The Property is located in Castleton, IN, an inner ring suburb of Indianapolis adjacent to the Ivy Hills subdivision where median home value is around $400,000.
High quality renovations should allow the Property to compete with newer product in the rental market while offering larger floor plans at a lower price than the competitive set.
The Property’s current asking rents are lower than most of the competing properties in this local rental market and comparable properties are achieving higher rents with smaller units. This indicates room for rent premiums once renovations are completed.
The GSH Group
The GSH Group (“The Real Estate Company") is a real estate investment company focused on class B/workforce housing across the United States. The leadership team has over 40 years of combined experience and the company has over $1 billion assets under management(1), made up of 8,333 multifamily units(2), inclusive of partner legacy assets.
With demonstrated experience as advisors, managers, and resolving problem loans, The Real Estate Company is attuned to the needs and processing of Special Servicers for the quick disposition of assets. The Real Estate Company employs a tactical strategy for value creation. Value enhancement is approached from multiple angles and scenarios. These include, but are not limited to, organic rental growth due to market inefficiencies, rent premiums generated through unit upgrades, and decreasing expenses through management efficiencies.
The Real Estate Company uses applicable, real-time software to help manage all assets on a minute-by-minute basis. Using real-time data, they can effectively keep all projects on track to ensure the business plan's proper implementation. Additionally, The Real Estate Company is vertically integrated, employing an affiliated general contractor and construction team to ensure projects stay on budget and on time.
(1) Portfolio value includes an assumed value based on current T1/T12 financials and a capitalization rate of 5.00%. This includes certain legacy properties owned and managed by partners.
(2) Units include legacy units owned by the partners as well as units sold.https://gshrealestate.com/
Gideon is responsible for strategic partnership initiatives and ventures, financing and debt opportunities, overseeing investment performance, strategic partner’s performance, and approving decisions on investments and acquisitions. He also oversees daily operations. Prior to GSH, Gideon operated a highly successful aggregation and renovation firm focused on single-family homes in the Midwest and Southeast.
Shmuel is responsible for asset management and Israeli Investor relations. An Israeli citizen, Shmuel also owns a separate portfolio of over 1,300 units in multifamily properties in Michigan and North Carolina. His experience as an owner and operator is an invaluable resource and he is responsible for the continued success of raising private capital in Israel for The GSH Group.
Hannan is responsible for banking, investor relations, and branding. He is an experienced real estate investor, owns several businesses, and is an active member of a prominent family office in Michigan. Hannan is president of WW Group, which holds Weight Watchers franchises for Michigan and Ontario, Canada. The company was formerly the largest franchisee in the Americas.
GSH Group Track Record
|Property||City, State||Asset Type||Acq Date||Units||Purchase Price||Sale Price|
|Cornerstone Apartments||Detroit, MI||Multifamily||2016||476||$8,900,000||$12,025,000|
|Chapel Oaks Apartments||Fort Wayne, IN||Multifamily||2017||320||$7,500,000||$10,500,000|
|Holcomb, Chicago, Collage, & Jefferson||Detroit, MI||Multifamily||2012||210||$2,450,000||$3,645,000 (1)|
|Whittier & Morang||Detroit, MI||Multifamily||2012||44||$460,000||Under Management|
|Chapel Court||Detroit, MI||Multifamily||2013||184||$2,090,000||Under Management|
|Pallister||Detroit, MI||Multifamily||2016||187||$7,400,000||Under Management|
|Marina Bay||Gibraltar, MI||Multifamily||2016||137||$4,900,000||Under Management|
|Wakefield Apartments||Southfield, MI||Multifamily||2017||67||$7,200,000||Under Management|
|Ridge Pointe Apartments||Conover, NC||Multifamily||2017||160||$11,000,000||Under Management|
|Holiday Garden Apartments||Mount Clemens, MI||Multifamily||2017||64||$2,575,000||Under Management|
|Eastland Village||Harper Woods, MI||Multifamily||2017||408||$21,750,000||Under Management|
|Utica Square Apartments||Roseville, MI||Multifamily||2018||266||$11,000,000||Under Management|
|Barwin Place||Mount Clemens, MI||Multifamily||2018||48||$2,100,000||Under Management|
|Birch Hill Apartments||Westland, MI||Multifamily||2018||173||$10,650,000||Under Management|
|Hoover Square||Warren, MI||Multifamily||2018||342||$18,950,000||Under Management|
|Colony Club||Bedford, OH||Multifamily||2019||588||$35,515,200||Under Management|
|Louis Apartments||Detroit, MI||Multifamily||2019||28||$962,000||Under Management|
|Pickford Apartments||Detroit, MI||Multifamily||2019||35||$1,122,500||Under Management|
|Stacey Ann Apartments||Detroit, MI||Multifamily||2019||49||$1,565,500||Under Management|
|Polo Club||Marshall, MI||Multifamily||2019||80||$3,400,000||Under Management|
|The Loop On Greenfield||Oak Park, MI||Multifamily||2019||717||$59,700,000||Under Management|
|Glengarry Park||Waterford, MI||Multifamily||2020||300||$22,650,000||Under Management|
|Foote Hills||Grand Rapids, MI||Multifamily||2020||182||$24,950,000||Under Management|
|BLVD West Apartments(2)||Lansing, MI||Multifamily||2021||144||$23,000,000||Under Management|
|The Landings on East Hill(2)||Grand Blanc, MI||Multifamily||2021||148||$14,800,000||Under Management|
|Veridian Castleton(2)||Indianapolis, IN||Multifamily||2021||398||$44,500,000||Under Management|
|Laurel Pines(2)||Laurel, MD||Multifamily||2021||235||$38,250,000||Under Management|
|The Orion||Lake Orion, MI||Multifamily||2021||200||$27,375,000||JV-Under Management|
|The Preserve at Spring Lake(2)||Altamonte Springs, FL||Multifamily||2021||320||$62,800,000||Under Management|
|The Meadows at Capitol Heights||Capitol Heights, MD||Multifamily||2021||272||$49,100,000||Under Management|
|Sherwood Oaks||Riverview, FL||Multifamily||2021||199||$35,000,000||JV-Under Management|
|The Meadows at Canton(2)||Canton, MI||Multifamily||2021||736||$125,715,000||Under Management|
|The Meadows at Farmington Hills(2)||Farmington Hills, MI||Multifamily||2021||424||$81,350,000||Under Management|
(1) Holcomb, Chicago, Collage, and Jefferson were a portfolio acquisition totaling 210 units in 2012. Holcomb, which makes up 90 of the 210 total units, was sold for $3,645,000. All of the other properties are still under management.
