Laurel, MD is located in North Prince George's County, which sits between Washington DC and Baltimore just off the Baltimore Washington Parkway. The Property is served by a large retail cluster less than a mile away and major area employers including federal agencies and military bases. Prince George's County is an affluent suburb serving over 900,000 residents with a median household income of just over $100,000.
High quality renovations and proper management should allow Laurel Pines to capture premium rents in a strong Washington DC suburban submarket.
The Property's current asking rents are lower than most of the competing properties in this local rental market. Comparable renovated and non-renovated properties are currently achieving higher rents. This indicates room for rent premiums once renovations are completed and experienced management is introduced.
The GSH Group
The GSH Group (“The Sponsor") 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, GSH is attuned to the needs and processing of Special Servicers for the quick disposition of assets. The Sponsor 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.
GSH 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, GSH 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.
The Real Estate Company is acquiring the Property at a discount through a mortgage assumption. They determined that tenants at the Property, and in the market, are willing to pay premium rents for renovated units. Their business plan will capture the rental premiums through their proposed value-add execution.
The value-add program consists of aggressive unit renovations and common area improvements. The large unit sizes at the Property, compared to competing properties in the market, should help achieve attractive returns on interior renovation costs. The interior renovation plan is to update kitchens and bathrooms, install hardwood-style flooring, and add stackable washers and dryers. Common area improvements will include a state-of-the-art fitness center, resident lounge, resident green space, and modifications to the existing dog park. The combined renovation plan should assist with resident acquisition and retention while further differentiating the Property from competing multifamily communities in the submarket.
The Real Estate Company projects raising NOI over $1M by year three through executing their renovation plan, hiring a local property manager with deep experience in the market and a successful track record, raising utility rebill income 100%, and improving collections to decrease bad debt by 50%.
The Real Estate Company plans to hire Signature Properties to manage the Property. Signature Properties manages over 2,500 units in the Baltimore/Washington DC area valued at approximately $300M and will be investing in the Property as an LP.
Laurel Pines is a 235-unit apartment community in an inﬁll location in Laurel, MD. The units at the Property are 28% larger than the competitive set on average. Laurel is a Washington DC suburb located halfway between Washington DC and Baltimore and provides convenient linkages to employment, shopping, education, recreation, and places of worship. The Real Estate Company determined that tenants at the Property, and in the market, desire renovated units and will pay premium rents. Their business plan expects to capture the rental premiums through their proposed value-add execution.
Current Unit Mix
|Unit Type||# of Units||Avg SF/Unit||Avg Rent (In-Place)||Avg Rent (Post-Renovation)||Rent/SF (Post-Renovation)|
|Crestleigh Apartments||Willow Lake||Woodland Grove||Summerlyn Place||Comp Averages||Laurel Pines (Post Renovation)|
|Submarket||North Prince George's County||North Prince George's County||North Prince George's County||North Prince George's County||North Prince George's County|
|Distance to Subject||2.5 Miles||1.4 Miles||1.9 Miles||0.1 Miles||1.5 Miles|
|Average Rental Rate||$1,603||$1,546||$1,525||$1,547||$1,561||$1,593|
|Crestleigh Apartments||Southridge||The Views at Laurel Lakes||Westgate at Laurel||Concord Park At Russett||Total/Averages||Subject: Laurel Pines|
|Date||Under Contract||Sep '19||Oct '20||Jan '20||Jul '19|
|Submarket||North Prince George's County||North Prince George's County||North Prince George's County||North Prince George's County||Outer W Anne Arundel||North Prince George's County|
|Distance from Subject (mi.)||2.5 Miles||2.5 Miles||1.5 Miles||1.1 Miles||3.0 Miles||2.1 Miles|
The Property is located in Prince George’s County within the Washington DC Metro area. Population in Prince George’s County as of 2019 was 923,700 with a median household income of $100,960 annually. Median gross rent throughout the county reached $1,475. Maryland’s GDP ranked 15th in the nation and its largest sectors are finance, insurance, real estate, and government. This region is home to the headquarters of Marriott International, Lockheed Martin, and MedStar Health which operates over 120 entities, including ten hospitals throughout the Baltimore-Washington metropolitan area.
