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Funded
Multifamily
The Chateau
Hoschton, GA
INVESTMENT STRATEGY
Development
INVESTMENT TYPE
Equity
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100% funded
Offered By Highlands Residential
18.3%* TARGET IRR 17.3%-19.3%
1.63x* TARGET EQUITY MULTIPLE
Estimated Hold Period 3 years
Estimated First Distribution 10/2020
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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Overview
Ground-up development of a 152-unit multifamily active adult living community in suburban Atlanta.
Market

This development will target one of the fastest growing housing segments. As households age, there is a demographic wave of people becoming empty nesters and entering the 55+ population. Increasing number of baby boomers and an increasing number of renters in this demographic equates to a secular shift in demand for age-restricted rental housing.

Partner

The Real Estate Company is an experienced developer of Active Lifestyle, senior living communities which cater to residents 55 and older. The principals have $622 million in their current portfolio with an average stabilized occupancy of 98% in their Active Adult communities.

Location

The South Hall / North Gwinnett Market Area’s housing costs and demographics support the demand for the site. The resident base for The Chateau is expanding and getting wealthier.

Property at a glance
Construction Start Date February 2021
# of Units 152
Rentable SF 141,768
# of Buildings 1
Parking Ratio 1.30 spaces per unit
Total Project Cost

$30,552,959

Investment Highlights
The exit strategy is to sell the Property in three years at an expected cap rate of 5.50%.
Highlands Residential expects to close on initial investments in the first quarter of 2021 and to complete its construction of the Project in the fourth quarter of 2022, aiming to reach a point of stabilization (where roughly 95% of the units are leased or rented) approximately 16 months after the completion of construction.
The amenities and services provided by Highlands Residential are targeted specifically towards the active adult who wants to stay engaged in life. The Chateau’s rents are positioned to be less expensive than Pre-Independent communities.
The Sponsor has an extensive track record in development and operation of Active Adult Residential properties. The principals have $541 million in their current portfolio with an average stabilized occupancy of 97%. Currently, they have $119 million in communities under development and show a realized equity multiple of 2.01x in sold development assets thus far.
Management
Cumulative Distributions

Highlands Residential

Highlands Residential (the "Real Estate Company") was founded by Dave Loeffel, who has over 15 years of experience in development. The Real Estate Company represents a partnership between Dave Loeffel, Tim Schrager - CEO and founder of Perenial Properties, Aaron Goldman - President of Perenial Properties, and Robert Lachapelle - Vice Chairman at CBRE. Robert LaChapelle's investment in and association with Highlands Residential is entirely personal and has no connection with CBRE, Inc. or Robert LaChapelle's employment with CBRE.

The Real Estate Company is an experienced developer of Active Lifestyle, senior living communities which cater to residents 55 and older. The principals have $541 million in their current portfolio with an average stabilized occupancy of 97%. Currently, they have $119 million in communities under development and show a realized equity multiple of 2.01x in sold development assets thus far. 

https://www.highlandsresidential.com
  • Dave Loeffel
    Founder/CEO
  • Aaron Goldman
    GP Investor and Strategic Advisor
  • Tim Schrager
    GP Investor and Strategic Advisor
  • Robert LaChapelle
    Principal
Dave Loeffel
Founder/CEO

Dave Loeffel is the Founder and CEO of Highlands Residential, a development company committed to providing real estate where people make amazing memories, thrive in the present, and dream of the future.  Dave holds an MBA from Emory’s Goizeuta Business School and a BS in Industrial Engineering from Georgia Institute of Technology and is a CFA charterholder. After nearly two decades in real-estate development with over 22 communities (16 as an owner and partner) for Walton Communities, Dave knows what drives successful design.  His experience has driven him to provide a product that caters to residents 55 and older.  Dave wants to help define this asset class to provide communities to the empty nester clientele.

