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.
Kaufman Development is one of Columbus' most innovative mixed-use developers. Kaufman's unique approach focuses on building communities of high-design and high-impact, while enriching the lives of the tenants who live and work in them and the neighborhoods in which they are located. Notable projects include 801 Polaris, 600 Goodale, 250 High, 80 On The Commons, The LeVeque Tower Residences, and Gravity Phase I. Kaufman has appeared on the Inc. 5,000 list of the nation's fastest growing companies and its projects are consistently ranked at the top of Columbus Underground's best development lists.
Given this is an opportunity zone investment, investors can anticipate tax-free treatment of capital gains upon sale of the asset. The investment is expected to allow for the deferral of tax on rolled-in gains until 2027 and a 10% decrease in the tax owed on those gains. Additionally, the investment may be eligible for a State of Ohio tax credit, which represents 10% of invested amount and can be sold if not used. This is expected to further enhance pro forma returns.
*Consult your tax professional. State of Ohio tax credit is first come, first served and is not guaranteed. Next application window opens 1/4/2021.
The Project is being developed in the East Franklinton neighborhood, a neighborhood generally recognized as one of the city's most desired areas for entrepreneurial employers, unique retail and entertainment venues, and a preferred destination for residents from Columbus' creative class. It has also emerged as a destination of choice for high-growth Columbus’ companies. Downtown Columbus’ office space is currently undergoing a major transformation with office tenants demanding contiguous, Class A office floor plates in new buildings that are in small supply in and around the Columbus CBD. The strong commercial leasing at Kaufman’s 250 High and 80 On The Commons projects exemplifies this.
Kaufman Development
Kaufman Development evolved with the career of its founder, Brett Kaufman. After getting his start in the banking industry, Mr. Kaufman entered the world of real estate. Prior to founding Kaufman, he worked with large real estate developers in Central Ohio. Kaufman Development was founded based on a growing passion for creating innovative communities filled with purpose. He wanted the communities to focus on wellbeing, impact, and creative expression. And in doing so, he believed they could have a positive impact on the lives of the residents.
Since founding the company in 2011, Kaufman Development has developed and managed over 1,500 residential units and over 400,000 SF of commercial space in nine distinct projects. The company has won numerous awards, including the first ever ULI Columbus Excellence in Development award. Kaufman Development has donated over 3,000 hours and over $350,000 in contributions to various philanthropic organizations, including BESA, KIPP Journey Academy, Community Shelter Board, Ohio State University Star House, Hunger Alliance, Ronald McDonald House, OSU James Cancer, Columbus Jewish Federation and many others.
https://livekaufman.com/-
Brett KaufmanFounder & CEO -
Frank SassoPresident -
Ian LabitueDirector of Finance -
Steve WelkerDirector of Construction -
Lauren SchottDirector of Communities
Brett Kaufman, founder and CEO, has been working in real estate development and investing in various asset types—both through the investment banking and development lens—for more than 18 years. During this time, he has developed, leased and/or sold over 10,000 homes and a variety of commercial, retail, land and office projects. His accomplishments have not gone unnoticed. He was twice named Developer of the Year by the Building Industry Association (BIA); is past president of the Columbus Apartment Association; and serves on many civic boards throughout Central Ohio, including the boards of the Columbus Partnership, the Central Ohio Transit Authority, and the Wexner Center for the Arts. In 2012, he was named Next Generation Builder of the Year by the BIA, and in 2014, Brett was honored as Ernst & Young’s Emerging Entrepreneur of the Year.
Frank Sasso, President of Kaufman Development, has been involved in commercial real estate since 2004. As a Relationship Manager at KeyBank, he originated senior and mezzanine financing for multifamily, condominium, office, retail, and industrial properties. He helped lead the creation of Key’s Collateralized Debt Obligation platform and co-managed a $625 million investment fund. Prior to joining Kaufman Development, Frank worked for Amgen, Inc. as part of its commercial leadership program. Frank earned a B.S. from The Ohio State University, summa cum laude, and an M.B.A. from Northwestern University’s Kellogg School of Management, with distinction. In 2018, Frank was named to Columbus Business First’s 40 Under 40.
