OREI reapproached a national brokerage firm following a broadly marketed process, due to the previous buyer's seeming uncertainty of execution. Following 6 months of consistent tracking, and the transaction ultimately falling through, OREI contractually stepped in as the buyer at a lower price, with terms and a track record that ensures the ability to close.
Austin has been named the #1 fastest-growing major metro area for population growth for nine straight years. Austin has also ranked the #1 place to live in the United States, for the third consecutive year in 2019. The Austin area consists of several Fortune 500 companies, including Apple, Facebook, Amazon, Dell, IBM, Oracle, and soon Tesla's new Gigafactory. Through the COVID-19 pandemic era, Austin added over 37,000 new jobs, marking 3.5% growth and making the city the 2nd fastest-growing metro in the United States. The City recently approved the Orange Line, a new metro rail that will be passing just two blocks from the Property and will provide commuters with convenient access to the Tech Ridge and Downtown Austin. The submarket has averaged 4%+ rent growth and 95%+ occupancy over the past 10 years.
Though built in 2012, OREI has an opportunity to enhance all 222 units at Lotus Village, while also further enhancing amenities and exterior spaces. OREI has the ability to raise the average current rents of $1.33 per square foot to $1.51 per square foot, which results in a $172 premium over in-place rents and assumed stabilized occupancy at 92%.
$38,500,000
One Real Estate Investment
Founded in 2001, One Real Estate Investment (“OREI”) is a privately owned, Miami-based real estate investment and asset management company. OREI is a disciplined investor, manager, and operator focused on acquiring multifamily assets in the Southeast United States and Texas. The firm’s expertise is in executing and managing strategic asset repositioning, amenity upgrade, and operational optimization programs to maximize value for its tenants, investors, and communities in which it invests. The firm’s deals are capitalized by proprietary funds and programmatic relationships with institutional, family office, and ultra-high-net-worth capital partners. OREI has over 5,000 units under management nationally and has acquired and sold over 10,000 value-add multifamily units since its inception.
https://www.onerealestateinvestment.com/-
Jeronimo HirschfeldFounder, Chairman, and CEO -
Jesus ArtidielloChief Financial Officer -
Alexander RoseChief Investment Officer
Jeronimo Hirschfeld is the Founder, Chairman, and CEO of One Real Estate Investment (OREI). Under his direction, the Company has acquired and manages a portfolio valued at over $800 Million. He is a leading developer and sophisticated investor with seats on the Boards of a number of highly successful real estate-oriented companies. Today, Mr. Hirschfield’s firm is composed of experienced real estate professionals who work full time on the management of company properties, allowing him to continue to successfully seek out new investments and effectively grow One Real Estate Investment’s real estate portfolio.
Jesus has over 20 years of executive financial management and controllership experience. Throughout his career, Mr. Artidiello has worked with global accounts, offshore relations, and has significant experience with contract negotiations. His responsibilities at OREI include accounting, fiscal planning, expense tracking, portfolio analysis, and overseeing the bookkeeping department. Jesus is a graduate of Campbell State University in North Carolina where he earned an MBA and a Bachelor of Science degree in accounting.
Alexander (AJ) brings over 15 years of experience in institutional real estate investment management and serves as OREI’s Chief Investment Officer overseeing the Acquisitions Team and the Asset Management Division. AJ is involved in the debt and equity raise for each OREI transaction as well as structuring long-term programmatic capital structures for OREI’s investment platform. Over his career, he has overseen the investment of over $1 billion of equity into commercial real estate assets. AJ has an MBA from the University of Cambridge and a Bachelor of Science degree in business administration, with a concentration in real estate finance, from the University of Southern California.