Aaron Goldman
GP Investor and Strategic Advisor

Aaron Goldman is the President and co-owner of Perennial Properties, Inc., a development, investment, and management firm focused on multi-family rental housing accompanied by retail establishments.  Raised in Milwaukee, Aaron is a graduate of the University of Wisconsin Real Estate Program and served on the Wisconsin Real Estate Alumni Association Board of Trustees. Perennial’s existing portfolio is centered in Atlanta’s intown neighborhoods, including West Midtown, Virginia Highland, Morningside, Piedmont Heights, Emory, Buckhead, Inman Park and the Old Fourth Ward. Aaron has executed successful subdivision developments, condominium conversions, and office/retail developments, comprising nearly 200 single-family home sites, 5,000 multiple dwelling units, and 200,000 square feet of commercial space.

Tim Schrager
GP Investor and Strategic Advisor

Tim Schrager founded Perennial Properties, Inc. in 1988. This Atlanta-based real estate development and property management company started as a one-man shop, where he learned the business from the ground up, building and renovating multi-family projects in Atlanta’s intown neighborhoods. In three decades, Perennial has been responsible for the development of numerous multi-family communities as mixed-use developments in Georgia and in Florida.  Tim received a B.S. degree in Real Estate Finance from the University of Southern California.  
He is currently involved in several Atlanta community organizations, including: the Atlanta Contemporary Art Center (Past President – Board of Trustees); the Jewish Federation of Greater Atlanta (Annual Campaign Major Gift Fundraiser); Atlanta Apartment Association (Past Chairman – Board of Directors, and 2009/2010/2012 Co-Chair of the AAA’s Annual Food-A-Thon benefiting the Atlanta Community Food Bank).

Robert LaChapelle
Principal

Robert LaChapelle is the Vice Chairman for CBRE's Debt and Structured Finance Group in Atlanta, Georgia.  His investment in Highlands Residential is in his personal capacity and not on behalf of CBRE. Robert holds a BS in business management from Tulane University.
Robert has over 33 years of experience within the multi-family real estate industry. Robert was awarded the Coldwell Colbert Circle Award, recognizing the top three percent of commissioned salespeople worldwide in 2002, 2003, 2005, and 2008 through 2016, and has been among the top 25 producers within the entire CBRE platform.
Robert LaChapelle's investment in and association with Highlands Residential is entirely personal and has no connection with CBRE, Inc. or Robert LaChapelle's employment with CBRE.

Track Record

Representative Transactions

Property City, State Asset Type Dev/Acq Date Units or SF
East Lake Flats Atlanta, GA Pre Construction - Multi 8/25/2020 230
Hardy Springs by Highlands Residential Dallas, GA New Construction - Multi 2/16/2020 149
Legacy at Walton Summit (55+) Gainesville, GA New Construction - Multi 10/10/2017 90
Conklin Atlanta, GA Pre Construction - Multi 6/1/2017 280
Walton Summit Phase 1 Gainesville, GA New Construction - Multi 12/8/2016 84
The Legacy at Walton Green (55+) Augusta, GA New Construction - Multi 11/15/2016 80
Walton Ridge Austell, GA New Construction - Multi 8/31/2016 71
The Byron  Atlanta, GA Value Add - Multifamily 8/27/2015 65 + 6,000 SF retail
The Legacy at Walton Oaks Ph 2 (55+) Augusta, GA New Construction - Multi 11/12/2014 62
755 North Apartments Atlanta, GA New Construction - Multi 9/1/2014 227
The Legacy at Walton Park (55+) Acworth, GA New Construction - Multi 8/29/2014 100
The Arya on Peachtree Atlanta, GA New Construction - Multi/comm/retail 6/13/2014 282 + 17,000 SF commercial
The Legacy at Walton Mill (55+) Hiram, GA New Construction - Multi 12/18/2013 105
Walton Oaks Ph 2 Augusta, GA New Construction - Multi 11/12/2013 106
The Brady Apartments Atlanta, GA New Construction - Multi 11/1/2013 230
The Telephone Factory Lofts Atlanta, GA Value Add - Multifamily 10/31/2013 65
Walton Renaissance on Henderson (62+) Marietta, GA Sub-Rehab - Multifamily 9/1/2012 150
Legacy at Walton Heights (55+) Marietta, GA New Construction - Multi 8/8/2012 100
Walton Crossing Austell, GA Value Add - Multifamily 11/18/2011 238
Walton Oaks Ph 1 Augusta, GA New Construction - Multi 11/14/2011 75
The Legacy at Walton Overlook (55+) Acworth, GA New Construction - Multi 6/16/2011 108
The Legacy at Walton Oaks Ph 1 (55+) Augusta, GA New Construction - Multi 9/30/2010 75
The Legacy at Walton Village Ph 2 (55+) Marietta, GA New Construction - Multi 2/19/2010 78
The Legacy at Walton Lakes (55+) Atlanta, GA New Construction - Multi 8/21/2008 125
N. Highland Steel Atlanta, GA New Construction - Multi 5/2/2005 239 + 30,000 SF retail
Highland Walk Apartments Atlanta, GA New Construction - Multi 1/7/2002 350 + 6,000 SF retail
Monroe Place Apartments Atlanta, GA New Construction - Multi 9/30/1998 241
Highland View Apartments Atlanta, GA New Construction - Multi 4/15/1998 110
Myrtle Street Apartments, LLC Atlanta, GA Value Add - Multifamily 11/17/1997 32