Ian Labitue, Director of Finance, began his career as a financial analyst by completing JPMorgan Chase’s Global Investment Banking Program and then with GE Energy by completing a two-year financial management training program. He also worked in the real estate groups of several law firms, assisting clients in the areas of commercial real estate development, real estate finance and commercial leasing. Most recently, he served as an assistant general counsel with Nationwide Realty Investors, Ltd. providing legal and strategic guidance, analysis and management of various projects within NRI’s real estate portfolio. Ian earned a B.B.A. from Morehouse College, cum laude, and a J.D. from the University of Michigan Law School.
Steve Welker, Director of Construction, has been working in commercial construction for over 15 years. Prior to joining Kaufman Development, Steve earned a B.S. in construction management from The Ohio State University and worked for Messer Construction as a senior project manager. During this time, he honed his management skills while leading projects in areas such as healthcare, residential, dining, commercial, and city parks. Specifically, he was a part of the North Residential District Transformation at The Ohio State University, which consisted of two dining centers, a fitness center, a 2,000 square foot retail pavilion, and housing for 378 students. He also worked with Mt. Carmel St. Ann’s and Mt. Carmel West on campus revitalization projects.
Lauren Smith, Director of Communities, has over 11 years of multi-family experience. Her prior employment includes Ackermann Group, Coastal Ridge and Peak Campus. As a Regional Manager, she managed conventional and student assets for a national portfolio. She created company-wide leasing and marketing strategies, oversaw new development lease-ups, and assisted in building the operations platform for a rapidly growing management division. Lauren is a graduate of The Ohio State University.
Kaufman Development Schedule of Real Estate Owned
| Property | Location | Asset Type | Acq Date | Project Acquisition/Development Costs | Highlights |
| LeVeque Tower | Columbus, OH | Mixed Use | N/A | $24 million | 69 apartment homes + 8 for-sale condominium units |
| 23 West 2nd | Columbus, OH | Land/Redev | Apr 2016 | - | N/A |
| The Gravity Project Phase I | Columbus, OH | Mixed Use | Feb 2017 | $72 million | 234 apartments + 50,000 SF of office space and 30,000 SF of ground-floor retail |
| The Gravity Project Phase II | Columbus, OH | Land/Redev | Jun 2018 | - | N/A |
Kaufman Development Portfolio
| Property | Location | Asset Type | Date of Completion | Sale/Recap Year | LP Returns | Project Acquisition/Development Costs | Highlights |
| Downtown Submarket 1 | Columbus, OH | Mixed Use | Summer 2016 | 2019 | 23% IRR | $51 million | 121 apartment units + 150,000 SF of office/retail space |
| Grandview/Arena District Submarket | Columbus, OH | Multifamily | Dec 2013 | 2019 | 35% IRR | $26 million | 174 residential units + structured parking |
| Polaris Submarket | Columbus, OH | Multifamily | Mar 2015 | 2019 | 22% IRR | $33 million | 270 residential units + structured parking |
| New Albany/Easton Submarket | New Albany, OH | Multifamily | Jun 2013 | 2019 | 50% IRR | $31 million | 322 apartment homes on 38 acres of land |
| Downtown Submarket 2 | Columbus, OH | Mixed Use |
Jul 2018 |
12% preferred return |
$62 million | 125 apartment homes + 160,000 SF of commercial space |
|
| Market & Main | New Albany, OH | Multifamily | Q3 2018 | - | - | - | 132 units + 6,000 SF of amenities and 191 parking stalls |
The above bios and track record were provided by Kaufman Development and have not been independently verified by RealtyMogul.
Kaufman Development plans to construct a mixed-use multifamily, office, and retail development consisting of:
- An office building containing approximately 170,970 SF of Class A office space and 13,219 SF of convenience retail space
- A 12-story mixed-use luxury lower containing approximately 257 market-rate apartments, 19,175 SF of Class A office space, and 3,447 SF of convenience retail space
- A Townhome building containing approximately 24 market-rate residential apartments
- A residential mid-rise building containing approximately 68 market rate residential units and approximately 146 co-live bedrooms
- A retail building containing approximately 500 SF of retail space
- A public parking garage containing approximately 880 stalls
The total cost to complete the Project, based on execution-ready Guaranteed Maximum Price contracts with general contractors, is approximately $165.7 million.
The business plan calls for an eleven-year hold, at which point the Property is projected to be sold at a 5.54% cap rate for $230.9 million.
