DealPoint Merrill / Platinum Storage Group
DealPoint Merrill is an owner and operator of value-added and redevelopment assets, as well as the sponsor of real estate co-investment offerings. For more than 29 years, the principals and its affiliated companies have earned a reputation for client-centric management services from a broad range of financial institutions, public agencies, and individuals. DealPoint Merrill's services are built on one simple concept: they place clients' interests first and manage the assets as if they are their own. DealPoint Merrrill also co-invests in all of its investment properties. Based in Los Angeles, the company has established a track record of success with a scope of operations encompassing development and construction for its own account, third party asset and property management, as well as court appointment receivership and commercial loan workout strategies and negotiation services to solve complex issues for property owners and investors.
David Frank and Sterling P. McGregor are the owners and operating members of Deal Point Merrill, LLC and have the exclusive authority to manage and control all aspects of the business of the Company. The Manager operates two subsidiary companies:
Sperry Van Ness / Deal Point Merrill Property Corporation, a Delaware limited liability company, is a subsidiary of DealPoint Merrill, LLC that works closely with more than 165 national offices to provide superior investment brokerage services and property management services. Sperry Van Ness International Corporation (SVNIC), is one of the most innovative commercial brokerage firms in North America with approximately $8 billion in annual sales volumes. Our national brokerage platform is comprised of highly qualified and experienced specialists in office, industrial, retail, multi-family, self-storage land and investment real estate. In addition, the company has product specialists with intimate knowledge and experience by product type within their respective geographic market areas. This broad range of market expertise allows us to better meet our investor’s requirements and achieve exceptional results.
Sperry Van Ness/ DealPoint Merrill Equities, a Delaware limited liability company, is a subsidiary of DealPoint Merrill LLC, which provides Sperry Van Ness® advisors’ and their clients with value added real estate co-investment opportunities and development services. These investments also include tenant in common co-ownership, real estate funds and individual property offerings. The majority of our offerings consist of redevelopment or adaptive reuse, as well as, new development. Each of our investments are supported by strong investor relations with on-line paperless reporting, highly disciplined internal expense control and accounting infrastructure to include full reporting transparency and audited financials. All of our co-owned properties are internally managed with “day to day” asset management by company principals.
The Merrill Group of Companies, and its affiliate The Merrill Companies, based in Los Angeles since 1985, has established an enviable track record of success with a scope of operations encompassing development, acquisitions and property management for its own account. The managing members are David Frank and Sterling McGregor. The managers individually have over 28 years of commercial real estate and capital markets experience. The principals have acquired and or developed over 20 million SF of commercial and residential properties.
PRIOR PERFORMANCE OF THE MANAGER AND AFFILIATES
The information presented in this section presents the prior performance of investment projects for investor real estate programs (the “Affiliate Sponsored Programs”) managed by The Group of Merrill Companies (“The Merrill Companies”) or an Affiliate or predecessor of The Merrill Group of Companies. The principal of The Merrill Group of Companies is David Frank, who is also a principal of the Manager of DealPoint Merrill. The Merrill Group of Companies is not a manager or sponsor of this Offering and you should not assume that you will experience returns, if any, comparable to those experienced by investors in the Affiliate Sponsored Programs. Purchasers of Units will not acquire any interest in any Affiliate Sponsored Programs.
The principal business of The Merrill Group of Companies, LLC and its affiliates was the acquisition, development and management of commercial real estate properties. None of the real estate programs that The Merrill Group of Companies has been involved with were registered with the SEC or any state agency and, consequently, were not and are not subject to the various reporting requirements, proxy rules, and insider trading rules imposed by such agencies.
To view a list of properties that have been acquired and sold by The Merrill Companies and its predecessor entities from through 1998 through 2012 and a list of properties that are currently owned and/or operated by The Merrill Companies and its Affiliates, CLICK HERE.
