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Retail
ExchangeRight Net Leased Portfolio 11 DST - 1031
Multiple Locations
INVESTMENT STRATEGY
INVESTMENT TYPE
Equity
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100% funded
Offered By Exchange Right
%* TARGET IRR %-%
6.75%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 7-10 years
Estimated First Distribution 4/2016
*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
Property at a glance
Leverage 53% Loan-to-Cost/ 60% Loan-to-Purchase
Tenant Diversification Eight Different Tenants
Credit Tenancy Six Tenants With Credit Ratings Ranging From A- to BBB-
Long Term Existing Leases Existing Lease Terms Range From 9 -19 Years Remaining
Acquisition Price

$41,688,032

Investment Highlights
Credit Tenants on Long Term Leases
Diversified Portfolio Including Pharmacy, Discount Retailers, and Auto Retailers
Experienced Sponsor
Management
Cumulative Distributions

Exchange Right

ExchangeRight is committed to providing long-term, stable income and asset preservation to accredited 1031 investors. Their goal is to consistently deliver 1031-exchangeable DST portfolios of long-term, net-leased properties backed by investment grade corporations. They target corporate tenants that successfully operate in the necessity retail space to provide investors with stable and predictable income. ExchangeRight’s long-term exit strategy is to provide greater diversification and value to investors by combining multiple portfolios of investment grade, net-leased assets in a portfolio sale or 721 exchange roll-up.

http://www.exchangeright.com/
  • David Fisher, CPA
    Managing Member
  • Warren Thomas, CPA
    Founder and Managing Director
  • Joshua Ungerecht
    Managing Member
  • Dave Van Steenis
    Chief Financial Officer
David Fisher, CPA
Managing Member

David Fisher enjoyed a successful career in banking and finance for 20 years. He is now focused on the management success of ExchangeRight and on managing his own investments. He began his career with KPMG in the tax department, and then worked in tax, treasury, and acquisitions for Wells Fargo for over nine years. He was North American Head of Asset and Structured Finance for HSBC's Investment Banking division for the last seven years of his banking career. David and his banking teams executed international financings in excess of $4 billion. He has been an active real estate investor for the past 10 years and has interests in over 30 partnerships across nine states. He graduated from the University of Northern Iowa in 1993, Magna Cum Laude in Accounting, and earned national honors with the Elijah Watt Sells Award on the May 1993 CPA exam.

Warren Thomas, CPA
Founder and Managing Director

Warren currently serves as a managing member for ExchangeRight Real Estate. He is focused on the securitization, broker dealer, and registered representative relations sides of the business. Warren is the co-founder and president over a number of integrated wealth management and securitized real estate companies with Joshua Ungerecht. Prior to focusing on the securitized 1031 exchange market in 2003, Warren developed an extensive tax practice including estate planning, financial planning, and real estate advisory services. Warren has over 30 years of experience as a CPA and has been an active commercial real estate investor for the past 15 years. He graduated in 1978 from Biola University with a B.S. in Business Administration, specializing in Accounting. He also earned a master's degree in Taxation from Golden Gate University in 1993. He maintains Series 6, 7, 22, 24, 39,63, and 79 Securities Licenses.

Joshua Ungerecht
Managing Member

Joshua currently serves as a managing member for ExchangeRight Real Estate. He is focused on the operations, investment structuring, and acquisitions aspects of the business. Concurrently, he serves as CEO and Chief Investment Officer over a number of integrated wealth management and securitized real estate companies. He developed one of the industry's leading due diligence platforms in securitized real estate analysis. Together with Warren Thomas, Joshua has overseen the acquisition of over $500 million in real estate since 2003. Joshua graduated from The Master's College, Summa Cum Laude with a B.A. in Theology, Apologetics, and Missions, and is currently on leave from Talbot Graduate School, where he was pursuing an M.A. in Philosophy of Religion and Ethics. He also maintains Series 7, 22, 24, 63, 65, and 79 Securities Licenses and an active California real estate license.