A summary of the development budget can be found attached.
Kaufman Development believes that the market opportunity for the Project, similar to that of Kaufman’s prior project, Gravity Phase I, located across the street from the Project, remains compelling. The Project sits at the gateway to the East Franklinton creative district and is directly west of the planned Scioto Peninsula development. With easy access to SR-315 and walkability to Downtown Columbus, the Project offers an outstanding location for the proposed development. The Project is expected to be one of the most dynamic and forward-thinking mixed-use projects in the country. With multifamily, office, retail, and a fully programmed amenities package, the Project will create a vibrant 18-hour hub of activity and innovation.
Office Building:
The Office Building is currently planned to be 6 stories tall and located on the northwest corner of the Property fronting Broad Street and Gravity Phase I. The Office building is estimated to include 170,970 square feet of contiguous Class A office space and 13,219 square feet of ground floor retail space.
Currently, a lease has been executed with a large Central Ohio health system to locate an urgent care and primary care physicians’ office at the Project. There is strong interest from an approximately 150,000 SF user in the market currently as well as multiple State agencies who have expressed an interest in re-locating to Gravity in 2022. While there are no assurances that any of these will convert to a signed lease, the early momentum is encouraging. Further, if the Project receives New Market Tax Credits, Kaufman plans to build a Center for Innovation and Social Impact, combining a start-up accelerator/space for high growth companies with a social impact center to house several innovative area non-profits.
Mixed-Use Luxury Tower:
The Mixed-Use Luxury Tower is currently planned to be 12 stories tall and located on the northeast corner of the Property fronting Broad Street and Gravity Phase I. The Mixed-Use Luxury Tower is expected to include a mix of 257 market-rate residential units, 19,175 square feet of office space, and 3,447 square feet of ground floor retail space. Other amenities are planned to include a dynamic residential lobby/entryway, local gathering space, meditation, fitness facility, and large communal courtyards.
Townhome Building:
The Townhome Building will consist of six 2-story, walk up townhomes for rent and is expected to contain a total of 18 flats.
Residential Mid-Rise Building:
The Residential Mid-Rise Building is currently planned to be five stories tall and located on the southeast corner of the Property fronting State Street and the Idea Foundry (one of the largest “maker” spaces in the Midwest). The Residential Mid-Rise Building will include a mix of 68 market-rate studios and 1-bedroom residential units, and 146 co-live beds. The co-live beds are housed in 33 individual units comprised of 4- and 5- bedroom units with shared kitchens and living rooms. Rent for the co-live beds are on a per bed basis and is gross – including utilities, internet, and basic cleaning services. Currently, a shared amenity space consisting of a pool area, amenity deck, and other recreational space (the “Shared Amenity Space”) is planned to be located adjacent to the Residential Mid-Rise Building.
The Retail Building:
The Retail Building will be a stand-alone building on the southwest portion of the Property fronting State Street. The space will consist of 500 square feet (rentable) of renovated warehouse space. The Retail Building is targeted towards a restaurant operator or similar tenant and/or may be utilized as a community amenity/gathering space for the Project, dependent upon market demand.
The Parking Garage:
The Parking Garage is estimated to hold approximately 880 stall parking spaces in a five-story parking structure (with additional parking on the roof level) and will serve the as the primary parking choice for the various aspects of the Project. Kaufman Development will likely enter into a contract with a third-party parking manager to manage the operating of the Parking Garage. The Parking Garage is separately financed through a public majority tax-exempt bond issuance and a $2 million City of Columbus Grant.
