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.
The Preserve at Spring Lake (the "Property") is a 320-unit multifamily community located in a suburb of Orlando. The Property provides access to major regional employers and retailers as well as convenient linkages to public transportation. The Orlando market is one of the fastest-growing cities in the United States and supports a diverse economy outside of the tourism and hospitality industries. The Property offers resort-style living for tenants with five onsite swimming pools and a low-density site plan. The business plan should capture rental premiums through market rent adjustments, execution of an interior and exterior renovation plan, and organic rental growth in the Orlando market.
Unit Mix
| Unit Type | # of Units | Avg SF/Unit | Avg Rent (In-Place)* | Avg Rent (Stabilized) | Rent/SF (In-Place) |
| 1x1 | 48 | 775 | $1,099 | $1,239 | $1.60 |
| 2x1 | 72 | 950 | $1,300 | $1,349 | $1.42 |
| 2x1.5 | 49 | 1,000 | $1,264 | $1,384 | $1.38 |
| 2x1.5 Townhome | 32 | 1,050 | $1,422 | $1,451 | $1.38 |
| 2x2 | 44 | 1,100 | $1,271 | $1,475 | $1.34 |
| 3x2 | 60 | 1,246 | $1,469 | $1,681 | $1.35 |
| 3x2 Townhome | 1 | 1,700 | $1,810 | $2,201 | $1.29 |
| 4x2.5 Townhome | 14 | 1,858 | $1,809 | $2,230 | $1.20 |
| Total/Averages | 320 | 1,060 | $1,328 | $1,469 | $1.40 |
*Avg Rent (In-Place) is based on current rent roll.
Lease Comparables
| The Lexington at Winter Park | Springs Colony Apartments | Lakeshore at Altamonte | Altamonte at Spring Valley | Preserve at Spring Lake (Pre-Renovation) | |
| Year Built | 1971 | 1986 | 1986 | 1974 | 1972/1974 |
| Units | 228 | 188 | 224 | 250 | 320 |
| Average SF | 802 | 889 | 996 | 915 | 1,059 |
| Average $/SF | $1.80 | $1.49 | $1.32 | $1.24 | $1.30 |
| 1 Bedroom | $1,375 | $1,200 | $1,187 | $1,052 | $1,158 |
| 2 Bedroom | $1,639 | $1,456 | $1,397 | $1,194 | $1,351 |
| 3 Bedroom | $1,730 | $1,459 | $1,527 |
*Lease comps are based on current asking rents
Sales Comparables
| Property | Brickstone Maitland | Highpoint Club | Indigo West | Signal Pointe | The Crest at Altamonte | Preserve at Spring Lake: Purchase |
| Date | Dec '19 | Oct '20 | Mar '20 | Jan '20 | Dec '19 | Jun '21 |
| Submarket | North Orlando | North Orlando | North Orlando | North Orlando | North Orlando | North Orlando |
| Year Built | 1998 | 1994 | 1998 | 1969 | 1986 | 1972/1974 |
| Units | 272 | 348 | 456 | 368 | 340 | 320 |
| Sale Price | $55,200,000 | $69,000,000 | $90,500,000 | $69,888,889 | $62,000,000 | $62,800,000 |
| $/Unit | $202,941 | $198,276 | $198,465 | $189,915 | $182,353 | $196,250 |
| Cap Rate | 4.70% | 5.27% |
*Please see Marketing Booklet for full details on rent & sales comparables
Total Capitalization
| Sources of Funds | $ Amount | $/Unit |
| Senior Loan | $53,650,000 | $167,656 |
| GP Investor Equity | $2,756,000 | $8,613 |
| LP Investor Equity | $15,579,000 | $48,684 |
| Total Sources of Funds | $71,985,000 | $224,953 |
| Uses of Funds | $ Amount | $/Unit |
| Purchase Price | $62,800,000 | $196,250 |
| Transactional Costs(1) | $1,163,000 | $3,634 |
| Acquisition Fee | $1,256,000 | $3,925 |
| Closing & Due Diligence | $1,135,000 | $3,547 |
| Tax and Insurance Reserve | $858,000 | $2,681 |
| Initial CapEx Plan Funds | $3,475,000 | $10,859 |
| CapEx Contingency (10%) | $348,000 | $1,088 |
| Working Capital & CapEx Reserves | $950,000 | $2,969 |
| Total Uses of Funds | $71,985,000 | $224,953 |
Please note that The GSH Group's equity contribution may consist of friends and family equity and equity from funds controlled by The 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: MF1 Capital, LLC
- Term: 3 Years
- Loan-to-Cost: 75%
- Estimated Proceeds: $53,650,000
- Interest Type: Floating
- Spread Above One-Month LIBOR: 3.35%
- Interest-Only Period: Term of the Loan
- Amortization: N/A
- Loan Fees: 1.0% to Lender, 0.5% to Broker
- Extension Requirements: Two 12-month extension terms available if:
1) Borrower gives 30-day advance notice
2) Payment of an extension fee equal to 0.25% of Principal amount
3) Minimum debt yield of 7% for first extension and 7.5% for second extension.