Platinum Storage Group
Platinum Storage Group ("Platinum") is a privately-held, real estate company headquartered in Irvine, California.. Founded in 1999, Platinum Storage Group has developed an excellent reputation for their management, acquisition and development services in the self storage industry. Platinum currently operates a national platform consisting of 45 self storage facilities across 7 states and is actively expanding its portfolio through new acquisition and third-party management. Platinum's property management services include the following: day-to-day management, site staff evaluation and hiring, experienced staff of regional and district managers to ensure proper training and accountability, monthly visits by supervisors, delinquency control, constant analysis of operating reports, and competition reports.
The list below contains selected transactions from Platinum's management and acquisition portfolio.
American Mini Storage - 7020 N. Camino Martin Tucson, AZ 85741
Sierra Vista Central Self Storage - 4029 E. Golden Acres Rd. Sierra Vista, AZ 85650
Storage Direct Self Storage - 4200 N. Black Canyon Hwy. Phoenix, AZ 85017
A-Aarkvark Self Storage - 4490 Murphy Canyon Rd. San Diego, CA 92123
North Chester Mini Storage - 700 James Rd. Bakersfield, CA, 93308
Storage Direct Self Storage - 15262 Mojave Dr. Victorville, CA, 92394
Storage Direct Corona - 1790 Pomona Rd. Corona, CA, 92880
Storage Direct Self Storage - 998 Washington Blvd. Roseville, CA, 95678
U-Store Bell - 5427 Clara Street, Bell, CA, 90201
U-Store Hollywood - 6632 Lexington Avenue, Hollywood, CA, 90038-1306
L-K Self Storage - 8150 Tamarind Avenue, Fontana, CA, 92335
Delhi Mini Storage - 10733 Flower St. Delhi, CA 95315
Myers Mini Storage - 16464 Letteau Ave Delhi, CA 95315
Storage Direct Self Storage - 16422 Adelanto Rd. Adelanto, CA, 92301
Storage Direct Self Storage - 16990 Ceres Avenue, Fontana, CA, 92335
Storage Direct Self Storage - 225 S. Carlton Avenue, Blythe, 92225
Storage Direct Self Storage - 9818 DeSoto Avenue, Chatsworth, CA, 91311
Storage Direct Self Storage - 9428 Sheep Creek Rd. Phelan, CA, 92371
Super Storage - 6637 Van Buren, Riverside, CA, 92503
Burlington Self Storage - 104 W. Grove Street, Middleboro, MA, 2346
Dennis Mini Storage - 349 Hokum Rock Rd, Dennis, MA, 2638
Storage Unlimited Self Storage - 17 Terry Avenue, Burlington, MA, 1803
Storage Direct Self Storage - 143 Lafayette Rd. Hampton Falls, NH, 3844
Storage Direct Self Storage - 590 E. Silverado Ranch Blvd., 89183
Storage Direct Self Storage - 9890 Pollock Dr. Las Vegas, NV, 89183
Summit Plaza Self Storage - 4375 E. Sahara Avenue, Las Vegas, NV, 89104
Malibu Valley Self Storage - 4866 E. Russell Rd. Las Vegas, NV, 89120
Storage Direct Self Storage - 4349 S. Jones Blvd. Las Vegas, NV, 89103
Storage Direct Self Storage - 9420 Spectrum Dr. Austin, TX, 78717
Storage Direct Self Storage - 945 W New Hope Dr. Cedar Park, TX 78613
Storage Direct Self Storage - 3318 Old Bridge Rd. Woodbridge, VA, 22192
Mr. Frank started his career in real estate development after attending law school. In 1985, Mr. Frank founded The Merrill Companies, a privately held development, asset management, and leasing firm in Southern California. At age 27, Mr. Frank formed a retail shopping center development company. During this time the company completed 10 retail developments, and managed over 1 million square feet of value added retail shopping centers. In 1992, Mr. Frank began to handle bankruptcy matters and business reorganization as a Court Appointed Receiver and property manager for more than 400 complex real estate cases; his experience also included working with the Federal Deposit Insurance Corporation and another 75 public or institutional clients. By working with banks and lending institutions nationwide on their default loan portfolios, Mr. Frank’s expertise enabled the Company to diversify its management portfolio into multiple asset classes. Mr. Frank’s background in development, law, construction, asset and property management, positioned the Company to become one of the largest Federal and State Court Appointed Receivers in the nation for receivership and property management distressed portfolios. In 1997, he moved forward and co-founded NewMark Merrill Companies, a preeminent Los Angeles based retail shopping center developer, which acquired and developed millions of square feet of retail shopping centers and development projects. The company was ranked “Top 10 Property and Development Firms” in the Los Angeles area by the LA Business Journal. Continuing his retail, commercial, and multifamily development program in 2005, The Merrill Group of Companies developed anchor tenant shopping centers in established communities nationwide, bringing its hands on approach to planning and developing commercial and retail projects to their full potential. The Company currently has three offices in Los Angeles, California and Las Vegas, Nevada, and currently manages over 2.5 million square feet of commercial, retail, and multifamily units. Mr. Frank has been a member of ICSC (International Council of Shopping Centers) since 1985 and continues to support philanthropic organizations.