The unit mix is as follows:
Unit Mix
| Residential Unit Type | # of Units | Sq Feet | Total SF | Average Mo. Rent | Average Rent / SF / Month | Gross Annual |
| Residential Luxury Tower Apts | 257 | 776 | 199,537 | $ 1,781 | $ 2.29 | $ 5,493,000 |
| Residential Mid-Rise Apts | 101 | 774 | 78,167 | $ 1,915 | $ 2.47 | $ 2,321,400 |
| Townhomes | 24 | 893 | 21,420 | $ 1,919 | $ 2.15 | $ 552,600 |
| Residential Average - Overall | 783 | $ 1,825 | $ 2.33 | |||
| Commercial Unit Type | Sq Feet | Base Average Rent / SF / Yr | Add'l Rent Average Rent / SF / Yr | Gross Annual | ||
| Residential Luxury Tower - Office | 19,175 | $ 18.90 | $ 8.57 | $ 526,680 | ||
| Residential Luxury Tower - Retail | 3,447 | $ 23.00 | $ 8.19 | $ 107,512 | ||
| Office Bldg - Retail | 13,219 | $ 24.00 | $ 8.22 | $ 425,916 | ||
| Office Bldg - Office (new) | 170,970 | $ 19.50 | $ 8.59 | $ 4,801,692 | ||
| Retail Bldg (existing) | 500 | $ 50.00 | $ 9.00 | $ 29,500 | ||
| Residential Luxury Tower Amenity Space | 11,920 | $ - | $ - | $ - | ||
| Residential Mid-Rise Amenity Space | 9,231 | $ - | $ - | $ - | ||
| Commercial Average | 32,637 | $ 25.79 | ||||
| Commercial Average (less amenity) | 41,462 | $ 28.42 | ||||
| Additional Income Unit Type | # of Units | Average Mo. Rent | Gross Annual | |||
| Pet Revenue | 76 | $ 45 | 41,256 | |||
| Short term Lease Revenue | 76 | $ 125 | 114,600 | |||
| View /Penthouse Premium | 60 | $ 50 | 36,000 | |||
| Other Res. Income | 497,530 | |||||
| Total Gross Rental Income | $ 14,947,686 | |||||
Lease Comps
| 250 High1 | 80 On The Commons1 | Hubbard Park Place2 | Microliving @ 260 S 4th3 | The Nicholas | Total/Averages | Subject | |
| Year Built | 2015 | 2018 | 2019 | 2014 | 2019 | 2017 | 2022 |
| # of Units (approximate) | 121 | 125 | 101 | 52 | 230 | 126 | 382 |
| Average Rental Rate | $2,082 | $1,867 | $2,210 | $812 | $1,500 | $1,694 | $1,825 |
| Average Unit Size | 1,075 | 1,001 | 915 | 291 | 689 | 794 | 783 |
| Average $/SF | $1.94 | $1.87 | $2.42 | $2.79 | $2.18 | $2.24 | $2.33 |
| Levels | 12 | 12 | 7 | 5 | 6 | 8 | 12 |
| Occupancy | 95% | 86% | 85% | 96% | 53% | 83% | |
| Distance from Subject (mi.) | 1.0 mi | 1.1 mi | 1.8 mi | 1.3 mi | 0.8 mi | ||
| $/Unit (Studio) | $1,751 | $1,215 | $812 | $1,172 | $1,238 | $1,292 | |
| SF (Studio) | 727 | 470 | 291 | 495 | 496 | 501 | |
| $/SF (Studio) | $2.41 | $2.59 | $2.79 | $2.37 | $2.54 | $2.58 | |
| $/Unit (1x1) | $1,528 | $1,536 | $1,857 | $1,297 | $1,555 | $1,582 | |
| SF (1x1) | 876 | 809 | 796 | 587 | 767 | 700 | |
| $/SF (1x1) | $1.74 | $1.90 | $2.33 | $2.21 | $2.05 | $2.26 | |
| $/Unit (2x2) | $3,125 | $2,622 | $2,949 | $2,173 | $2,717 | $2,365 | |
| SF (2x2) | 1,530 | 1,477 | 1,166 | 1,071 | 1,311 | 1,093 | |
| $/SF (2x2) | $2.04 | $1.78 | $2.53 | $2.03 | $2.09 | $2.16 | |
| $/Unit (3x2) | $4,374 | $4,483 | $4,429 | $2,950 | |||
| SF (3x2) | 1,740 | 1,733 | 1,737 | 1,579 | |||
| $/SF (3x2) | $2.51 | $2.59 | $2.55 | $1.87 | |||
| $/Unit (4x3)4 | $775 | ||||||
| SF (4x3) | 273 | ||||||
| $/SF (4x3) | $2.84 | ||||||
| $/Unit (5x4)4 | $725 | ||||||
| SF (5x4) | 291 | ||||||
| $/SF (5x4) | $2.49 | ||||||
1Mixed-use building. First 6 floors are office.
2Mixed-use building. The first floor is comprised of townhomes and the second floor is office.