OREI Track Record
| Property | City, State | Asset Type | Acq Date | Units | Purchase Price |
| The Summit at Landry Way | Fort Worth, TX | Multifamily | 2017 | 224 | $18,000,000 |
| The Summit at 7700 | Houston, TX | Multifamily | 2018 | 172 | $13,500,000 |
| Westbury Crossings | Houston, TX | Multifamily | 2018 | 240 | $17,000,000 |
| Oakwood Apartments | Lake Worth, TX | Multifamily | 2018 | 160 | $29,000,000 |
| Wynwood Square | Miami, FL | Mixed use development | 257 | $200,000,000 | |
| The Carter @ 4250 | Norcross, GA | Multifamily | 2019 | 300 | $34,962,000 |
| West End at Fayetteville | Fayetteville, NC | Multifamily | 2019 | 360 | $39,800,000 |
| Park Crossing | Lilburn, GA | Multifamily | 2019 | 280 | $31,250,000 |
| Mira Vista | Austin, TX | Multifamily | 2019 | 200 | $23,250,000 |
| Axiom Apartments | Charlotte, NC | Multifamily | 2019 | 202 | $22,844,200 |
| Sunswept Townhomes | Houston, TX | Multifamily | 2020 | 211 | $17,050,000 |
| Element at University Park | College Station, TX | Multifamily | 2020 | 192 | $19,872,000 |
| Ardmore Pointe | Fayetteville, NC | Multifamily | 2020 | 291 | $26,750,000 |
| Tampa, Florida Land | Wesley Chapel, FL | Land | 2020 | 400 | $11,100,000 |
| Whitney Manor | New Orleans, LA | Multifamily | 2020 | 199 | $15,300,000 |
| Westchase | New Orleans, LA | Multifamily | 2020 | 380 | $31,500,000 |
| La Villita | Houston, TX | Multifamily | 2020 | 308 | $21,750,000 |
| Avalon | Charlotte, NC | Multifamily | 2020 | 240 | $32,400,000 |
| Kelston | Charlotte, NC | Multifamily | 2020 | 310 | $36,300,000 |
| Total | 4,926 | $641,628,200 |
Realized Track Record (100+ Unit Multifamily Assets)
| Property | City, State | Asset Type | Disposition Date | Units | IRR | Yield |
| Airport Portfolio (2 Assets) | Houston, TX | Multifamily | 7/31/2019 | 412 | 20% | 7% |
| Winding Trails | Houston, TX | Multifamily | 1/2/2019 | 438 | 17% | 5% |
| Uvalde Portfolio (2 Assets) | Houston, TX | Multifamily | 9/1/2017 | 882 | 18% | 6% |
| Crystal Lakes | Miami, FL | Multifamily | 10/1/2015 | 1,312 | 24% | 7% |
| Houston Portfolio (5 Assets) | Houston, TX | Multifamily | 7/29/2015 | 105 | 30% | 4% |
| Riverwalk II Apartments | Homestead, FL | Multifamily | 8/1/2014 | 112 | 17% | 4% |
| Cardsound Apartments | Homestead, FL | Multifamily | 7/1/2014 | 491 | 19% | 6% |
| 3,752 | 21% | 6% |
The above bios and track record were provided by OREI and have not been independently verified by RealtyMogul.
Upon acquisition, OREI plans to implement an interior renovation program which will result in rental premiums of $172 per unit on average. The following highlight the actionable plans upon the acquisition of Lotus Village:
- Acquire the Property and immediately implement value-add enhancements to all 222 units in the asset, including but not limited to the following: tile kitchen backsplashes, modern painted cabinet hardware, updated kitchen faucets, and new showerheads in the bathrooms. OREI anticipates a total interior renovation cost of $318,120 ($2,321/unit).
- Approximately $405,000 will be invested toward exterior improvements. These include renovations to the leasing office and fitness center, pool enhancements, updated landscaping, open-air BBQ and picnic area, upgrades to the dog park, as well as repairs to the gutters and garage doors.
OREI will bring in a strategic partner and best-in-class residential property manager, Allied Orion Group, to maximize operating efficiency. Allied Orion currently manages all of OREI's Texas portfolio (6 assets totaling 1,547 units). Allied Orion is headquartered in Houston, Texas with over 23,000 units under management.