Dave Van Steenis
Chief Financial Officer

Dave currently serves as Chief Financial Officer for ExchangeRight Real Estate. He is focused on financial reporting and acquisitions for the Company. Dave began his career with KPMG in the financial services audit practice, and most recently was with Kaufman Jacobs Real Estate Investments were he was involved in the investment acquisition, capital markets, and financial reporting aspects of the business. Dave graduated from Trinity Christian College with highest honors with a B.S. in Accounting and a Finance concentration. Dave is a CPA and is also a CFA Level III candidate.

Track Record

Offering Description Projected Annualized Return Actual Annualized Return*
Net-Leased Preferred Equity Company 1 Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Performing as expected. Range of 12-20% Range of 13-17%**
Net-Leased Preferred Equity Company 2 Shorter-term fund to acquire and sell net-leased assets for the Sponsor.
Performing as expected.
Range of 8-12% 10-12%**
Acquisitions Notes II Company that issues short term debt capital to the Sponsor to acquire and sell net-leased assets. Performing as projected. Range of 8-12% 10-12%**
Net-Leased Portfolio 1 Portfolio of two long-term net-leased properties leased to Family Dollar. One of the two properties sold in January, 2015 at a 10.59% annualized  net profit to investors. Current remaining property return shown in chart and is exceeding projections. 7.25% 7.39%
Net-Leased Portfolio 2 Portfolio of seven long-term net-leased properties leased to Family Dollar (6) and Dollar General (1). Performing as projected. 7.23% 7.23%
Net-Leased Portfolio 3 Portfolio of nine long-term net-leased properties leased to Family Dollar (8) and Dollar General (1). Performing as projected. 7.30% 7.30%
Net-Leased Portfolio 4 Portfolio of eleven long-term net-leased properties leased to Family Dollar (8), Dollar General (1), Aaron's (1) and Advance Auto Parts (1). Performing as projected. 8.02% 8.02%
Net-Leased Portfolio 5 Portfolio of fourteen long-term net- leased properties leased to Family Dollar (5), Dollar General (4), Advance Auto Parts (2), AutoZone (1), Sherwin Williams (1) and The Christ Hospital (1). Performing as projected . 7.50% 7.50%
Net-Leased Portfolio 6 Portfolio of sixteen long-term net- leased properties leased to Family Dollar (3), Dollar General (8), Advance Auto Parts (1), AutoZone (1), CVS (1), Dollar Tree (1) and Tractor Supply  (1). Performing as projected. 7.51% 7.51%
Net-Leased Portfolio 7 Portfolio of sixteen long-term net- leased properties leased to Family Dollar (4), Dollar General (8), Advance Auto Parts (1), CVS (1), Napa Auto Parts (1), and O'Reilly Auto Parts (1). Performing  as projected. 7.75% 7.75%
Net-Leased Portfolio 8 Portfolio of thirteen long- term net- leased properties leased to Advance Auto Parts (3), AutoZone (2), CVS (1), Dollar General (2), Family Dollar (1), Franciscan Alliance (1), Ross Stores (1) and Tractor Supply (2). Performing as projected. 7.32% 7.32%
Net-Leased  Portfolio 9 Portfolio of twenty-two long- term net- leased properties leased to Advance Auto Parts (4), AutoZone (4), CVS (1), Dollar General (9), Hobby Lobby (1), Napa Auto Parts (2) and TCF National Bank (1). Performing  as projected. 7.03% 7.03%
Net-Leased Portfolio 10 Portfolio of twenty-two long-term net- leased properties leased to Advance Auto Parts (3), AutoZone (1), CVS (1), Dollar General (5), Dollar Tree (1), Family Dollar (4), Napa Auto Parts (2), O'Reilly Auto Parts (2), PNC Bank (1) and Tractor Supply (2). Performing as projected. 7.03% 7.03%
Net-Leased Portfolio 11 Portfolio of seventeen long-term net- lease properties leased to Advance
Auto Parts (3), CVS (1), Dollar General (5), Family Dollar (2), Hobby Lobby
(1), Napa  Auto Parts (3), Sherwin- Williams (1) and Walgreens (1)
6.75% 6.75%
Multifamily 1 - Van Mark Creek Apartments One (1) apartment community consisting of 144 units. Performing as projected. 7.05% 7.05%
Mira Bella  and San Martin One (1) apartment community consisting of 378 units. Performing as projected. 6.51% 6.51%

*These returns were provided by and calculated by the Sponsor

**These investment opportunities are open-ended (i.e. Investors come into the fund at different times) resulting in a range of returns.

