Six Peak is a privately held real estate asset management firm. Founded in 2016, Six Peak is the property company (“PropCo”) owning the real estate underlying ground-breaking operating companies (“OpCos”) that are taking innovative approaches to real estate. This provides limited partners risk-adjusted returns with the upside from innovation with the downside protection of real estate in Top U.S. cities. Six Peak deploys 2 main strategies: 1) Los Angeles Direct Sourcing, Acquisition, Entitlement, Development and Construction 2) Co-GP Investment partnerships in Seattle, New York, and Chicago.
The firm’s investment strategies include co-living property development and redevelopment, multi-property portfolio acquisitions, joint ventures, and public-private partnerships. With 23 coliving projects totalling more than 2,000 beds, Six Peak is one of the leaders in co-living investments in the U.S.
Six Peak’s investment strategy emphasizes capital preservation and incentive alignment between the firm’s principals and investors. The firm focuses on long-term value creation and has the flexibility to make investments with a longer hold period than typical real estate opportunity funds. Six Peak seeks to unlock unrealized value in its portfolio over time through execution and a hands-on asset management approach.
The Project is centered between Silicon Beach on walkable Venice Blvd, bikeable to the beach and Abbot Kinney Blvd in one of the most desirable locations in West LA. Its close proximity to more than 500,000 jobs located west of the 405 freeway make it an ideal location for shared housing and affordable by design rents to the 25-40 year old demographic. Google, Snapchat, Microsoft, Amazon, Apple, and Facebook all have offices within a 5-10 minute drive from the Property. Its close proximity to Santa Monica, Culver City and Playa Vista make it an ideal location for the live/work/play lifestyle.
Unit Mix:
| Unit Type | # of Units | Avg SF/Unit | Avg Rent/Bed (Stabilized) | Rent per SF | ||
| 6BR Co-living | 18 | 1,700 | $2,021 | $7.13 | ||
| 4BR Co-living | 1 | 1,200 | $2,021 | $6.74 | ||
| Total/Averages | 19 | 1,674 | $2,021 | $7.11 | ||
Lease Comparables - Co-living
| 13348 Beach Ave | 2432 Penmar Ave | 4210 Del Rey Ave | 29 Navy St | 5842 Carlton Way | Averages | Subject | |||
| Year Built | 2018 | 2019 | 2019 | 1924/2018 | 2019 | 2019 | 2022 | ||
| # of Bedrooms | 242 | 12 | 108 | 31 | 84 | 95 | 112 | ||
| Average Rental Rate (per bed) | 2,674/month | 1,700/month | 1,941/month | 2,074/month | 2,020/month | 2,329/month | 2,021/month | ||
| Average $/SF | $13.37/SF | $11.33/SF | $10.78/SF | $17.28/SF | $13.47/SF | $13.00/SF | $13.47/SF | ||
| Distance from subject | 1.3 mi | 1.6 mi | 1.6 mi | 3.1 mi | 11.6 mi | 3.8 mi | |||
| Notes | Partially co-living. 4-7 furnished bedrooms with en-suite bathroom. Amenities. Avg BR SF estimated. | 4 3-bedroom units. Rooftop deck. Shared Bathroom. 4 shared kitchens. | Rooftop Spa. Shared bathroom. Fitness studio. Barbecue. 93% occupied. | Studio & 2-bedroom co-living. Rooftop deck. Shared bathroom. 93.5% occupied. Boardwalk Adjacent. | 5- & 3-bedroom units. Shared bathroom. Lounge & Café. |
Reflects year 3 stabilized rents; |
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Lease Comparables - Conventional Multifamily
| 12636 Matteson Ave | 12821 Washington Blvd | 13365 Washington Blvd | 4044 Redwood Ave | 1107 Venice Blvd | Averages | Subject | |||
| Year Built | 2017 | 2020 | 2013 | 2015 | 2009 | 2015 | 2022 | ||
| # of Units | 29 | 37 | 19 | 22 | 38 | 29 | 19 | ||
| # of Bedrooms | 49 | 47 | 34 | 29 | 40 | 40 | 112 | ||
| Average Rental Rate (per bed) | 2,190/month | 2,969/month | 2,148/month | 1,920/month | 3,062/month | 2,503/month | 2,021/month | ||
| Average $/SF | $3.29 | $4.15 | $2.82 | $3.07 | $3.52 | $3.43 | $6.94 | ||
| Distance from subject | 0.3 mi | 0.8 mi | 1.1 mi | 1.1 mi | 1.2 mi | 0.9 mi | |||
| Notes | New construction, no amenities. | New construction, no amenities. | Spa. 1 mile west of subject, adjacent to Costco. | Rooftop deck. | Barbecue. 1 mile west of subject. | Reflects year 3 stabilized rents; Avg $/sf based on total unit rent. |
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Sales Comparables
| 9901 Washington Blvd | 11400 Culver Blvd | 4227 McLaughlin Ave | 3667 Mentone Ave | 12626 Matteson Ave | Averages | Subject | |||
| Date Sold | 1/3/2018 | 8/14/2020 | 6/29/2018 | 10/8/2019 | 10/8/2019 | 1/31/2026 | |||
| Year Built | 2016 | 2018 | 2018 | 2019 | 1988 | 2012 | 2022 | ||
| # of Units | 131 | 21 | 14 | 10 | 20 | 39 | 19 | ||