3Original building built in 1911. Renovated in 2014 and converted from warehouse/office to apartments with a ground-floor restaurant.
4Co-living units are shown by bed.
Sales Comps
| Downtown Comp 1 | Downtown Comp 2 | Downtown Comp 3 | Easton Mall Submarket | Total/Averages | Subject | |
| Date Sold | 2019 | 2019 | 2019 | 2020 | ||
| Year Built | 2016 | 2019 | 2012 | 2000 | ||
| # of Units (approximate) | 130 | 125 | 195 | 1,065 | 379 | 382 |
| Sale Price | $68,500,000 | $72,000,000 | $30,000,000 | $135,000,000 | $76,375,000 | $203,800,000 |
| $/Unit | $526,923 | $576,000 | $153,846 | $126,761 | $345,882 | $533,508 |
| Cap Rate | 4.16% | 4.20% | 4.85% | 4.95% | 4.54% | 5.18% |
| Distance from Subject | 1.0 mi | 1.0 mi | 1.5 mi | 10.0 mi |
Market Overview
The Project will be located in the neighborhood of Franklinton, which is situated directly west of downtown Columbus, Ohio. The neighborhood of Franklinton is located within in an opportunity zone and holds a storied place in the history of Columbus as its oldest neighborhood. Unlike many opportunity zones across the country which have unclear development potential, the Franklinton neighborhood is already on its way towards a massive transformation and is generally recognized as one of the city's hottest new areas for entrepreneurial employers, unique retail and entertainment venues, and a preferred destination for residents from Columbus' creative class. The Project is also located within Franklinton such that it will benefit from its close proximity to the heart of downtown Columbus, Ohio, situated a half-mile from the Ohio Statehouse, theatres, restaurants, hotels and all of the downtown Columbus neighborhoods.
Columbus is the state capital of Ohio, the largest city in the state, the state’s second largest metropolitan area, the second-most populous city in the American Midwest, and the third-most populous state capital in the U.S. The current population is estimated at 2.1 million people. It is expected that the Columbus MSA, the fastest growing in the Midwest, will be the largest in Ohio by 2020. The area is comprised of 63 college and university campuses (133,000 undergraduate and graduate students), home to 14 Fortune 1000 headquarters - of which four are fortune 500 companies (AEP, Cardinal Health, L Brands (Victoria’s Secret and Bath and Body Works), and Nationwide). Additionally, Columbus is home to 450 international companies and two of the world’s leading private-research institutions, Battelle, and Chemical Abstract Services.
In recent years, Columbus has become the epicenter of entrepreneurial activity in the Midwest and has become one of the fastest growing innovation and technology hubs in the nation. Organizations like venture capital firm Drive Capital, which was founded by former partners at famed Sequoia Capital in Silicon Valley and now has over $1 billion AUM in venture capital, have recently helped Columbus achieve its position as the top US city for tech workers, according to a 2017 study by SmartAsset, and a top 10 rising city for startups according to Forbes (2019). Moreover, Rise of the Rest, a DC venture capital seed fund lead by AOL co-founder Steve Case that invests in emerging markets in the US, has identified Columbus as a top Midwestern market for startups.
Additionally, Columbus recently won a nationwide competition led by the US Department of Transportation. Columbus has gone 'all in' on mobility innovation. Thanks to $50 million across two grants, the city is being positioned as Smart Columbus, a localized takeoff of smart city initiatives in other key hubs internationally.
Downtown Columbus’ office space is currently undergoing a major transformation. Office tenants are demanding contiguous, Class A office floor plates that are in small supply in and around the Columbus CBD. The strong commercial leasing at Kaufman Development’s 250 High and 80 on The Commons projects exemplifies this, but still little supply of new Class A office space is available. To add to that, already over 1mm SF of downtown’s dated office space has either been converted, or is planned to be converted into retail, hotel, and residential uses more suitable for the smaller, oddly shaped floorplates. These conversions not only will continue to add new life to downtown and the surrounding areas but may also significantly reduce the stock of existing office space downtown- further increasing office demand in and around downtown Columbus.
As Columbus realizes a resurgence in urban living, Franklinton provides a more sustainable, active, and forward-thinking lifestyle. The exploration in multimodal transit options, renewable energy, green infrastructure solutions and connected bicycle corridors will assist in Franklinton redefining urban living across the Midwest.