Mr. McGregor has over 20 years of commercial real estate experience and capital markets experience. Over the past decade, he has acquired and financed 20+ million SF of commercial and multi-family properties with values in excess of $2.5 billion in structured real estate securities transactions. He is responsible for acquisitions, due diligence and operations for the Manager. Mr. McGregor has over 20 years of commercial real estate and capital markets experience. Mr. McGregor was previously an owner and Executive Vice President of CORE Realty Holdings, LLC where he was responsible for acquisitions, financing and asset and property management as the Chief Investment Officer. Previously, he was an owner and Chief Investment Officer for several real estate sponsors, including a founding shareholder and Managing Director of Acquisitions of Triple Net Properties, Inc. Prior to his tenor with these real estate securities companies, Mr. McGregor was responsible for the management of several institutional quality portfolios for Wells Fargo Bank and Cal Fed Syndications, a NYSE real estate investment trust. Mr. McGregor holds his 22, 63 and 7 series securities licenses, is a California real estate broker and a certified general appraiser (inactive). Mr. McGregor earned his Bachelor’s degree in business management and finance from Brigham Young University. Mr. McGregor is a licensed representative of Financial West and will receive compensation from Financial West related to the sale of units.
As president for the firm, Mr. Gustafson is responsible for arranging debt and equity transactions for joint venture acquisitions and 1031 exchanges for Sperry Van Ness Advisor’s and their clients portfolio. With over 25 years of commercial real estate experience in underwriting, financing, and development background, Michael directs all of DealPoint Merrill Equities transactions. Mr. Gustafson was previously the Managing Director at Sperry Van Ness/Renaissance Commercial in Irvine, California. Prior to joining Sperry Van Ness, Michael served as the President of VP Commercial, LLC in Scottsdale, Arizona, which specialized in the acquisition and development of award winning retail, office and industrial development company. The firm’s portfolio grew in excess of $250 million square feet while being recognized as the top development companies from 2008- 2010. As the co-founder of “Vision Offices”, Mr. Gustafson directed office solutions for the Scottsdale based executive suite provider. He was responsible for the profitability, operations and staffing while providing the direction of its growth in the marketplace. While Mr. Gustafson worked to grow the Vision concept, his properties were recognized as the “Business Center of the year” four years in a row. His role as the Vice President for Daniel Fox and Associates, a national property condition assessment firm and as Hotel Director for Johnes Development, a prominent phoenix developer contributed to the $300 million Scottsdale Princess Hotel (now known as the Fairmont Princess) project.
Serving as Managing Director and Investment Property Specialist for Sperry Van Ness International in the Fresno market, Mark Mimms brings over 35 years of experience to the Sperry Van Ness Team. Mimms has closed over $1Billion in properties, and serves as an expert in the large projects division. Mimms entered the commercial real estate business in 1977 and served as president and owner of his own commercial real estate brokerage company until he joined Sperry Van Ness in the year 2000. A veteran in the industry, Mimms has been involved in a variety of large transactions in many jurisdictions including the sale of apartments, industrial buildings, office buildings, retail buildings, motels and land throughout the State of California. Mark’s client’s investment needs and desires have taken him to areas outside of the Fresno marketplace. Mimms has closed projects in Los Angeles, Beverly Hills, California, Hollywood, California, Sacramento, California, Baton Rouge, Louisiana, Lugoff, South Carolina, Charlotte, North Carolina, Dayton Ohio, Detroit, and most recently Grand Rapids, Michigan. Mark has formed the “Mimms Team”. With this Team we can provide complete commercial real estate services to our clients. Mimms is an active member of Christian Business Men’s Committee and has lived in the Fresno area for many years. He has been married for 38 years to Karen and they have two boys, Mark II, and Jon. In his spare time Mark enjoys golfing, motorcycles, weightlifting, and spending time with his family. Mimms received his bachelor’s degree in Criminology and Law Enforcement and a minor in real estate from the Fresno State University.