| # of Bedrooms | 226 | 25 | 26 | 20 | 40 | 67 | 112 | ||
| Sale Price | $42,529,019 | $10,500,000 | $9,457,500 | $7,500,000 | $9,687,500 | $15,934,804 | $38,774,166 | ||
| $/Bedroom | $188,182 | $420,000 | $363,750 | $375,000 | $242,188 | $317,824 | $346,198 | ||
| $/SF | $343 | $404 | $596 | $586 | $463 | $478 | $885 | ||
| Cap Rate | N/A | 4.11% | 4.26% | 3.95% | 4.13% | 4.11% | 4.50% | ||
| Building Size | 123,991 SF | 25,990 SF | 15,868 SF | 12,799 SF | 20,923 SF | 39,914 SF | 43,805 SF | ||
| Distance from subject | 2.7 mi | 2.3 mi | 1.3 mi | 2.4 mi | 0.2 mi | 1.8 mi | |||
Total Capitalization
| Sources of Funds | $ Amount | $/SF | |||
| Debt | $16,000,000 | $365 | |||
| GP Investor Equity | $1,156,170 | $26 | |||
| LP Investor Equity | $10,420,000 | $238 | |||
| Total Sources of Funds | $27,576,170 | $630 | |||
| Uses of Funds | $/SF | ||||
| Purchase Price | $5,276,000 | $120 | |||
| Predevelopment and Permitting Expenses | $1,374,000 | $31 | |||
| Loan Fee | $120,000 | $3 | |||
| Closing Costs(1) | $622,170 | $14 | |||
| CapEx | $19,377,508 | $442 | |||
| Loan Reserve | $806,489 | $18 | |||
| Total Uses of Funds | $27,576,170 | $630 | |||
Please note that Six Peak Capital's equity contribution may consist of friends and family equity and equity from funds controlled by Six Peak Capital. 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 Closing 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: City National Bank
- Term: 24 Months
- Loan to Value: 58.0%
- Estimated Proceeds: $16,000,000
- Interest Type: Floating
- Spread above one-month LIBOR: 3.75%
- Interest-Only Period: Full
- Amortization: None
- Prepayment Terms: None
- Extensions: 12 Months
Modeled Refinance:
- Lender: Unknown
- Term: 5-10 Years
- Estimated Proceeds: $23M
- Interest Type: Amortizing
- Spread above one-month LIBOR: 4.00%
- Interest-Only Period: None
- Amortization: 30 Years
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.
Six Peak Capital intends to make distributions as follows:
- To the Investors, pari passu, all operating cash flows to a 12.0% preferred return;
- 70% / 30% (70% to Investors / 30% to Promote) of excess cash flow thereafter.
Six Peak Capital intends to make distributions to investors 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 expected to start in September 2023 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Six Peak Capital, 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^ | ||||
| Effective Gross Revenue | $0 | $76,290 | $2,397,478 | $2,741,381 | $2,586,120 | |||
| Total Operating Expenses | $0 | $44,327 | $922,079 | $838,234 | $790,760 | |||
| Net Operating Income | $0 | $31,963 | $1,475,400 | $1,903,147 | $1,795,360 | |||
| Project-Level Cash Flows | ||||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Net Cash Flow | -$11,576,094 | $0 | $31,963 | $7,760,219 | $523,852 | $15,820,015 | ||
| Investor-Level Cash Flows* | ||||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Net Cash Flow | -$10,420,000 | $0 | $11,400 | $6,879,997 | $367,267 | $12,286,132 | ||
| Investor-Level Cash Flows - Hypothetical $50,000 Investment* | ||||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Net Cash Flow | -$50,000 | $0 | $55 | $33,013 | $1,762 | $58,955 | ||
*Returns are net of all fees including RealtyMogul's 1.0% annual administrative services fee.
^Reflects 11 months of year 5 revenue due to sale. Annualized year 5 NOI: $1,961,033.
Certain fees and compensation will be paid over the life of the transaction; please refer to Six Peak Capital's 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 | Notes |
| Development Fee | 5.0% of Hard & Soft Costs | Six Peak Capital | Development Costs | |
| Contractor Fee | $600,000 | LV Construction | Development Costs | Affiliate to Six Peak Capital |
| Pre-Development Fee | $75,000 | HC Land Management LLC | Development Costs | |
| Acquisition Fee | $105,520 | HC Land Management LLC | Development Costs | 2% of Purchase Price |
| Recurring Fees: | ||||
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
| Administrative Services Fee | 1% of equity* | RM Admin(3) | Cash Flow | Dev period capitalized upfront |
*Only applies to equity raised through the RealtyMogul Platform
(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 the Real Estate Company 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 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. Sponsor is 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.
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. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.