(2) JV Equity raised through RealtyMogul Platform.
The above bios and track record were provided by GSH Group and have not been independently verified by RealtyMogul.
Veridian Castleton (the "Property") is an apartment community located in Castleton, IN, an infill submarket of the Indianapolis metro area. It is close to robust retail including Castleton Square Mall, a hospital campus and employment districts. The Real Estate Company believes the Property can capture rent premiums ranging from $125-$250 through their interior and exterior renovation plan. High quality renovations should allow the Property to compete with newer product in the rental market by offering a lower price while boasting larger floor plans than the competitive set. The Real Estate Company will also enhance the amenities onsite to help draw in more potential tenants.
The Property was acquired by its current owners with an aggressive plan to upgrade the Property and realize the benefits of its location, large units, spacious grounds and great schools. They completed some interior improvements but did not put the finishing touches on the exterior improvements or add the necessary amenities for the Property to realize its full potential. The Real Estate Company sees an opportunity to complete the improvements and realize the benefits left by the current ownership.
|$ Amount||Per Unit/SF|
|Countertops (4 units)||$3,200||$8|
|Total Interior Renovation Costs||$2,325,780||$5,844|
|Parking Lot Resurface||$84,444||$212|
|Dog Parks (2)||$44,444||$112|
|Total Exterior Renovation Costs||$1,600,000||$4,020|
|Total Renovation Contingency||$458,220*||$1,151|
*Budgets for Capital and CapEx work are subject to change. Sponsor reserves the right to utilize cash flow from operations, contingency reserves, and/or supplemental loan proceeds to complete the business plan if needed.
The Property is an apartment community located in Castleton, IN, an infill submarket of the Indianapolis metro area. It is close to robust retail including Castleton Square Mall, a hospital campus and employment districts. The Real Estate Company believes that by updating the interior and exterior, the Property can capture rent premiums ranging from $125-$250. High quality renovations should allow the Property to compete with newer product in the rental market by offering a lower price while boasting larger floor plans than the competitive set.
Current Unit Mix
|Unit Type||# of Units||Avg SF/Unit||Avg Rent
|Avg Rent (Proforma)||Rent/SF (Proforma)|
|Riverbend Apartments||Waterside at Castleton||Woods of Castleton||Brockton Apartments||Comp Averages||Veridian Castleton|
|Distance to Subject||2.0 Miles||1.7 Miles||1.5 Miles||3.4 Miles||2.2 Miles|
|Average Rental Rate||$1,250||$976||$933||$1,217||$1,105||$1,088|
|$/Unit (2x1.5) Townhome||$969||$1,154||$1,028||$1,230|
|SF (2x1.5) Townhome||1,000||1,156||1,050||1,300|
|$/SF (2x1.5) Townhome||$0.97||$1.00||$0.98||$0.95|
|Waterside at Castleton||Grande Reserve at Geist||Carmel Woods||Northlake Village Apartments||Total/Averages||Subject: Veridian Castleton|
|Date||Dec '19||Feb '19||Dec '18||Jul '20|
|Distance from Subject (mi.)||1.7 Miles||5.1 Miles||7.7 Miles||12.0 Miles||6.6 Miles|
Indianapolis is the most populous city in the state of Indiana. Almost 2.1 million residents call Indianapolis and its suburbs home. According to CBRE Research and RealPage, the Indianapolis market is outperforming all but four major US markets. The overall market vacancy rate for Metro-Indianapolis rental is currently 5.9%. Average rent has consistently increased over the past twenty-five years and is currently at $940/month. The Indianapolis MSA and CBD have had the highest household income growth rates in the Midwest over the past decade. This is a direct correlation with the diversified economy of Indianapolis which is anchored by a strong technology, finance, health care, government and education sectors.
