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Funded
Residential
La Vida Build For Rent Tucson
Tucson, AZ
INVESTMENT STRATEGY
Development
INVESTMENT TYPE
Equity
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100% funded
Offered By DSW Commercial and Deloache Capital
20.7%* TARGET IRR 19.7%-21.7%
1.41X* TARGET EQUITY MULTIPLE
Estimated Hold Period 2 Years
Estimated First Distribution 2/2024
Minimum Investment 25000
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
DSW's three La Vida projects are infill build-for-rent communities located in prime locations in Tucson, Arizona.
Location

Each La Vida project is surrounded by established residential housing. The locations for each project are prime sites in Tucson. Two of the projects are in northwest Tucson off of River Road at the base of the Catalina Foothills and the third project is located in the very successful Civano master-planned community on the southeast side of Tucson.

Market

The build-for-rent market is one of the most desirable destinations for investments, especially in high growth geographies like Arizona. The lack of affordable housing coupled with increases in "rentorship" are driving demand for rental housing communities like La Vida.

Capital Appreciation

The DSW team has identified small infill sites that can be built out quickly. The communities are expected to lease up quickly, allowing for rapid capital appreciation and ultimately a quick sale of the stabilized communities at an IRR projected to exceed 20% for investors.

Property At A Glance
# of Units 102
Return on Cost 5.72%
Construction Start Date March 2022
Stabilization Date June 2023
Exit Cap Rate 5.1%
Land Acquisition Price

$2,322,449

Investment Highlights
The Sponsor expects each of the Projects' multiples on equity invested to range between 1.35x - 1.55x in two years.
Total cost of $309,000 per unit and exit at $341,000 per unit, assuming a conservative 5.1% exit cap rate.
Each La Vida community is completely surrounded by existing residential housing in prime Tucson locations.
The average vacancy in the target submarkets is approximately 3.5-4.5% with strong demographics.
DSW has a 20+ year track record in the Tucson market, and G.S. Jaggi's involvement in the Project adds significant credibility.
Non-recourse financing at 80% LTC, which should allow strong returns from capital appreciation.
Management
Cumulative Distributions

DSW Commercial and Deloache Capital

DSW Commercial

DSW was established in Tucson, Arizona by Michael Sarabia (DSW Commercial Principal) and Mark Schnuck (DESCO Group Principal) in 2001 as a full service commercial real estate firm in partnership with The DESCO Group, a leading development, property management and investment company based in St. Louis, Missouri. DSW Commercial Real Estate (formerly DESCO Southwest) began to build alliances with Arizona brokers and identified investment and development opportunities in the Tucson and Phoenix markets.

DSW Commercial Real Estate has developed several successful projects in the Arizona Market with projects such as the Skyline Esplanade office complex in Tucson, the unique redevelopment of the Phoenix Union High School in downtown Phoenix as a facility to accommodate the University of Arizona College of Medicine, and the construction of the Stapley Corporate Center in Mesa, Arizona. DSW Commercial Real Estate has developed approximately 1,000,000 square feet of office, medical and retail space.

In 2016, Michael Sarabia and James Hardman negotiated the purchase of the operating platform for DSW Commercial Real Estate from the DESCO Group to continue to develop and invest in commercial real estate and operate the property management and brokerage business independent from the DESCO Group. Since that time, DSW Commercial Real Estate has invested in nearly $125 million dollars of commercial real estate. Currently, DSW Commercial Real Estate manages over one million square feet of office, medical and retail real estate and is currently developing a number of office, medical and retail centers.