Johnna Howard is the Chief Financial Officer responsible for strategic planning, cash management and all financial accounting, for our portfolio of 94 properties. Her background includes over 25 years of experience in financial operations and management within the real estate sector.
Prior to joining Platinum, Johnna was the CFO at Thompson National Properties where she provided both strategic guidance and financial expertise to manage rapid growth from $20 million to $2.4 billion in assets under management. She was responsible for the acquisition of three companies including the integration of financial accounting data and the addition of new employees. She also oversaw the compliance of 10 commercial real estate investment programs with aggregate commitments in excess of $200 million.
Previous to her position at Thompson National Properties, Johnna was senior vice president and controller at IHP Capital Partners for ten years, where she managed the accounting department and compliance for five Investor Limited Partnerships, with aggregate commitments in excess of $1.4 billion. Howard earned a Bachelor of Business Administration degree with an emphasis in accounting from the University of San Diego and is a Certified Public Accountant.
As President, Genevieve Sigmund builds relationships with equity partners, identifies potential acquisition opportunities, forges alliances with key trade and industry groups and oversees investor relations for Platinum Storage Group. Additionally, she works closely with other key members of the executive team to manage the company’s financial and banking relationships, human resources and the integration of properties into the company’s growing nationwide portfolio.
Prior to joining Platinum, Ms. Sigmund worked in the political arena as a consultant on high profile campaigns at the national, state and local level. Ms. Sigmund earned a bachelor’s degree from the University of Southern California.
At A Glance
|Investment Strategy:||Buy and Hold|
|Hold Period:||3-5 years|
|Net Rentable Area:||53,150 square feet|
|Distributions to Realty Mogul 21, LLC:||8% preferred return with excess cash flow and appreciation shared 65/35|
DealPoint Merrill ("DPM") and Platinum Storage Group ("Platinum") (collectively, "the Managers") plan to acquire, improve, and lease-up American Mini Storage, an 53,150 square foot, 458-unit, self-storage facility located in an in-fill location outside Tucson, Arizona less than one mile from the Interstate 10. The property is currently 61% leased and is being purchased as a bank owned REO property at an estimated 10-15% discount to today's market value.
Realty Mogul investors have an opportunity to invest in Realty Mogul 21, LLC. Realty Mogul 21, LLC will subsequently invest in a new entity setup by the Managers, which will hold title to American Mini Storage. Investor distributions are projected to start after the first quarter post-closing.
The Managers plan to increase occupancy from 61% to 85% via proactive management, a replenished capital structure, and an updated internet marketing plan. The strategy is to renew expiring tenants and lease up the remaining vacancy by aggressively marketing the property using three (3) approaches:
- Develop a state of the art website
- Utilize search engine optimization techniques to drive traffic to the website
- Hire a nationally-recognized self-storage management company (Platinum Storage) to pursue commercial and residential tenancies
The occupancy rate is projected to improve gradually over the 3-5 year holding period and reach 80% by year three (3). The Managers also intend to implement a high impact lighting and signage plan as part of the rebranding and marketing effort, in addition to creating new storage income streams by installing a covered parking structure for boats and RVs. The property currently has 52 RV spaces and has room for an additional 50-60 stalls to be developed on the excess land for covered RV and boat parking, which have the potential to add $90,000 a year in new rental income. This additional rental income is not included in the financial projections. The property has also been approved for expansion with an additional 18,500 square feet of gross storage are which, if built, will replace the existing 52 RV spaces.