Castleton was a separate town that was annexed to Indianapolis in 1992 when the city and Marion County governments merged. This merger created a very strong municipal government that propelled the growth and stability of the Indianapolis metropolitan area. Today, Castleton is one of the best neighborhoods in the metro area, served by the highly rated Lawrence and Washington township schools. Castleton is also home to a regional retail cluster anchored by Castleton Square Mall, one of the largest malls in Indiana. The Castleton neighborhood is a desirable location for professionals and families that desire the lower population density found in the suburbs, while staying within a half hour commute of downtown Indianapolis. Niche.com ranks Castleton as the second-best neighborhood in Indianapolis.
|Sources of Funds||$ Amount||$/Unit|
|Real Estate Company Equity||$2,192,000||$5,508|
|LP Investor Equity||$18,500,000||$46,482|
|Total Sources of Funds||$54,957,000||$138,083|
|Uses of Funds||$/Unit|
|Closing & Due Diligence||$387,300||$973|
|Tax, Insurance, Covid Reserve||$2,374,409||$5,966|
|Initial CapEx Plan Funds||$3,925,780||$9,864|
|Initial CapEx Plan Funds - Contingency||$458,220||$1,151|
|Working Capital & Reserves||$850,000||$2,136|
|Total Uses of Funds||$54,957,000||$138,083|
Please note that the GSH Group's equity contribution may consist of friends and family equity and equity from funds controlled by GSH Group. Additionally, the numbers represented above can change prior to closing depending on 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 Transactional Costs and is intended to be capitalized into the transaction at the discretion of the Manager.
The expected terms of the debt financing are as follows:
- Lender: Capital One
- Term: 15 years
- LTV: 77.00%
- Total Estimated Proceeds: $34,265,000
- Estimated Rate (Fixed): 3.64%
- Interest Only: 7 years
- Amortization: 30 years
- Loan Origination Fee: 1.00% of Loan Proceeds
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.
A substantial portion of the total acquisition for the Property will be paid with borrowed funds. The use of borrowed money to acquire real estate is referred to as leveraging. Leveraging increases the funds available for investment or development purposes, on the one hand, but also increases the risk of loss on the other. If the Company were unable to pay the payments on the borrowed funds (called a "default"), the lender might foreclose, and the Company could lose its investment in its property.
GSH Group intends to make distributions from Veridian Domestic Investors, LLC as follows:
1. To the Investors, pari passu, all operating cash flows to a 9.5% preferred return
2. 65% / 35% (65% to Investors / 35% to Promote) of excess operating cash flows
Note: These distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).
Distributions are expected to start in August 2021 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of GSH Group, who may decide to delay distributions for any reason, including maintenance or capital reserves.
Cash Flow Summary
|Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7|
|Effective Gross Revenue||$4,885,655||$5,351,591||$5,841,995||$6,114,000||$6,273,564||$6,437,914||$6,607,195|
|Total Operating Expenses||$2,224,848||$2,280,391||$2,482,359||$2,536,661||$2,588,512||$2,641,449||$2,695,494|
|Net Operating Income||$2,660,807||$3,071,199||$3,359,636||$3,577,340||$3,685,051||$3,796,465||$3,911,701|
Project-Level Cash Flows
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7|
|Net Cash Flow||-$20,692,000||$1,646,448||$1,847,521||$1,876,150||$11,747,231||$1,599,724||$1,707,851||$35,027,150|
Investor-Level Cash Flows*
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7|
Investor-Level Cash Flows - Hypothetical $50,000 Investment*
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7|
|Net Cash Flow||-$50,000||$3,478||$3,964||$4,034||$27,886||$3,366||$3,627||$64,159|
*Returns are net of all fees including RM Admin's 1.0% administrative services fee.
NO ASSURANCE OF RETURN: The Company's pro-forma projections are based on assumptions regarding future events, such as the timing and extent of the recovery of the residential market and the stabilization of the debt markets. While the Manager believes that these assumptions are reasonable and achievable, the likelihood of its occurrence is subject to many factors that are not within the control of the Company or its Manager and that could impair the ability of the Company to meet its projections.
Certain fees and compensation will be paid over the life of the transaction; please refer to GSH Group's materials for details. The following fees and compensation will be paid(1)(2)(3):
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Acquisition Fee||2.00% of purchase price||GSH Group LLC||Capitalization|
|Buyer Broker Fee||2.25% of purchase price||Momentum Realty||Capitalization||Affiliate to GSH|
|Refinancing Fee||1.00% of refinance proceeds||GSH Group||Loan Proceeds||Subordinated to Return of Capital|
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Administrative Services Fee||1.00% of amount invested||RM Admin(3)||Distributable Cash|
|Asset Management Fee||2.00% of EGI||GSH Group, LLC||Distributable Cash|
(1) Fees may be deferred to reduce impact to investor distributions. The above table is a summary and there may be additional fees and expenses associated with this offering. Please refer to the Private Placement Memorandum for further details.
(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 Investors 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.
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.
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