https://dswcommercial.com/

Deloache Capital

Deloache Capital (“Deloache”) is a commercial real estate (“CRE”) finance company that is currently deploying capital for Deloache Capital Fund I (the “Fund”).  The Fund is making investments in and providing liquidity for, commercial real estate assets.  Their investment philosophy is simple:  find great people, provide capital into the right structure and find strong potential in the real estate.  Deloache was founded as a collaboration between highly successful institutions: Thomas Title & Escrow (“Thomas Title”) and Presidium Group (“Presidium”).  Thomas Title is a leading commercial real estate title insurance agency.  Established in 2006, Thomas Title has closed over $30 billion in CRE transaction volume.  Frank Busch is the Founder of Thomas Title and serves as the Managing Principal of Deloache.  On June 1, 2021, Thomas Title was sold to Stewart Title (NYSE:STC), and Frank Busch remains the CEO of Thomas Title.  Presidium is a large CRE development company that has deployed over $4 billion in such transactions generating a 2.9x cash-on-cash return for a 40% Gross IRR on over $1 billion of realized investments.  Presidium’s Co-CEOs John Griggs and Cross Moceri are Principals of Deloache.  The Fund’s General Partner (“GP”) has committed to investing $3 million of the Fund’s capital commitments.  Deloache has deep expertise in the rental housing sector.  

https://www.deloachecapital.com/

G.S. Jaggi

One of DSW's top investor partners, G.S. Jaggi, is involved in these projects. Jaggi is considered one of the early pioneers of build-for-rent housing. G.S. Jaggi has 20 years of entrepreneurial experience and founded Iridius Capital in 2011 to bring Avilla Homes communities to market. Under Mr. Jaggi’s leadership, Iridius’ portfolio has grown to include multifamily, office, retail, and hotel properties. Mr. Jaggi has overseen the acquisition and/or development of over one billion dollars in real estate assets. Prior to founding Iridius Capital, Mr. Jaggi was the founder and CEO of one of the largest privately-held mortgage banks in the United States.

  • Michael Sarabia
    CEO, DSW Commercial
  • James Hardman
    Principal, DSW Commercial
  • John Griggs
    Principal, Deloache Capital
  • Cross Moceri
    Principal, Deloache Capital
  • Frank W. Busch III
    Principal, Deloache Capital
  • G.S. Jaggi
    Principal
Michael Sarabia
CEO, DSW Commercial

Michael A. Sarabia, CEO of DSW Commercial, developed and implemented DSW’s investment platform and strategy in the western United States. Prior to this investment platform, Michael worked on ground-up commercial real estate development with expertise in entitlement and construction. His extensive knowledge and experience in the areas of pre-development and due diligence have been a valuable asset in underwriting targeted investments. Michael brings a “hands-on” approach to this course of action. Michael’s ability to identify market voids and conduct in-depth feasibility studies coupled with his understanding of area demographics is the cornerstone of DSW Commercial. He has the experience necessary to navigate the complex equity and financing components of acquisitions. Michael is a graduate of the University of Arizona, a licensed broker in the state of Arizona, a member of Southern Arizona Leadership Council (SALC) and a member of the International Council of Shopping Centers (ICSC).

James Hardman
Principal, DSW Commercial

James Hardman, Director of Asset Management & Leasing, oversees DSW’s managed portfolio including third-party asset management, lease administration, office association management, and facilities management. James is also involved in site analysis, acquisition, and development of DSW investments. James has been active in the industry since 1997. James joined DSW Commercial in 2004 as a commercial real estate agent and property manager. James’ brokerage transactions include the sale/ purchase of investment properties, tenant representation/lease negotiation, landlord representation /lease negotiation and owner/user acquisitions. A graduate of the University of Arizona with a B.S. degree in Regional Development, James is a certified member of the CCIM Institute, the International Council of Shopping Centers (ICSC), Urban Land Institute (ULI) and the Metropolitan Pima Alliance (MPA).