4) Borrower must have completed renovation plan substantially in accordance with renovated schedule
5) Purchase of an acceptable rate cap for the extension term at a strike rate that results in a DSCR of not less than 1.0.
Modeled Refinance:
- Refinance Date: 7/1/2024
- Lender: Fannie Mae
- Term: 10 Years
- Estimated Proceeds: $59,340,359
- Interest Type: Fixed
- Annual Interest Rate: 4.25%
- Interest-Only Period: 5 Years
- 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.
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.
The GSH Group intends to make distributions from Preserve Domestic Investors, LLC as follows:
- To the Investors, pari passu, all operating cash flows to a 9.5% preferred return;
- 65% / 35% (65% to Investors / 35% to Promote) of excess cash flow thereafter.
The GSH Group 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 December 2021 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of The 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 | $5,441,569 | $5,893,655 | $6,265,532 | $6,524,630 | $6,795,529 | $7,016,309 | $7,244,219 | |
| Total Operating Expenses | $2,281,928 | $2,381,865 | $2,437,122 | $2,489,878 | $2,543,888 | $2,597,312 | $2,651,885 | |
| Net Operating Income | $3,159,641 | $3,511,790 | $3,828,410 | $4,034,752 | $4,251,641 | $4,418,997 | $4,592,334 | |
| Project-Level Cash Flows | ||||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | |
| Net Cash Flow | -$18,335,000 | $1,335,404 | $1,524,946 | $6,337,569 | $1,452,294 | $1,513,765 | $1,676,705 | $35,456,494 |
| Investor-Level Cash Flows* | ||||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | |
| Net Cash Flow | -$9,000,000 | $565,502 | $658,542 | $3,020,887 | $622,880 | $653,053 | $733,035 | $14,964,954 |
| 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 | $3,142 | $3,659 | $16,783 | $3,460 | $3,628 | $4,072 | $83,139 |
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.*Returns are net of all fees including RM Admin's 1.0% administrative services fee.
Certain fees and compensation will be paid over the life of the transaction; please refer to The GSH Group'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 |
| Acquisition Fee | 2.0% of Purchase Price | GSH Group, LLC | Capitalization |
| Refinance Fee | 1.0% of Loan Proceeds | GSH Group, LLC | Capitalization |
| Sales Broker Fee(4) | 2.0% of Acquisition Cost | GSH Group, LLC or an Affiliate | Sales Proceeds |
| Recurring Fees: | |||
| Type of Fee | Amount of Fee | Received By | Paid From |
| Asset Management Fee | 2.0% of EGI | GSH Group, LLC | Operations |
| Administrative Services Fee | 1.0% of Equity* | RM Admin(3) | Cash Flow |
*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 Preserve Domestic Investors, 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.
(4) If the Manager or an Affiliate is acting as a sales broker in connection with any Purchase Transaction or Sale Transaction with a bonafide third-party seller or purchaser that is not an Affiliate of the Manager, brokerage fees equal to two percent (2%) of the gross acquisition cost of the Investment Asset, payable upon consummation of the Purchase Transaction or Sale Transaction. For avoidance of doubt, a disposition fee will not be a Permitted Fee, and will not be paid to the Manager or any of its Affiliate
RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe 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. Neither RM Securities nor Sponsor are 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. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
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. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.