Submarket Overview
Franklinton served as the original settlement in Central Ohio, founded in 1797, making it the birthplace of downtown Columbus. As one of Columbus' once most downtrodden neighborhoods, Franklinton is now poised to become the most sought-after community in the city by millennials, empty nesters, thought leaders and innovative entrepreneurs. As Columbus realizes a resurgence in urban living, Franklinton provides a more sustainable, active, and forward-thinking lifestyle. The exploration in multimodal transit options, renewable energy, green infrastructure solutions and connected bicycle corridors will assist in Franklinton redefining urban living across the Midwest.
In recent years, Franklinton has emerged as a destination of choice for Columbus' emerging companies as demonstrated by Cover My Med's (now McKesson) breaking ground on a 400,000 SF headquarters next to the existing Orange Barrel Media HQ less than a half mile to the west of the Property as well as the planned redevelopment of the Mount Carmel West hospital campus on the west side of SR-315. In addition to companies such as BARK, which is the anchor tenant in Gravity Phase I, there are several additional announcements forthcoming furthering Franklinton’s image as the epicenter for the next generation of rapid growth in our community.
In addition to the wave of high growth companies calling Franklinton home, there is a robust movement amongst the art and creative class communities planting permanent roots in the neighborhood. Anchored by the 400 West Rich development, the Idea Foundry, Strongwater, Land Grant Brewing Company, Glass Axis and recent additions like BrewDog Pub and others, there is already a strong nucleus of energy and activity. With the completion of the new National Veteran’s Memorial museum and the City’s recent selection of individual developers to spearhead its master plan to redevelop the Scioto Peninsula, there will be several hundred million dollars in public & private investment in close proximity.
| Sources of Funds | Cost |
|---|---|
| Senior Construction Loans | $108,915,164 |
| PACE Financing | $8,170,000 |
| Ohio Water Development Authority Bonds | $2,702,824 |
| City of Columbus - Capital Contributions | $3,446,000 |
| Equity | $42,508,432 |
| Total Sources of Funds | $165,742,420 |
| Uses of Funds | Cost |
| Land Cost | $8,034,145 |
| Environmental Cleanup | $524,181 |
| Sitework & Landscaping | $5,165,018 |
| Offsite Improvements | $2,946,000 |
| Hard Costs- Buildings | $101,474,712 |
| Tenant Improvement Allowances | $9,683,150 |
| Commercial Leasing Commissions | $2,372,340 |
| Soft Costs | $25,477,848 |
| Contingency (6.1%) | $10,065,026 |
| Total Uses of Funds | $165,742,420 |
This is reflective of the total expected capitalization post pre-development. RealtyMogul investors are investing in the pre-development phase. There is a risk that Kaufman Development will not be able to sufficiently raise the required equity or obtain the required debt to fully develop the Property.
In addition to the total equity, the Project will be developed and constructed using a variety of sources of funds, including traditional senior construction loans, attractive city/state low interest bond financing, and city grants. All public incentives have been approved/legislated and all loan documents are substantially negotiated with a closing pending.
Huntington Bank and First National Bank are the two lead senior construction lenders, with Huntington providing the financing for the Mixed-Use Luxury Tower and Townhome Building and First National Bank providing the financing for the Office Building, Residential Mid-Rise Building, and Retail Building. Two Ohio ports will provide PACE financing for qualified energy efficient improvements. The Ohio Water Development Authority is issuing bond financing to fund various sitework and stormwater infrastructure improvements. Finally, the City of Columbus is providing various grants to support the construction of various on- and off-site infrastructure improvements (streetscape, signalization of an intersection, & relocation of certain utilities). These low-interest loan programs and grant dollars are accretive to the overall investment returns and indicative of public support for the project.
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.
Kaufman Development intends to make distributions from The Gravity Project 2, LLC to Gravity 2 – RM Member, LLC as follows:
Distributions of Available Cash:
- Pari passu, all excess operating cash flows to an 8.0% preferred return to investors;
- Thereafter, (i) 25.0% to the Manager and (ii) 75.0% to the Limited Members, pro rata based on their respective membership interests.