 

Business Plan

The DST closed on the Portfolio in December 2015 with a weighted-average lease term in place of 12.69 years. The Sponsor then assigned all of the Properties to the Trust pursuant to the terms of the Trust Agreement. The Properties are now owned 100% by the Trust. In conjunction with the purchase of the Properties, ExchangeRight NLP 11 Master Lessee ("Master Lessee") became the lessor under the Tenants’ leases. The Trust is a passive owner of the Properties and will not be involved in any manner in the active management of the Properties. The Manager has been appointed to manage the Trust pursuant to the Trust Agreement.

The Trust expects to provide the Owners a return on their investment in two primary ways: (i) in the form of monthly cash distributions to the Owners; and (ii) upon any Disposition of the Properties. The Trust intends to dispose of all of the assets in the Portfolio in a single disposition of the Properties. This strategy is anticipated to provide investors with the opportunity to perform another 1031 exchange.

Property

Investors are being offered the opportunity to invest in a portfolio of seventeen (17) single-tenant, long-term net-leased retail assets (the "Portfolio") that are currently 100% occupied. The Portfolio is composed of a diversified tenant base:

  • 29% Pharmacy (Walgreens & CVS)
  • 27% Discount Retailers (Dollar General & Family Dollar)
  • 22% Auto Retailers (NAPA Auto Parts & Advance Auto Parts)
  • 22% Other (Hobby Lobby & Sherwin Williams)

ExchangeRight Net-Leased Portfolio 11 DST, a Delaware Statutory Trust ("DST"), owns the portfolio, and ExchangeRight Real Estate, LLC ("Sponsor") is offering beneficial interests in the trust to investors. The Sponsor is retaining at least a 1.0% ownership interest in the Portfolio and is offering up to 99.0% of the beneficial interests in the DST to accredited investors. The Trust expects to provide the Owners a return on their investment in two primary ways: (i) in the form of monthly cash distributions to the Owners; and (ii) upon any Disposition of the Properties.

The total offering amount is $46,837,000, of which $21,825,000 is equity and $25,012,000 is long-term fixed-rate financing. 

This offering is designed for investors seeking to participate in a 1031 tax-deferred exchange as well as investors seeking a diversified net-leased real estate investment on a cash basis. Investors completing a 1031 exchange may invest for a minimum of $100,000; investments made on a cash basis are subject to a $25,000 minimum investment.

Property Details

Tenant Location Credit Rating (S&P) Size Yr Built Annual Rent Lease Type Lease Expiration
Advance Auto Parts New Bern, NC BBB- 7,050 2005 $82,600 NN 12/31/2024
Advance Auto Parts Superior, WI BBB- 6,878 2008 $119,837 NN 9/30/2026
Advance Auto Parts Dalton, GA BBB- 6,400 2010 $111,756 NN 12/31/2029
CVS/Pharmacy Las Vegas, NV BBB+
5,000
2010 $384,390 NN 12/31/2026
Dollar General
Douglasville, GA
BBB-
5,000
2010 $98,700 NNN 8/31/2030
Dollar General Gretna, LA BBB-
5,000
2010 $122,873 NNN 4/30/2029
Dollar General Sumter, SC BBB- 5,000
2010
$79,009 NN 12/31/2025
Dollar General Shreveport, LA BBB-
5,000

2010
$90,729 NNN
6/30/2026
Dollar General Mobile, AL BBB-
5,000

2010
$82,740 NN 7/31/2025
Family Dollar Shreveport, LA Ba2*
5,000
2010 $114,917 NNN 3/31/2031
Family Dollar Cocoa, FL Ba2* 5,000 23
2010
$121,892 NNN 3/31/2031
Hobby Lobby Lawrenceville, GA N/A 5,000
2010
$467,500 NN 7/31/2029
NAPA Auto Parts Morton, IL N/A 5,000 2010 $99,000 NNN 11/08/2035
NAPA Auto Parts
Bloomington, IL
N/A 5,000
2010