Laurel, MD is a suburb of Washington DC located in Prince George's County between Washington DC and Baltimore. The Property is located off of Bowie Road close to a large retail cluster, major area employers, which include federal agencies and military bases. The Property sits six miles away from Fort Meade, the US Government's hub for the major cybersecurity agencies, including the NSA. Fort Meade employs over 50,000 workers and pays an estimated $13 billion in wages annually. The area is served by strong regional transportation linkages including a commuter rail connecting to Washington and Baltimore. The Property is flanked by I-95 and the Baltimore Washington Parkway which carry 200,000 and 100,000 vehicles per day, respectively.
|Sources of Funds||$ Amount||$/Unit|
|GP Investor Equity||$2,000,000||$8,511|
|LP Equity (RealtyMogul)||$3,500,000||$20,213|
|LP Equity (Other Investors)||$14,500,000||$56,383|
|Total Sources of Funds||$47,159,000||$200,677|
|Uses of Funds||$ Amount||$/Unit|
|Closing & Due Diligence||$848,695||$3,611|
|Tax, Insurance, and COVID Reserve||$2,209,020||$9,400|
|Initial CapEx Plan Funds||$2,708,100||$11,524|
|CapEx Contingency (10%)||$270,810||$1,152|
|Working Capital & CapEx Reserves||$750,000||$3,191|
|Total Uses of Funds||$47,159,000||$200,677|
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:||Fannie Mae||Fannie Mae|
|Term:||10 Years, originally dated 03/30/2017||6 Years|
|Annual interest rate:||4.60%||5.30%|
|Interest-only period:||5 Years, first full payment 05/01/2022||0 Years|
|Amortization:||30 Years||30 Years|
|Prepayment Terms:||Estimated $2,031,658 on 4/1/2024||Estimated $272,602 on 4/1/2024|
|Loan Fees:||1% Assumption Fee of $239,460 and $20,720 of Legal fees||Application Deposit of $23,800 and Estimated Legal Fees of $2,780.|
|Annual interest rate:||4.50%|
|Interest-only period:||5 Years|
|Loan Origination Fee||1.0%|
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. 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.
GSH Group intends to make distributions from Laurel Pines Domestic Investors, LLC as follows:
1. To the Investors, pari passu, all operating cash flows to a 10.0% 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 September 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||$3,949,105||$4,427,897||$4,770,264||$4,967,323||$5,128,352||$5,270,775||$5,430,981|
|Total Operating Expenses||$1,560,088||$1,623,284||$1,669,784||$1,706,230||$1,742,205||$1,778,245||$1,815,453|
|Net Operating Income||$2,389,017||$2,804,612||$3,100,479||$3,261,094||$3,386,148||$3,492,531||$3,615,528|
|Project-Level Cash Flows|
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7|
|Net Cash Flow||-$20,000,000||$1,173,915||$1,358,357||$16,199,447||$1,098,082||$1,219,915||$1,323,450||$27,715,406|
|Investor-Level Cash Flows*|
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7|
|Net Cash Flow||-$4,750,000||$231,305||$275,110||$3,799,869||$213,294||$242,230||$266,819||$5,118,660|
|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||$2,435||$2,896||$39,999||$2,245||$2,550||$2,809||$53,881|
*Returns are net of all fees including RM Admin's 1.0% administrative services fee.
PLEASE NOTE: Estimated distributions and returns include the assumption of property refinancing in April 2024. There is no assurance of said refinance and could affect the distributions and returns if it does not take place as expected.
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||2.0% of Purchase Price||GSH Group LLC||Capitalization|
|Buyer Broker Fee||2.0% of Acquisition Cost||Momentum Realty||Capitalization||Affiliate to GSH|
|Refinance Fee||1.0% of Loan Amount||GSH Group LLC||Loan Proceeds||Stipulated in PPA|
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Asset Management Fee||2.0% of EGI||GSH Group, LLC||Property Cash Flow|
|Property Management Fee||3.0% of EGI||Signature Properties||Property Cash Flow||LP Investor|
|Administrative Services Fee||1.0% of RM amount invested||RM Admin(3)||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.
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.
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