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Funded
Mixed-Use
Gravity Phase II
Columbus, OH
INVESTMENT STRATEGY
Development
INVESTMENT TYPE
Equity
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100% funded
Offered By Kaufman Development
18.1%* TARGET IRR 14.1%-18.1%
9.0%* TARGET AVG CASH ON CASH
3.12x** TARGET EQUITY MULTIPLE
Estimated Hold Period 11 years
Estimated First Distribution 3/2024
Minimum Investment 35000
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Explore this Project
Overview
The Project is a proposed $166 million mixed-use Opportunity Zone eligible development in Columbus, Ohio, offering multifamily, office, retail, and fully programmed amenities.
Partner

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.

Capital Appreciation

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.

Location

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.

Property At A Glance
Stabilization Year 2024
# of Multifamily Units 382
Parking The property will offer a public parking garage containing approximately 889 stalls.
Acquisition Price

$9,200,000

Investment Highlights
*Kaufman Development anticipates tax-free treatment of capital gains upon exit given the Opportunity Zone designation. Gravity Phase II's projected return is equivalent to an 18.1% IRR, 9.0% cash on cash, and 3.12x equity multiple on a non-Opportunity Zone development when the benefit of tax deferral and reduction on the rolled-in gains is coupled with zero federal cap gains taxes on new gains after the projected eleven-year hold period. The projected actual pre-tax returns are an IRR of 14.1%, cash on cash of 9.0%, and equity multiple of 2.62x, prior to taking into account Opportunity Zone benefits.
Gravity Phase II aims to be one of the most creative and forward-thinking mixed-use projects in the country, centered on wellbeing, impact and creative expression.
The Project is being delivered directly across the street from Gravity Phase I, a similar mixed-use development completed by Kaufman earlier this year. At Gravity Phase I, residential units are currently 92% occupied and the office and retail components are currently 72% leased.
GMP (Guaranteed Maximum Price) contracts are fully negotiated with all pricing complete and ready for execution.
The exit strategy is to sell the Property in eleven years at an expected blended cap rate of 5.54%.
The Project will positively impact the surrounding community through programming focused on wellness, mental health and entrepreneurship. Through a partnership with Homeport (a Central Ohio non-profit affordable housing developer), 50+ apartment units affordable to residents earning less than 60% of Area Median Income will be developed on an adjacent site and will share parking with the Project. Additionally, a portion of the Project's residential product offers housing options for $800 and under per month, including utilities, in a fully-amenitized project that is walkable to the major downtown employment centers. The office component is anticipated to attract high-growth job creating tenants and the developer’s unique partnership with Rhove allows residential renters to “own where they live.”
Management
Cumulative Distributions

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 Kaufman
    Founder & CEO
  • Frank Sasso
    President
  • Ian Labitue
    Director of Finance
  • Steve Welker
    Director of Construction
  • Lauren Schott
    Director of Communities
Brett Kaufman
Founder & CEO

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

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

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

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 Schott
Director of Communities

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. 

Track Record

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.

 
Business Plan

Kaufman Development plans to construct a mixed-use multifamily, office, and retail development consisting of:

  1. An office building containing approximately 170,970 SF of Class A office space and 13,219 SF of convenience retail space
  2. 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
  3. A Townhome building containing approximately 24 market-rate residential apartments
  4. A residential mid-rise building containing approximately 68 market rate residential units and approximately 146 co-live bedrooms
  5. A retail building containing approximately 500 SF of retail space
  6. 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.

Property

Property Details

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
             
Comparables

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    
Location

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.

 

Photos
Financials
Sources & Uses

Total Capitalization
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.

Debt Assumptions

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.

Distributions

Kaufman Development intends to make distributions from The Gravity Project 2, LLC to Gravity 2 – RM Member, LLC as follows:

Distributions of Available Cash:

  1. Pari passu, all excess operating cash flows to an 8.0% preferred return to investors;
  2. 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:

  1. 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
  2. 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. 
  3. To the Members in proportion to and to the extent of their unpaid Preferred Return.
  4. To the Members pari passu in proportion to their respective unreturned capital contributions, until their respective capital contributions have been fully returned.
  5. 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
Fees

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):

Kaufman Development Fees
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  
  Recurring Fees
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.

Disclaimers/FAQs
Disclaimers

The content on this detail page was produced by the Sponsor or an affiliate thereof. The Sponsor is under no obligation to update this detail page. None of the opinions expressed on this detail page are the opinions of RealtyMogul and they are not endorsed by RealtyMogul. Assumptions and projections included in this detail page are not reflective of the position of RealtyMogul or any other person or entity other than the Sponsor’s investment vehicle (“Investment Entity”) or its affiliates.

The preceding summary of principal terms of the offering is qualified in its entirety by reference to the more complete information about the offering contained in the offering documents, including, without limitation, the Private Placement Memorandum, Operating Agreement, Subscription Agreement and all exhibits and other documents attached thereto or referenced therein (collectively, the "Investment Documents"). This summary is not complete, and each prospective investor should carefully read all of the Investment Documents and any supplements thereto, copies of which are available by clicking the links above or upon request, before deciding whether to make an investment. In the event of an inconsistency between the preceding summary and the Investment Documents, investors should rely on the content of the Investment Documents.

There can be no assurance that the methodology used for calculating targeted IRR is appropriate or adequate. Target IRR is presented solely for the purpose of providing insight into the Investment Entity’s investment objectives, detailing its anticipated risk and reward characteristics and for establishing a benchmark for future evaluation of the Investment Entity’s performance. Targeted IRR is not a predictor, projection or guarantee of future performance. There can be no assurance that the Investment Entity’s targets will be met or that the Investment Entity will be successful in identifying and investing in investment opportunities that would allow the Investment Entity to meet these return parameters. Target returns should not be used as a primary basis for an investor’s decision to invest in the Investment Entity. Please see the applicable Investment Documents for disclosure relating to forward-looking statements.

All forward–looking statements attributable to the Sponsor or persons acting on its behalf apply only as of the date of the offering and are expressly qualified in their entirety by the cautionary statements included elsewhere in this summary and the Investment Documents. Any financial projections are preliminary and subject to change; the Sponsor undertakes no obligation to update or revise these forward–looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.

The interests in the Investment Entity will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) in reliance upon exemptions contained in Rule 506(b) or 506(c) of Regulation D as promulgated under the Securities Act. In addition, the interests will not be registered under any state securities laws in reliance on exemptions from registration. Such 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 investing activities risk the loss of capital. There can be no assurance that investors will not suffer significant losses. No guarantee or representation is made that investment objectives of the Investment Entity will be achieved. You should not subscribe to purchase interests in the Investment Entity unless you can readily bear the consequences of such loss.

Interests in the Investment Entity are listed on the RealtyMogul Platform. RealtyMogul receives fees from the Sponsor or the Investment Entity partially based on the number of investors investing in such Investment Entity through the RealtyMogul Platform. This arrangement could create a conflict of interest between RealtyMogul and investors.

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