CapEx Breakdown:
| Interior Renovations | $ Amount | Per Unit | Number of Units |
| Paint Cabinets & Hardware | $144,300 | $650 | 222 |
| Backsplash | $55,500 | $250 | 222 |
| Kitchen Sink & Showerheads | $66,600 | $300 | 222 |
| WD Replacement | $4,800 | $800 | 6 |
| Flooring Replacement (Various Areas) | $18,000 | $191 | 94 |
| Contingency | $28,920 | $130 | |
| Total Interior Renovation Costs | $318,120 | $2,321 | |
| Exterior Renovations | $ Amount | Per Unit | |
| Leasing Office / Signage | $15,600 | $70 | |
| Signage Enhancement | $25,000 | $113 | |
| Fitness Center | $30,000 | $135 | |
| Pool Repair | $25,000 | $113 | |
| Grill Area / Outdoor Kitchen | $10,000 | $45 | |
| Dog Park Equipment | $5,000 | $23 | |
| Dog Park Fence Repair | $3,500 | $16 | |
| Dog Park Irrigation Repair & Wash Station | $1,500 | $7 | |
| Dumpster Enclosures (x3) | $16,500 | $74 | |
| Landscaping & Irrigation Line Repair | $50,000 | $225 | |
| Garage Repairs | $25,000 | $113 | |
| Gutter Repairs (On Garages) | $26,120 | $118 | |
| Corroded Stair Landings | $56,490 | $254 | |
| Exterior Lighting - Repair of Various Breezeway Lights | $10,000 | $45 | |
| Window Trim - Repair Corrosion | $47,868 | $216 | |
| Hardi Siding Repair (Building 8) | $4,000 | $18 | |
| Termite Warranty | $16,419 | $74 | |
| Contingency | $36,800 | $166 | |
| Total Exterior Renovation Costs | $404,797 | $1,823 | |
| Grand Total | $722,917 | $4,145 |
These amounts are subject to change at the discretion of the Real Estate Company.
One Real Estate Investment ("OREI") has secured under contract an opportunity to acquire and manage Lotus Village (the "Property"), a 222 Unit, Class A Multifamily asset built in 2012. The Property is 94% occupied and situated in rapidly expanding North Austin. Located only 8-miles from downtown Austin and within 6 miles of Apple's Austin Campus, the Property is also situated near several retail centers, schools, and major transit stops, and only 3 miles east of The Domain, dubbed Austin's second downtown.
Unit Mix
| Unit Type | # of Units | Avg SF/Unit | Avg Rent (In-Place) | Avg Rent (Stabilized) | Post-reno rent per SF |
| 1x1 | 60 | 700 | $998 | $1,130 | $1.61 |
| 1x1 | 24 | 749 | $997 | $1,175 | $1.57 |
| 2x2 | 90 | 1000 | $1,285 | $1,470 | $1.47 |
| 2x2 | 24 | 1040 | $1,327 | $1,495 | $1.44 |
| 3x2 | 24 | 1239 | $1,582 | $1,800 | $1.45 |
| Total/Averages | 222 | 922 | $1,213 | $1,385 | $1.51 |
Lease Comparables
| 502 North | Copper Mill | Addison at Kramer Station | Walnut Park | Altair Tech Ridge | Total Averages | Subject (Proforma) | |
| Year Built | 1985 | 1984 | 2015 | 2018 | 2019 | 2004 | 2012 |
| # of Units | 160 | 320 | 388 | 277 | 230 | 275 | 222 |
| Average Rental Rate | $1,327 | $1,244 | $1,682 | $1,572 | $1,513 | $1,468 | $1,385 |
| Average Unit Size | 814 | 818 | 904 | 977 | 950 | 893 | 922 |
| Average $/SF | $1.63 | $1.52 | $1.86 | $1.61 | $1.59 | $1.64 | $1.50 |
| Levels | 3 | 2 | 3 | 3 | 3 | 3 | 4 |
| Occupancy | 96% | 94% | 94% | 96% | 95% | 95% | 92% proforma |
| Distance from subject | 1.2 mi | 1.0 mi | 2.7 mi | 1.7 mi | 3.5 mi | 2.0 mi | |
| $/Unit (1x1) | $1,164 | $1,189 | $1,570 | $1,315 | $1,224 | $1,292 | $1,143 |
| SF (1x1) | 642 | 759 | 800 | 664 | 633 | 700 | 714 |
| $/SF (1x1) | $1.81 | $1.57 | $1.96 | $1.98 | $1.93 | $1.85 | $1.60 |
| $/Unit (2x2) | $1,459 | $1,509 | $2,150 | $1,905 | $1,836 | $1,772 | $1,475 |
| SF (2x2) | 925 | 998 | 1,136 | 1,235 | 1,208 | 1,100 | 1,008 |
| $/SF (2x2) | $1.58 | $1.51 | $1.89 | $1.54 | $1.52 | $1.61 | $1.46 |
| $/Unit (3x2) | $2,570 | $2,009 | $2,290 | $1,800 | |||
| SF (3x2) | 1,387 | 1,441 | 1,414 | 1,239 | |||
| $/SF (3x2) | $1.85 | $1.39 | $1.62 | $1.45 |
Sales Comparables
| The Copeland | Windsor Burnet | Crestview Commons | Parmer Place Apartments | Altair Tech Ridge | Averages | Subject | |||