The above bios and track record were provided by Highlands Residential and have not been independently verified by RealtyMogul.

Business Plan

The Chateau by Highlands will be a top quality, tangible asset that fills an unprecedented need for active adult housing. The asset, which will be delivered in 2022, is just 40 miles northeast of downtown Atlanta, in the fastest growing active adult lifestyle destination in the metropolitan area. The Chateau by Highlands will provide Senior Living without the expense of medical, meals, or maids. Residents will save more than $20,000 per year compared to alternatives. This allows our community to attract a broader and deeper market which will be a slightly younger demographic: empty nesters still “on the go” who are not dependent on the community for all their social and entertainment needs.

The Chateau offers a unique living experience for younger Seniors to join a retirement community without the high cost of a full nursing staff and meal plan. The Real Estate Company will begin construction in April 2021 and complete building in December 2022 - for a total construction timeline of 20 months. Units will be delivered in phases, and preleasing will begin in March 2022 four months prior to units becoming available. Total lease up time is expected to be 24 months at a rate of 6 units per month - seeing 95% stabilization by March 2024. The asset will be sold upon stabilization at the end of year 3 for approximately $40,550,000 ($266,775 per unit) at a projected reversion cap rate of 5.50%. Lender appraisal shows an exit value of $42,300,000.

Estimated Schedule:

April 2021 - Construction Begins

March 2022 - Begins Pre-Leasing First Units

June 2022 - Move-in begins

December 2022 - Construction Completes

March 2024 - Asset Stabilization

April 2024 - Sale of Asset

Development Budget:

Land Cost $1,939,000 $12,757
     
Soft Costs    
Architecture & Engineering $818,000 $5,382
Legal and Title $346,794 $2,282
Marketing $270,000 $1,776
Financing $220,750 $1,452
Impact Fees $430,196 $2,830
FF&E $440,000 $2,895
Taxes and Insurance $262,142 $1,725
Total Soft Costs $2,787,982 $18,341
     
Other Costs    
Developer Fee $1,160,000 $7,632
Net Interest/Lease Up Expense $760,977 $5,006
Total Other Costs $1,920,977 $12,638
     
Hard Costs    
Total Construction Hard Costs $22,005,000 $144,770
Contingency (8%) $1,900,000 $12,500
Total Construction Hard Costs $23,905,000 $157,270
     
Grand Total $30,552,959 $201,006

These amounts are subject to change at the discretion of the Real Estate Company.