$102,000
NNN 11/08/2035
NAPA Auto Parts Decatur, IL N/A 6,746   $69,000 NNN 11/23/2035
Sherwin Williams Winston-Salem, NC A-
10,186

2010
$125,000 NN 10/31/2025
Walgreens
Lawrenceville, GA
BBB 15,066
2010
$395,000 NNN 3/31/2026

*Moody's credit rating

 Headquartered in Roanoke, Va., Advance Auto Parts, Inc., the largest automotive aftermarket parts provider in North America, serves both the professional installer and do-it-yourself customers. Advance operates over 5,200 stores, over 100 Worldpac branches and serves approximately 1,300 independently owned Carquest branded stores in the United States, Puerto Rico, the U.S. Virgin Islands and Canada. Advance employs approximately 74,000 Team Members. Advance Auto Parts trades on the New York Stock Exchange under the AAP symbol.  

CVS Pharmacy is an American pharmacy retailer and currently stands as the second largest pharmacy chain, after Walgreens, in the United States, with more than 7,600 stores,and is the second largest US pharmacy based on total prescription revenue. As the retail pharmacy division of CVS Health, it ranks as the 12th largest company in the world according to Fortune 500 in 2014. CVS Pharmacy's leading competitor Walgreens ranked 37th. CVS sells prescription drugs and a wide assortment of general merchandise, including over-the-counter drugs, beauty products and cosmetics, film and photo finishing services, seasonal merchandise, greeting cards, and convenience foods through their CVS Pharmacy and Longs Drugs retail stores and online through CVS.com. It also provides healthcare services through its more than 1,000 MinuteClinic medical clinics as well as their Diabetes Care Centers. Most of these clinics are located within CVS stores.

Dollar General Corporation, incorporated on May 29, 1998, is the discount retailer in the United States. The Company offers a selection of merchandise, including consumables, seasonal, home products and apparel. Its merchandise includes national brands from manufacturers, as well as private brand selections with prices at discounts to national brands. It offers its merchandise at everyday low prices through its convenient small-box locations, with selling space averaging approximately 7,400 square feet. The Company sells national brands from manufacturers, such as Procter & Gamble, PepsiCo, Coca-Cola, Nestle, General Mills, Unilever, Kimberly Clark, Kellogg's and Nabisco, which are typically found at higher retail prices elsewhere. Additionally, its private brand consumables offer even greater value with options to purchase value items and national brand equivalent products at substantial discounts to the national brand. The Company operates approximately 11,879 stores located in 43 states located in the southern, southwestern, midwestern and eastern United States. 

For more than 50 years, Family Dollar has been providing value and convenience to customers in easy-to-shop neighborhood locations. Family Dollar’s mix of name brands and quality, private brand merchandise, appeals to shoppers in more than 8,100 stores in rural and urban settings across 46 states. 

 Hobby Lobby Stores, Inc., headquartered in Oklahoma City, OK, operates over 600 stores across the nation that average 55,000 square feet. Hobby Lobby is an industry leading retailer offering more than 70,000 arts, crafts, hobbies, home decor, Holiday, and seasonal products. Hobby Lobby is included in Forbes’ annual list of America’s largest private companies. While Hobby Lobby continues to grow steadily, the company carries no long-term debt.

 In the U.S., NAPA includes over 60 distribution centers, 15,000 NAPA AutoCare Centers and more than 6,000 independently-owned and company-owned stores. NAPA carries an extensive inventory of more than 400,000 parts for automotive and industrial applications. A division of Genuine Parts Company (NYSE: GPC) and a global automotive aftermarket leader, NAPA operates NAPA Canada, Auto Todo in Mexico and Repco in Australia and New Zealand.