| Date Sold | 10/15/2019 | 10/17/2019 | 10/1/2019 | 12/1/2020 | 11/1/2019 | 6/16/2021 | |||
| Year Built | 2019 | 2018 | 2018 | 2008 | 2019 | 2016 | 2012 | ||
| # of Units | 328 | 352 | 353 | 290 | 230 | 311 | 222 | ||
| Average Unit Size | 748 SF | 800 SF | 784 SF | 1144 SF | 860 SF | 867 SF | 922 SF | ||
| Sale Price | $72,300,000 | $89,300,000 | $79,900,000 | $44,750,000 | $42,500,000 | $65,750,000 | $38,500,000 | ||
| $/Unit | $220,427 | $253,693 | $226,346 | $154,310 | $184,783 | $207,912 | $173,423 | ||
| $/SF | $245 | $317 | $207 | $132 | $189 | $218 | $188 | ||
| Building Size | 295,102 SF | 281,703 SF | 385,806 SF | 339,956 SF | 225,355 SF | 305,585 SF | 204,787 SF | ||
| Distance from subject | 2.5 mi | 3.0 mi | 3.4 mi | 3.1 mi | 3.5 mi | 3.1 mi | |||
Market Overview
With approximately one million residents and population growth of 30% over the last 10 years, Austin is the 11th largest city in the United States, the 4th most populous in Texas, and ranks #2 nationwide in job growth. Over 15 Fortune 500 companies across the Technology (Apple, DELL Technologies, IBM Corp, Oracle Corp, Amazon, Facebook and soon Tesla), Manufacturing (3M, General Motors, NXP Semiconductors), and Financial (VISA, Charles Schwab, Citizens) industries are present in the Austin area.
The Property abuts to Highway 35 which provides a 9-mile commute (14 minutes) to Downtown Austin, which houses some of the largest employers in the nation such as Oracle, Dell, IBM, and Apple. The Property is ~12 miles from Tesla’s new Austin Gigafactory which is under construction and is expected to add around 5,000 new jobs to the market shortly after it delivers in May 2021.
Austin will be adding its first major league franchise in 2021 with the inception of Austin FC into Major League Soccer. Additionally, the City has confirmed and approved the Orange Line for the new metro rail that will be passing just two blocks from the Property. The Project is set to complete in 2027 and this planned metro line will provide commuters with convenient access to the Tech Ridge and Downtown Austin.
Submarket Overview
Lotus Village is located in the North Austin submarket with convenient access to the entire Austin MSA via I-35 less than a mile to the east, and both Highway 183 and the Mopac Expressway 2 miles to the west. Additionally, Lotus Village is located 3 miles east of The Domain – the master-planned retail and employment hub comprising over 300 acres which has been dubbed Austin’s second downtown. The Domain has offices leased to large tech employers such as Amazon, VRBO, and Facebook and is adjacent to over 130 shopping, dining, and entertainment options. The Property lays just 2 miles south of the Tech Ridge Center which is home to major employers such as Dell Technologies, Apple, IBM, and General Motors Innovation Center, among others. Lotus Village will continue to benefit from its location as the immediate area continues to grow, with the Austin FC soccer stadium slated to open just over 2 miles away in Spring of 2021 and Amazon’s 3.8 million square foot distribution center coming online in 2021 roughly 6 miles away.
Per Costar and Axiometrics, North Austin continues to benefit from the increasing demand for The Domain, office, retail, and apartments in the adjacent Northwest Austin Submarket. North Austin was historically limited to older vintage properties with lower rents (average vintage 1995), but investors and developers have begun to cater to the recent influx of wealthy tech professionals in the area. The average cost of homeownership in the North Austin submarket is $1,938 per month, exceeding stabilized rents by an average of $554/mo or 28.6%. Additionally, the median income to stabilized rent ratio is 4.31x. The average 10 and 20-year rent growth in the North Austin submarket are 4.1% and 2.6%, respectively.
