalizing property management. A disciplined investment approach to renovation and tenant improvement has led to repositioning opportunities in assets with significant value-add potential, while always maintaining a focus on downside risk limitation.
The Parks at Walnut (the "Property") was built in 1979. The Property contains 234,132 rentable square feet and is comprised of 25 individual residential structures, along with a resident business center, two swimming pools, barbeque grilling stations, community picnic areas, controlled access gates, and convenient laundry facilities. It is within close proximity to upscale shopping centers and mixed-use developments like NorthPark Center and the Galleria, which is a top tourist destination for food, shopping and entertainment. The Property is highly accessible to D-FW Airport, the fourth-largest airport in the world, which is also the hub for American Airlines headquartered near the airport. As of now, the Property is a solidly performing multifamily asset, achieving an occupancy rate of around 94%. The unit mix is as follows:
In-Place/Stabilized Unit Mix:
| Unit Type | # of Units | Unit Size (square feet) | In-Place Rent | Post-Reno Rent |
| Studio | 48 | 484 | $736 | $822 |
| 1 Bed, 1 Bath | 112 | 650 | $812 | $925 |
| 2 Bed, 1 Bath | 48 | 814 | $984 | $1,099 |
| 2 Bed, 2 Bath | 32 | 889 | $1,070 | $1,150 |
| 2 Bed, 2 Bath | 48 | 950 | $1,161 | $1,250 |
| 2 Bed, 3 Bath | 20 | 1249 | $1,349 | $1,471 |
| Total/Averages | 260 | 760 | $943 | $1,045 |
All rents are net effective
Post-reno rents do not include $50 monthly premium for private yards or $40 monthly premium for in-unit washer/dryer
Lease Comps
| Estancia | Riverwalk | The View at Lake Highlands | Brooklyn @ 9670 | Total/Averages | Subject | |
| Units | 220 | 166 | 292 | 256 | 233 | 308 |
| Year Built | 1981 | 1981 | 1969 | 1980 | 1977 | 1979 |
| Average SF | 934 | 846 | 797 | 708 | 821 | 760 |
| Average Rental Rate | $1,070 | $1,095 | $1,011 | $993 | $1,042 | $1,045 |
| Average $/SF | $1.15 | $1.30 | $1.27 | $1.40 | $1.28 | $1.38 |
| Distance from Subject (mi.) | 0.8 miles | 0.6 miles | 1.0 miles | 1.9 miles | 1.0 miles |
All rents are net effective
Subject rents do not include $50 monthly premium for private yards or $40 monthly premium for in-unit washer/dryers
Sales Comps
| Estancia | Lavera at Lake Highlands | The View at Lake Highlands | Alista | The Beverly | Esencia | Total/Averages | Subject | |
| Date | Jul-19 | Jun-18 | On the Market | Jan-19 | May-18 | Under Contract | Aug-20 | |
| Units | 220 | 280 | 292 | 333 | 200 | 200 | 254 | 308 |
| Year Built | 1981 | 1969 | 1969 | 1970 | 1979 | 1981 | 1975 | 1979 |
| Purchase Price | $24,100,000 | $30,000,000 | $34,500,000 | $36,000,000 | $23,800,000 | $24,000,000 | $28,733,333 | $30,800,000 |
| $/Unit | $109,545 | $107,142 | $118,000 | $108,108 | $119,000 | $120,000 | $113,632 | $100,000 |
| Distance from Subject | 0.8 miles | 3.5 miles | 1.0 miles | 2.7 miles | 2.5 miles | 10.7 miles | 3.5 miles |
| Sources of Funds | Amount |
|---|---|
| Debt | $23,100,000 |
| Equity | $11,993,784 |
| Total Sources of Funds | $35,093,784 |
| Uses of Funds | Amount |
| Purchase Price | $30,800,000 |
| Escrows/Prepaids | $718,906 |
| Closing Costs to Buyer | $280,000 |
| Loan Closing Costs | $288,750 |
| Capital Reserves | $2,390,128 |
| Other Reserves | $308,000 |
| Partnership Fees | $308,000 |
| Total Uses of Funds | $35,093,784 |
Please note that the Sponsor's equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor. Additionally, the numbers represented above can change prior to closing depending on final loan proceeds, property condition assessments, appraisals, final closing costs, and other lendermandated expenses. The Manager reserves the right to allocate Company resources in a manner that the Manager determines will best maximize returns and minimize risk depending on current market trends.
The expected terms of the debt financing are as follows:
- Lender: CBRE
- Estimated Proceeds: $23,100,000
- Estimated Rate: 3.06%
- Amortization: 30 years
- Term: 12 years
- Interest Only: Three years
- Exit Fee: None
- Prepayment: Defeasance
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 Real Estate Company intends to make distributions as follows:
- Pari passu, all excess operating cash flows to an 8.0% IRR to investors;
- 80.0% / 20.0% (80.0% to investors / 20.0% to promote) of excess cash flow and appreciation thereafter.
Note that these distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).
Distributions are expected to start in January 2021 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. The Real Estate Company will receive a promote as indicated above, and a portion of this promote may be received by RM Admin for administrative services.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Effective Gross Revenue | $3,353,163 | $3,712,605 | $4,265,031 | $4,395,813 | $4,512,774 |
| Total Operating Expenses | $1,923,532 | $2,022,509 | $1,974,530 | $2,018,783 | $2,063,509 |
| Net Operating Income | $1,429,631 | $1,690,097 | $2,290,502 | $2,377,030 | $2,449,265 |
Certain fees and compensation will be paid over the life of the transaction; please refer to Real Estate Company materials for details. The following fees and compensation will be paid(1)(2):
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
|---|---|---|---|---|
| Acquisition Fee | $308,000 | Real Estate Company | Capitalized Equity Contribution | 1.0% of the Property purchase price |
| Construction Management Fee | 7.0% of costs | Real Estate Company | Capitalized Equity Contribution |
| Type of Fee | Amount of Fee | Received By | Paid From |
|---|---|---|---|
| Administrative Services Fee | 1.0% of amount invested into Parks at Walnut RM, LLC | RM Admin(2) | Distributable Cash |
| Asset Management Fee | 1.0% of Effective Gross Income | Real Estate Company | Distributable Cash |
| Property Management Fee | 3.0% of Effective Gross Income | FPI Management | Distributable Cash |
(1) Fees may be deferred to reduce impact to investor distributions
(2) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage based fee for Real Estate Companies to use the marketplace.
(3) RM Admin will be providing the following services:(a) responding to inbound investor inquiries regarding how to subscribe to the Project, (b) distribution of all annual tax forms (after receipt of same from Project Sponsor), (c) processing distributions that are payable from Parks at Walnut RM, LLC to Investors, however, RM Admin will not be deemed to have custody of client funds, (d) distribution of all quarterly reports (after receipt of same from Project Sponsor) and (e) summarizing sponsor information on property performance, responding to investor inquiries regarding sponsor performance information as well as the real estate market generally.
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.
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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.