 

Property
Property Details

The Project will be designed and constructed as a three-story, attached building of 152 residential units with open air breezeways and approximately 145,000 net rentable square feet. Highlands Residential has designed the building so that the exterior and interior finishes are architecturally complementary to the surrounding area. The community will have multiple amenities, inclusive of a landscaped courtyard, BBQ areas, a personal training studio, library, game room, and a shared common space to host large gatherings and community get-togethers. Each unit will range in size from approximately 750 square feet to 1,230 square feet. Each unit will have 1 or 2 bedrooms, 1 or 2 baths, and a private, covered balcony or sunroom. The amenity package, interconnected living, and social community will make an easy transition for people moving from single family homes and offer a substantial upgrade for people moving from a traditional, non age-exclusive apartment.

Unit Type # of Units Avg SF/Unit Avg Rent (Stabilized)  Avg Rent per SF
1x1 (A1) 33 773 $1,492 $1.93
1x1 (A2) 39 807 $1,578 $1.96
1x1 (A3) 17 993 $1,858 $1.87
2x2 (B1) 34 1,040 $1,935 $1.86
2x2 (B2) 18 1,102 $2,028 $1.84
2x2 (B3) 5 1,229 $2,205 $1.79
2x2 (B4) 6 1,094 $2,013 $1.84
Total/Averages 152 933 $1,761 $1.89
Comparables

Competitive Landscape

There are several active adult communities for sale within a short driving distance of the Property, including:

- Del Webb Chateau Elan - 784 active adult homes (200 built and occupied and 120 additional homes sold)

- Cresswind at Twin Lakes - 1,300 active adult homes planned, not yet complete

- Village at Deaton Creek - 1,100 active adult homes.

The Chateau by Highlands will provide 152 rental units as an alternative to the 2,000 or more active adult for sale units currently in the market. The Chateau will benefit from the amenities that drew the active adult sale communities to the area and the amenities that have subsequently been built to target the growing active adult population.

The Chateau expects to compete against these and other independent living offerings by leveraging amenities available at nearby locations in lieu of manufacturing amenities on-site. By doing that, Highlands Residential intends to offer its customers the same experience as is available at competing sites but at a cost that will be approximately $20,000 less per year than traditional independent living.

Nearby amenities that will be available to residents of the Chateau include (i) 45 holes of golf at Chateau Elan Golf Club, (ii) 18 holes of golf at Reunion Country Club, located across the street from the Chateau, (iii) nearby Lake Lanier, metro Atlanta’s largest lake, less than 30 minutes from The Chateau, and (iv) the accommodations, spas, shops and resort activities at the Chateau Elan Resort.

Additional sale and lease comp studies performed by Highlands Residential are available under "Offering Documentation".

Location

The Property is located in the town of Braselton, Georgia, which is in Hall County, roughly 40 miles northeast of the City of Atlanta. The surrounding area is a mix of rural and suburban neighborhoods and includes access to Lake Lanier, the largest lake in the metro Atlanta area. Lake Lanier is a reservoir lake, formed in 1956 with the completion of Buford Dam on the Chattahoochee River. The lake encompasses 38,000 acres or 59 square miles of water, features 692 miles of shoreline, and the Lanier Islands and Margaritaville resorts. The lake provides swimming, boating and fishing opportunities and the shoreline features many luxurious private residences.

Market Overview

The market, Gainesville, is a booming economy, producing nearly 2% to 4% year over-year job growth most quarters in the 2010s, giving it solid tailwinds across the board. Hall County lies along one of Atlanta's primary paths of growth, and its populace has access not only to prominent local industries, such as poultry processing and Lake Lanier-related tourism, but also to a spectrum of jobs right down I-985 in the Atlanta metro. These attributes have led to a near doubling of the metro's population over the past 20 years, and over the next five years, the rate of growth could nearly triple that of the nation. Gainesville is that rare market where manufacturing employment still dominates the metro, with more than a fifth of jobs in the sector. Gainesville certainly caters to the small-business owner, where 93% of its companies employ fewer than 50 employees. Located about 50 miles northeast of Atlanta, the Gainesville metro is firmly in the economic orbit of one the largest economies in the South.