Total Capitalization
| Sources of Funds | $ Amount | $/Unit |
| Debt | $29,600,000 | $133,333 |
| Additional Debt Future Funded (CapEx) | $600,000 | $2,703 |
| GP Investor Equity | $1,564,584 | $7,048 |
| LP Investor Equity | $7,250,001 | $32,658 |
| MogulREIT II | $2,500,000 | $11,261 |
| Total Sources of Funds | $41,514,585 | $187,003 |
| Uses of Funds | $ Amount | $/Unit |
| Purchase Price | $38,500,000 | $173,423 |
| RM Acquisition Fee | $385,000 | $1,734 |
| OREI Acquisition Fee | $481,250 | $2,168 |
| Loan Fee | $347,300 | $1,564 |
| Closing Costs | $250,000 | $1,126 |
| Future Funded CapEx | $600,000 | $2,703 |
| Working Capital & Unfunded CapEx | $575,000 | $2,590 |
| Escrows and Reserves | $342,735 | $1,544 |
| Other | $33,300 | $150 |
| Total Uses of Funds | $41,514,585 | $187,003 |
Please note that OREI's equity contribution may consist of friends and family equity and equity from funds controlled by OREI. 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.
The expected terms of the debt financing are as follows:
- Lender: LoanCore
- Term: 3+1+1
- Loan-to-Value: 76.9%
- Estimated Proceeds: $30,200,000
- Interest Type: Floating
- Spread Above One-Month LIBOR: 3.10%
- Interest-Only Period: 3+1+1
- Amortization: Interest Only
- Prepayment Terms: Yield maintenance through 18 months, no fees thereafter
- Loan Extensions: Yes with conditional approvals
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.
OREI intends to make distributions from Lotus Village Holdco, LLC as follows:
- To the Investors, pari passu, all operating cash flows to an 8.0% IRR;
- 75% / 25% (75% to Investors / 25% to Promote) of excess cash flow to a 12.0% IRR;
- 65% / 35% (65% to Investors / 35% to Promote) of excess cash flow thereafter.
OREI intends to make distributions to investors after the payment of the 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 November 2021 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of OREI, who may decide to delay distributions for any reason, including maintenance or capital reserves.
OREI will receive a promote as indicated above, and a portion of this promote may be received by RM Adviser, LLC.
| Cash Flow Summary | ||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
| Effective Gross Revenue | $3,359,974 | $3,752,821 | $3,957,781 | $4,172,737 | $4,535,026 | |
| Operating Expenses | $1,762,477 | $1,826,184 | $1,865,282 | $1,917,642 | $1,974,719 | |
| NOI Excluding Reserves | $1,597,497 | $1,926,637 | $2,092,500 | $2,255,095 | $2,560,307 | |
| Replacement Reserves | $55,278 | $56,384 | $57,511 | $58,662 | $59,835 | |
| NOI Including Reserves | $1,542,219 | $1,870,253 | $2,034,989 | $2,196,433 | $2,500,473* | |
| * NOI used for reversion value. | ||||||
| Project-Level Cash Flows | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||
| Net Cash Flow | -$11,314,585 | $679,899 | $703,119 | $797,363 | $20,191,943 | |
| Investor-Level Cash Flows* | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||
| Net Cash Flow | -$4,000,000 | $200,362 | $208,571 | $241,889 | $6,113,794 | |
| Investor-Level Cash Flows - Hypothetical $50,000 Investment* | ||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||
| Net Cash Flow | -$50,000 | $2,505 | $2,607 | $3,024 | $76,422 | |
*Returns are net of all fees including RM Admin's 1.0% administrative services fee.
NO ASSURANCE OF RETURN: The Company's pro-forma projections are based on assumptions regarding future events, such as the timing and extent of the recovery of the residential market and the stabilization of the debt markets. While the Manager believes that these assumptions are reasonable and achievable, the likelihood of its occurrence is subject to many factors that are not within the control of the Company or its Manager and that could impair the ability of the Company to meet its projections.
Certain fees and compensation will be paid over the life of the transaction; please refer to OREI's materials for details. The following fees and compensation will be paid(1)(2):
| One-Time Fees: | |||
| Type of Fee | Amount of Fee | Received By | Paid From |
| OREI Acquisition Fee | 1.25% of Purchase Price | OREI | Total Capitalization |
| RM Acquisition Fee | 1.0% of Purchase Price | RM Adviser, LLC | Total Capitalization |
| Recurring Fees: | |||
| Type of Fee | Amount of Fee | Received By | Paid From |
| Asset Management Fee | 1.5% of EGI | OREI | Operating Cash Flows |
| Administrative Services Fee | 1.0% of Equity* | RM Admin(2) | Cash Flow |
*Only applies to equity raised through the RealtyMogul Platform
(1) Fees may be deferred to reduce impact to investor distributions.
(2) 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 Lotus Village Holdco, 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.
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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.
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