 The Sherwin-Williams Company (Sherwin-Williams), incorporated on July 16, 1884, is engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers in North and South America with additional operations in the Caribbean region, Europe and Asia. The Company has four operating segments: Paint Stores Group, Consumer Group, Global Finishes Group and Latin America Coatings Group. The Paint Stores Group markets and sells architectural paint and coatings, protective and marine products, original equipment manufacturer (OEM) product finishes and related items. The Consumer Group develops, manufactures and distributes a range of paint, coatings and related products to third party customers. The Global Finishes Group develops, licenses, manufactures, distributes and sells a range of protective and marine products, automotive finishes and refinished products, OEM product finishes and related products. The Latin America Coatings Group develops, licenses, manufactures, distributes and sells a range of architectural paint and coatings, protective and marine products, OEM product finishes and related products in North and South America.

Walgreens is the largest drug retailing chain in the United States. As of February 29, 2016, the company operated 8,177 stores in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. It was founded in Chicago, Illinois, in 1901. The Walgreens headquarters office is in the Chicago suburb of Deerfield, Illinois. In 2014, the company agreed to purchase the remaining 55% of Switzerland-based Alliance Boots that it did not already own to form a global business. Under the terms of the purchase, the two companies merged to form a new holding company, Walgreens Boots Alliance Inc., on December 31, 2014. Walgreens became a subsidiary of the new company, which retains its Deerfield headquarters and trades on the Nasdaq under the symbol WBA (wiki)

 

Comparables

Appraisals for all properties available upon request. Please email investor-help@realtymogul.com.

Location

The Portfolio contains properties located in the following cities and states:

  • New Bern, NC
  • Superior, WI
  • Dalton, GA
  • Las Vegas, NV
  • Douglasville, GA
  • Gretna, LA
  • Sumter, SC
  • Shreveport, LA (2 properties)
  • Mobile, AL
  • Cocoa, FL
  • Lawrenceville, GA (2 properties)
  • Morton, IL
  • Bloomington, IL
  • Decatur, IL
  • Winston-Salem, NC
Photos
Financials
Sources & Uses

Total Capitalization
Debt   $25,012,000
Equity   $21,825,000
Total Sources of Funds $46,837,000
     
Purchase Price   $41,688,032
Acquisition Fee   $652,345
Broker-Dealer Fee and Marketing Allowance   $1,746,000
Third Party Diligence   $255,000
Syndication Costs   $95,000
Closing Costs & Other Fees   $1,432,396
Organizational & Offering Costs   $327,375
Marketing, Distribution & Sponsorship Cost   $109,125
Reserves   $531,727
Total Uses of Funds $46,837,000
Debt Assumptions

The Portfolio has existing debt: 

  • Loan Origination Date: 12/4/2015
  • Lender: Barclays Bank PLC
  • Loan Proceeds: $25,012,000
  • Loan to Cost: 53.4%
  • Interest Rate: Fixed (4.586%)
  • Amortization: 10-year interest-only
  • Non-recourse
  • Term: 10 years
  • Prepayment Penalty: Subject to Yield Maintenance fee if loan repaid before 12/4/2020
Distributions

The Sponsor will make distributions directly to investors who own a beneficial interest in the DST on a prorata basis.

Distributions are projected to start for each investor within 60 days of the completion of that investors beneficial interest in the DST. Distributions are projected to continue on a monthly basis thereafter. These distributions are at the discretion of the Sponsor and made directly by the Sponsor, neither Realty Mogul Co. nor any of its affiliates have any control or discretion on the timing or amount of distributions.

Fees

Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:

Type of Fee Amount of Fee Received By Paid From Notes
One-Time Fees:
Acquisition Fee $652,345 Sponsor Capitalized Equity Contribution 2.0% of the offering amount
Broker-Dealer Fee 8.0% Broker Dealers Capitalized Equity Contribution Paid to North Capital(1) or other licensed broker-dealers based on the amount of equity capital raised. Surplus fees retained by sponsor.
Marketing & Due Diligence Fee 1.0% Broker Dealers Capitalized Equity Contribution 1.0% based on the amount of equity invested by investors through RealtyMogul.com, third-party Broker Dealers (including North Capital(1)) are entitled to additional fees based on equity they originate,surplus fees retained by Sponsor
Syndication Costs $95,000 Sponsor or Third Parties Capitalized Equity Contribution  
Equity Finance Costs $326,173 Sponsor or Affiliates Capitalized Equity Contribution  
Organizational & Offering Costs $327,375 Sponsor Capitalized Equity Contribution 1.5% of maximum offering amount
Redemption of Class 2 Interests $6,523 Sponsor Capitalized Equity Contribution To redeem, on a one-for-one basis, the 100 Class 2 beneficial ownership interests in the Trust issued to the Sponsor on formation of the Trust. The Class 2 interests are currently the only outstanding ownership interests in the Trust and upon the sale of the Interests, no Class 2 interests will remain outstanding 
Real Estate Commissions $263,740 JRW Realty (Sponsor Affiliate) Capitalized Equity Contribution  
Recurring Fees:
Asset Management Fee 0.45% - 1.90% of gross rental income Manager Operating Cash Flow Asset Management Fee starts at 0.45% of Gross Rental Income in Year 1 and ramps up to 1.90% by Year 7 onward. Average across a 10 year hold is 1.27%. 
Master Lease Operating Profit N/A Master Lessee Operating Cash Flow Master Lessee will retain operating revenues from the Properties that exceed the annual base rent. 

Notes:
(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.

The above presentation is based upon information supplied by the Sponsor or others.  Realty Mogul, Co. along with its respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein.  The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

Documents
Offering Documentation
Disclaimers
Disclaimers

Portfolio Risk

DSTs are ill equipped to address the untimely and unexpected need to raise capital or to re-tenant a property or to carry a property in the event of excessive vacancies. The Master Tenant is not likely to have the necessary resource to replace tenants as a result of default or untimely turnover. This risk is increased by an investment which includes multiple properties. 


1031 Risk

Although it is intended that interests will be acquired on a tax-deferred basis under Code Section 1031, each investor must satisfy a number of technical requirements to qualify for tax deferral under Section 1031. Also, no assurance can be given that investors will be able to complete a qualifying Section 1031 exchange in the future when the Properties are sold.


Real Estate Investment Risk

Any investment in real estate carries certain inherent risks, and there is no guaranty as to the future occupancy of the properties or operating results.  Factors which might influence outcome include:

  • Changes in national or local economic conditions
  • Changes in the local market, including the entry of new competitors
  • Changes in the financial condition of the major tenant or tenants
  • The occurrence of casualties or natural disasters
  • The enactment of unfavorable laws

Master Lease Risk

The properties are subject to a Master Lease to an affiliate of the Sponsor whose only assets and source of revenues will be the underlying properties and which may not be able to meet its obligations as they come due. As with any Master Lease, if there is a significant upswing in rents, that upside accrues to the Master Tenant, but if there is falloff or vacancy, that risk is likely to fall on the investors.  There is a substantial risk that, if the Master Tenant is unable to meet its obligation to pay rent, a default or foreclosure may occur under property financing which could result in a substantial or total loss of an investment.


Conflict of Interest Risk

There are various potential conflicts of interest among the Sponsor, the Trustees, the Signatory Trustees, the Master Tenant, the Property Managers, and others engagement in the management and operation of the properties, one or more of whom may be affiliated with the others. 


DST Risk

IRS established seven prohibitions over the powers of the DST Trustee, which include the following:

  • Once the offering is closed, there can be no future equity contribution to the DST by either current or new co-investors or beneficiaries
  • The DST Trustee cannot renegotiate the terms of the existing loans, nor can it borrow any new funds from any other lender or party
  • The DST Trustee cannot reinvest the proceeds from the sale of its investment real estate
  • The DST Trustee is limited to making capital expenditures with respect to the property to those for a) normal repair and maintenance, (b) minor non-structural capital improvements, and (c) those required by law
  • Any liquid cash held in the DST between distribution dates can only be invested in short-term debt obligations
  • All cash, other than necessary reserves, must be distributed to the co-investors or beneficiaries on a current basis, and
  • The Trustee cannot enter into new leases or renegotiate the current leases

Some of these restrictions are ameliorated in part by the introduction of a Master Tenant, who will have the ability, for example, to enter into or renegotiate leases.  However, the existence of a Master Tenant carries with in its own set of risk factors.  In addition, DST Members will have no voting rights, and therefore no control over future decisions regarding sale of the properties or roll-up into a limited liability company.