Per CoStar, the vacancy rate in the Oakwood/Flowery Branch Submarket has compressed substantially over the past four quarters, and at 3.8%, is slightly below the long-term average. While developers have been active in recent years, nothing has delivered over the past 12 months. Construction has started back up, and about 860 units are underway, which will substantially expand the existing inventory. Rents have increased by an impressive 5.8% over the past year, which significantly exceeds the average annual growth of 3.2% over the past decade.

Sources: ESRI Data, Axiometrics, CoStar

Photos
Financials
Sources & Uses

Total Capitalization

Sources of Funds $ Amount $/Unit
Construction Loan $19,500,000 128,289
RM Investor Equity $5,000,000 32,895
Other LP Equity $6,052,959 39,822
Total Sources of Funds $30,552,959 201,006
           
Uses of Funds   $/Unit
Land Purchase Price $1,939,000 12,757
Developer Fee $1,160,000 7,632
Hard Costs $23,905,000 157,270
Construction Period Interest $368,191 2,422
Soft Costs (1) $2,787,982 18,341
Initial Operating Deficit $392,787 2,584
Total Uses of Funds $30,552,959 201,006

 

Please note that Highlands Residential's equity contribution may consist of friends and family equity and equity from funds controlled by Highlands Residential. Additionally, the numbers represented above can change prior to closing depending on many factors including, but not limited to, final loan proceeds, property condition assessments, appraisals, final closing costs, and other lender-mandated expenses.

(1) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Closing Costs and is intended to be capitalized into the transaction at the discretion of the Manager.

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Estimated Proceeds: $19,500,000
  • Estimated Annual Interest Rate (Floating): 3.0% over LIBOR
  • Term: 4 years
  • Interest Only: 4 years
  • Operating Reserves: $200,000

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

Highlands Residential intends to make distributions from GA Hall Uninco 347, LLC to GA Hall Uninco 347 Core, LLC as follows:

  1. To the Members, pari passu, all excess operating cash flows to an 8.0% Preferred Return to the Members;
  2. 70% / 30% (70% to Members / 30% to Promote) of excess cash flow to a 14.0% IRR; 
  3. 55% / 45% (55% to Members / 45% to Promote) of excess cash flow and appreciation thereafter.  

GA Hall Uninco 347 Core, 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 more specifically set forth in the LLC agreements, in addition to any member loans or returns due on member loan).

Distributions are at the discretion of Highlands Residential, who may decide to delay distributions for any reason, including maintenance or capital reserves.

Cash Flow Summary

    Year 1 Year 2 Year 3
Effective Gross Revenue   $0 $577,350 $2,402,458
Total Operating Expenses   $10,000 $678,361 $1,028,634
Net Operating Income   -$10,000 -$101,011 $1,373,824

Investor-Level Cash Flows

  Year 1 Year 2 Year 3
Net Cash Flow -$11,052,959 $0 $18,049,446

Investor-Level Cash Flows - Hypothetical $50,000 Investment*

  Year 1 Year 2 Year 3
Net Cash Flow -$50,000 $0 $81,650

*Returns should be net of all fees including RealtyMogul's 1.0% annual asset management fee. 

Fees

Certain fees and compensation will be paid over the life of the transaction; please refer to Highlands Residential' materials for details. The following fees and compensation will be paid(1)(2)(3):

One-Time Fees
Type of Fee Amount of Fee Received By Paid From
Developer Fee 4.00% of Total Project Costs Highlands Residential Capitalized Equity Contribution
  Recurring Fees
Type of Fee Amount of Fee Received By Paid From
Property Management Fee 4.0% of Effective Gross Income Highlands Residential Distributable Cash
Asset Management Fee $30,000/year Highlands Residential Distributable Cash

Administrative Services Fee

1.00% of amount invested RM Admin(3) 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. An estimate of this fee is included in the Closing Costs and is intended to 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 RM VA WB 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
Disclaimers

The content on this detail page was provided 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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