Platinum Storage Group ("Platinum") will be retained to manage the day to day operations of the property. Platinum is currently the 8th largest self-storage operator, with approximately 25,000 storage units and 3.3 million square feet of storage space under management across approximately 45 properties in 7 different states. Platinum has an ownership stake in 25 out of the 45 properties.
The Managers plan on holding the property for 3-5 years before exiting the investment, although the hold period may be longer or shorter. Realty Mogul investors have the opportunity to participate as equity stakeholders and earn a share of the cash-flow and appreciation. Investors can expect to receive quarterly updates and quarterly distributions, with the first distribution expected after the first quarter post-closing.
American Mini Storage represents a unique opportunity to invest in a self-storage facility located in an in-fill location that is being acquired at a significant discount as an REO property and invest alongside a highly experienced operator and management team. The property has existing, in-place cash flow while also offering investors significant value-add potential through improved occupancy and the development of entitled expansion space that would increase both the net operating income and sales value of the property.
- Value Add Off Market Purchase of an REO Property: The property is being purchased at a 10-15% discount to today's market value from a lender through an REO sale. The discount from market value is supported by a third party broker opinion of value and is significantly below the historical 2007 appraised value of $4.7 million. To view the broker opinion of value click HERE.
- Immediate Upside In Occupancy Growth: Through pro-active management, a replenished capital structure and an updated internet marketing plan, the Managers plan to increase occupancy from 61% to 85%, significantly increasing the revenue of the property.
- Additional Potential Upside from Expansion: The property has been approved for expansion with an additional 18,500 square feet of gross storage space and there is additional room for 50-60 stalls to be developed for RV and boat parking, which has the potential to add $90,000 a year in new rental income for estimated capital costs of only $50,000.
- Experienced Management and Alignment of Interest: DealPoint Merrill ("DPM") is an owner and operator of value-added and redevelopment assets, as well as the sponsor of real estate co-investment offerings. The executives of DPM have acquired over $2 billion in assets and attracted over $1 billion in equity for commercial real estate investments. Platinum Storage Group ("Platinum") has the 8th largest self-storage owner-operator in the country, with a portfolio of over 45 self-storage properties (ownership stake in 25 properties) across 7 states, including Arizona. Both DPM and Platinum will be investing in American Mini Storage.
- Outperforming Asset Class: Over the last several years, the self-storage sector has generally outperformed most other commercial asset classes. Self-storage has been a consistent performer throughout economic cycles and is known for being healthy in strong economies and resilient in downturns. The sharp decline in new supply growth in recent years has resulted in historically high net absorption rates, putting upward pressure on rents. Operating fundamentals and investor interest are resilient due to the wide array of demand drivers supporting the industry. Self storage has managed to maintain stable occupancies throughout the economic downturn. The sharp decline in new supply growth in recent years has resulted in historically high net absorption rates putting upward pressure on rents. Roughly 50,000 self storage facilities are in existence today. From 2009–2012 average annual new supply was only 2% of existing stock vs. 6% per year from 1994 – 2008. As evidenced by the outperformance of the public self storage sector vs. most other real estate asset classes during the economic downturn, operating fundamentals and investor interest are resilient due to the wide array of demand drivers supporting the industry. In addition, the declining US home ownership rate (which fell to 65.3% in 3Q13, down from a peak of 69% in 2004) and the large number of renters, who move on average every two to three years, continues to drive storage demand.
Risks and Risk Mitigation*
- Lease-up of Vacant Space: The property is currently only 61% leased. In order to increase occupancy to the planned 85% level, several existing tenants will need to renew their leases and a significant number of other tenants will need to sign new leases. However, through pro-active and experienced management as well as accompanying strong market area and demand drivers, DPM and Platinum believe that they will be successful in significantly increasing occupancy at the property to the projected levels. Additionally, the property is being purchased as an REO property at a price that DPM and Platinum believe represents a significant discount to current market value.
- Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 14, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
- Possible Decrease in Rents or Occupancy: Another risk associated with this transaction is the potential occurrence of a significant decrease in rents or occupancy; if enough effective vacancies occur, the property may not generate sufficient funds with which to meet any required loan payments and operating expenses.