Distributions from Capital Event:
- Pari passu (A) in proportion to and to the extent of their unpaid Preferred Return attributable to Additional Capital Contributions and (B) in proportion to and to the extent of the applicable accrued and unpaid interest on Non-Contribution Covering Member Loans
- Pari passu, (A) in proportion to their respective unreturned additional capital contributions, until their respective additional capital contributions have been fully returned and (B) in proportion to and to the extent of the applicable unpaid principal balances on Non-Contribution Covering Member Loans.
- To the Members in proportion to and to the extent of their unpaid Preferred Return.
- To the Members pari passu in proportion to their respective unreturned capital contributions, until their respective capital contributions have been fully returned.
- Thereafter, (i) 40.0% to the Manager and (ii) to the Limited Members, pro rata based on their respective membership interests.
The Gravity Project 2, LLC intends to make distributions to investors. Note that all distributions will occur after the payment of both company's liabilities (loan payments, operating expenses, and other fees as set forth in the LLC agreements, in addition to any member loans or returns due on member loan).
Distributions are expected to start in Q1 2024 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of Kaufman Development, who may decide to delay distributions for any reason, including maintenance or capital reserves. Kaufman Development will receive a promote as indicated above.
Cash Flow Summary
| Effective Gross Revenue | Total Operating Expenses | Net Operating Income | |
| Year 1 | - | - | - |
| Year 2 | - | - | - |
| Year 3 | $6,985,855 | $1,846,358 | $5,139,497 |
| Year 4 | $14,613,814 | $3,910,093 | $10,703,721 |
| Year 5 | $14,979,159 | $3,974,623 | $11,004,537 |
| Year 6 | $15,353,638 | $4,040,265 | $11,313,374 |
| Year 7 | $15,737,479 | $4,107,040 | $11,630,440 |
| Year 8 | $16,130,916 | $4,174,968 | $11,955,948 |
| Year 9 | $16,534,189 | $4,244,070 | $12,290,119 |
| Year 10 | $17,241,930 | $4,320,493 | $12,921,437 |
| Year 11 | $17,987,972 | $4,398,715 | $13,589,256 |
Gravity 2 - RM Member, LLC (Assuming a $10 million total investment)
| Project-Level Cash Flows | Investor-Level Cash Flows | Investor-Level Cash Flows- Hypothetical $50,000 Investment | |
| Year 0 | ($42,508,432) | ($10,000,000) | ($50,000) |
| Year 1 | - | - | - |
| Year 2 | - | - | - |
| Year 3 | $3,671,195 | $763,639 | $3,818 |
| Year 4 | $35,548,902 | $8,129,027 | $40,645 |
| Year 5 | $4,564,881 | $800,905 | $4,005 |
| Year 6 | $4,873,718 | $843,332 | $4,217 |
| Year 7 | $5,190,784 | $884,764 | $4,424 |
| Year 8 | $3,145,796 | $493,751 | $2,469 |
| Year 9 | $3,479,966 | $546,305 | $2,732 |
| Year 10 | ($34,935) | ($108,218) | ($541) |
| Year 11 | $93,230,753 | $13,854,219 | $69,271 |
Certain fees and compensation will be paid over the life of the transaction; please refer to Kaufman Development materials for details. The following fees and compensation will be paid(1)(2):
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
|---|---|---|---|---|
| Development Fee | $4,663,540 | Kaufman LLC | The Gravity Project 2, LLC | 2.9% of total costs |
| Owner's Rep Fee | $550,000 | Kaufman LLC | The Gravity Project 2, LLC | 0.3% of total costs |
| Disposition Fee | 1.0% of gross sale price | Kaufman Communities, LLC |
The Gravity Project 2, LLC | |
| Perm Financing Fee | 0.25% of permanent debt balance | Kaufman Communities, LLC |
The Gravity Project 2, LLC |
| Type of Fee | Amount of Fee | Received By | Paid From |
|---|---|---|---|
| Administrative Services Fee | 1.0% of amount invested into Gravity 2 - RM Member, LLC | RM Admin(2) | Distributable Cash |
| Property Management Fee |
5.0% of Effective Gross Income- Residential 3.0% of Effective Gross Income- Commercial |
Kaufman Communities, LLC | The Gravity Project 2, LLC |
| Accounting Fee | $10,000 per year per PropCo | Kaufman Communities, LLC | The Gravity Project 2, LLC |
(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. This fee may be capitalized into the transaction at the discretion of the Manager.
(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 Houghton Mifflin 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.
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.