Forward-Looking Statements

Specified matters discussed in this Memorandum are forward-looking statements. The Signatory Trustee has based these forward-looking statements on its current expectations and predictions about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Property, including, among other things, factors discussed below:

  • General economic performance of the local and national economy;
  • Required capital expenditures at the Property
  • Competition from properties similar to and near the Property
  • Adverse changes in local population trends, market conditions, neighborhood values, and local economic and social conditions
  • Supply and demand for property such as the Property
  • Interest rates and real estate tax rates
  • Governmental rules, regulations and fiscal policies
  • The enactment of unfavorable real estate, rent control, environmental, zoning or hazardous material laws
  • Uninsured losses
  • Anticipated market capitalization rates at the time of sale

The Signatory Trustee intends to identify forward-looking statements in this Memorandum by using words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “objective,” “plan,” “predict,” “project,” “may be” and “will be” and similar words or phrases, or the negative thereof or other variations thereof or comparable terminology. All forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual transactions, results, performance or achievements of the Property to be materially different from any future transactions, results, performance or achievements expressed or implied by such forward-looking statements. The cautionary statements set forth under the caption “Risk Factors” and elsewhere in this Memorandum identify important factors with respect to such forward-looking statements.


Limited Transferability of Securities

Each Purchaser will be required to represent that he is acquiring the Interests for investment and not with a view to distribution or resale, that such Purchaser understands the Interests are not freely transferable and, in any event, that such Purchaser must bear the economic risk of investment in the Interests for an indefinite period of time because: (i) the Interests have not been registered under the Act or applicable state “Blue Sky” or securities laws; and (ii) the Interests cannot be sold unless they are subsequently registered or an exemption from such registration is available. There will be no market for the Interests and the Purchasers cannot expect to be able to liquidate their investment in case of an emergency. See “Restrictions on Transferability” in the PPM. Finally, the sale of the Interests may have adverse federal income tax consequences. See “Federal Income Tax Consequences” in the PPM.


Sale of the Property

The proceeds realized from the sale of the Property will be distributed among the Beneficial Owners, but only after satisfaction of the claims of other third-party creditors and Affiliates of the Sponsor. The ability of a Beneficial Owner to recover all or any portion of its investment, accordingly, will depend on the amount of net proceeds realized from such sale and the amount of claims to be satisfied therefrom. There can be no assurance that the Beneficial Owners will realize gains on sale of the Property.


Loss of Deposit

The Signatory Trustee may on behalf of the Trust retain the deposit of a Purchaser who is in default under the Purchase Agreement. See “Summary of Purchase Agreement and Escrow Instructions - Deposit; Liquidated Damages” in the PPM.​


No Representation of Beneficial Owners

Each Beneficial Owner acknowledges and agrees in the Purchase Agreement and Escrow Instructions that legal counsel representing the Depositor, the Signatory Trustee, the Property Manager and their Affiliates do not represent, and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing, any or all of the Beneficial Owners.​


Receipt of Compensation Regardless of Profitability​

The Sponsor, the Signatory Trustee, the Property Manager and their Affiliates are entitled to receive certain significant fees and other significant compensation, payments and reimbursements from the acquisition and operation of the Property regardless of whether the Property operate at a profit. See “Estimated Use of Proceeds" and “Compensation of the Sponsor and Affiliates” in the PPM. ​


No Fiduciary Duty

The Trust, the Signatory Trustee, and the Property Manager and their Affiliates will not have a fiduciary duty to the Beneficial Owners as would be applicable to a limited liability company, partnership, or corporation and, therefore, may take actions that would not be in the best interests of one or more of the Beneficial Owners. As permitted under applicable Delaware law, the Signatory Trustee and the Delaware Trustee have expressly disclaimed all duties to the Beneficial Owner except for the duties expressly contained under the Trust Agreement.


The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Private Placement Memorandum for a discussion of additional risks.

The above presentation is based upon information supplied by the Sponsor and others. Realty Mogul, Co., along with its respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

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