- Rising Interest Rates and General Economic Conditions: The real estate investment market has been bolstered over the past few years by historically low interest rates. This trend is likely in the process of changing course, however, and rising interest rates may adversely affect future property valuations and the ability to obtain any necessary refinancing.
- Interest-Only Financing: This transaction employs interest-only financing. By delaying principal payments, interest-only mortgages can make refinancing more difficult at maturity and increase risk of the investment opportunity.
*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.
|Address:||7020 N. Camino Martin, Tucson, AZ 85741|
|Years Built / Renovated:||1998 / 2005|
|Net Rentable Area:||53,401 square feet|
|Total Units:||458 storage units
- 268 climate controlled
- 190 non-climate controlled
52 uncovered RV spaces
1 office space
The property was originally constructed in 1998 and consisted of 37,200 square feet but was further improved with an additional 16,800 square feet in 2005. The property consists of eight (8) buildings located on a 3.8-acre lot. The property conforms well to the surrounding neighborhood infrastructure and support services. The rental spaces include 268 climate controlled units, 190 non-climate controlled units, plus 52 uncovered RV spaces and 1 office space.
The property has been approved for expansion with an additional 18,500 square feet of gross storage area which, if built, will eliminate the 52 RV spaces. The property has surplus land that is available for immediate development. The office sits at the end of one of the storage buildings and is approximately 1,200 square feet in size. There is no manager apartment.
|UNIT TYPE||SF||UNITS||TOTAL SF|
|RV Boat 3||0||50||0|
|RV Boat 2||0||1||0|
|RV Boat 1||0||2||0|
A management operations history and two self storage market reports are attached below the map on the right hand side of this page for reference.
American Mini Storage is located outside of Tucson, Arizona, approximately 0.7 miles east of the Interstate 10. The facility is 0.2 mile from West Ina Road, which is a thoroughfare with a high traffic count. A board sign at the corner of West Ina & North Camino Martin lists some of the businesses located on North Camino Martin, with "American Mini Storage" located at the top of the sign.
Tucson Area Overview
Tucson is Arizona's second largest city behind Phoenix. The 2010 U.S. Census puts the city's population at 520,116, while the 2012 estimated population of the entire Tucson metropolitan area was over 900,000. Tucson have made an effort to attract advanced technology industry sectors, and Raytheon Missile Systems, Texas Instruments, IBM, Intuit Inc., Universal Avionics, Sunquest Information Systems, Sanofi-Aventis, Ventana Medical Systems, Inc., and Bombardier Aerospace all have a significant presence in Tucson. Many new business sites have also recently sprung up in the downtown area.
The University of Arizona, which has an enrollment of over 40,000 students is located in Tucson and one of the largest employers in the city. The Davis-Monthan Air Force Base, located within Tucson, and the presence of the US Army Intelligence Center located in nearby Fort Huachuca, has led to the development of a significant number of high-tech industries, including several government contractors, in the area. Other significant employers include Raytheon Missile Systems, the State of Arizona, Walmart and Tucson Unified School District. The city of Tucson is also a major hub for the Union Pacific Railroad's Sunset Route that links the Los Angeles ports with the South/Southeast regions of the country.
According to Cushman and Wakefield, a prominent national real estate firm, a large part of the appeal of self-storage facilities compared with other real estate investments is that costs can be relatively low. For example, the break-even occupancy rate for a self-storage facility is often in the 40-50% range, compared to 60% or more for apartment buildings. Consequently, self-storage facilities tend to hold value better and recover faster than other assets when real estate markets sour. A recent analysis by Cushman & Wakefield reviewed the total annual returns of the five property sectors from 1994 to 2012 and concluded that self-storage had the highest returns over 5, 10 and 15-year averaged periods.
Tucson Self-Storage Overview
There are six (6) competing self-storage facilities within a few miles of American Mini Storage. The Managers believe that the market occupancy for comparable properties is higher than 80%, which American Mini Storage is not projected to reach until year three (3) in the pro forma.
(877) 781-7062Contact Investor Relations