John Griggs
Principal, Deloache Capital

John Griggs is an experienced real estate investor and business leader with over 20 years of experience. John currently serves as Co-CEO and Co-Founder of Presidium, a multifamily owner, operator, and developer based in Texas with over 3,200 units in the development pipeline and 13,000 apartment units under ownership, as well as several office, retail and land holdings. Presidium started by acquiring small multifamily properties in Arizona in 2003, expanded to Texas in 2005, and ultimately Oklahoma, Florida, and Maine by 2013. Presidium manages its assets with a vertically integrated operating company of over 300 employees. Its investment partners range from ultra-high net worth investors to institutional equity investors in North America, Europe and Asia. John focuses on all operational and financial aspects of Presidium’s $1.5 billion portfolio, including capitalization, refinances, dispositions, as well as asset and property management. In addition to his real estate investment and management experience, from 2012-2015, John oversaw Presidium Asset Solutions, a Special Servicer he co-owned, and facilitated the workout and disposition of over $1.8 billion of distressed debt. He also actively invests in oil and gas, solar energy and technology. Prior to cofounding Presidium, John practiced law at Wilson Sonsini Goodrich & Rosati for 5 years, advising over 20 growth companies on equity and debt placement and the full range of corporate governance matters. Prior to Wilson Sonsini, John began his career as an associate attorney at Milbank Tweed Hadley & McCloy in Los Angeles for 3 years where he advised companies on general corporate matters, high-yield debt and public and private equity offerings. John graduated from Stanford University with Honors and Distinction in 1995 with an A.B. in Political Science.  He attended the University of Michigan Law School, where he was a member of the Michigan Law Review and earned a J.D. in 1998. John is a member of the Young Presidents’ Organization and the Stanford Real Estate Council.

Cross Moceri
Principal, Deloache Capital

Cross Moceri is an experienced real estate investor and business leader with over 20 years of experience. Cross currently serves as Co-CEO and Co-Founder of Presidium, a multifamily owner, operator, and developer based in Texas with over 3,200 units in the development pipeline and 13,000 apartment units under ownership, as well as several office, retail and land holdings. Presidium started by acquiring small multifamily properties in Arizona in 2003, expanded to Texas in 2005, and ultimately Oklahoma, Florida, and Maine by 2013. Presidium manages its assets with a vertically integrated operating company of over 300 employees. Its investment partners range from ultra-high net worth investors to institutional equity investors in North America, Europe and Asia. Cross is primarily responsible for development, capital formation, acquisitions, financial structuring, and portfolio development. Over the past decade, Cross has spearheaded more than $1.5 billion of real estate investments. In addition to his real estate investment and management experience, from 2012-2015, Cross oversaw Presidium Asset Solutions, a Special Servicer he co-owned, and facilitated the workout and disposition of over $1.8 billion of distressed debt. He also actively invests in oil and gas, solar energy and technology. Prior to co-founding Presidium, Cross practiced law at Milbank Tweed Hadley & McCloy for 7 years where he advised companies on general corporate matters, high-yield debt and public and private equity offerings. Cross graduated from the University of Notre Dame in 1996 with a B.A. in Philosophy. He attended the University of Michigan Law School where he earned a J.D. in 1999.

Frank W. Busch III
Principal, Deloache Capital

Frank is the President and CEO of Thomas Title & Escrow, one of the leading national commercial title agencies in the U.S., and its related companies, which include 1031 exchange and corporate escrow services. His businesses have closed in excess of $30 billion in transaction volume since inception. An experienced commercial real estate investor, Frank has successfully invested in numerous assets located in markets throughout the Southwestern U.S. Frank also serves as Managing Partner of TLA, LLC, which provides escrow and settlement services for real estate and corporate transactions throughout Latin America. Prior to founding Thomas Title & Escrow in 2006, Frank served as Corporate Counsel of a $4 billion bank holding company, where he was primarily responsible for advising the bank and its affiliates on M&A, regulatory matters, credit decisions and structuring supplier relationships. From 2000 to 2002, he was a corporate and securities lawyer in the Phoenix office of Snell & Wilmer L.L.P., the largest law firm in the Southwestern U.S., advising public and private companies in M&A, debt and equity issuances, securitizations and venture capital financings. Prior to Snell & Wilmer, he worked in the Mexico City office of the international law firm Baker & McKenzie. Frank attended the University of Arizona, Honors College, where he earned a Bachelor of Science in Business Administration, magna cum laude. He earned his J.D. from the University of California, Hastings College of the Law. He also attended Universidad Iberoamericana, Mexico City, completing a semester of Mexican legal studies, and Universidad LaSalle in Mexico City, completing a semester of business courses.

G.S. Jaggi
Principal

G.S. Jaggi has 20 years of entrepreneurial experience and founded Iridius Capital in 2011 to bring Avilla Homes communities to market. Under Mr. Jaggi’s leadership, Iridius’ portfolio has grown to include multifamily, office, retail and hotel properties. Mr. Jaggi has overseen the acquisition and/or development of over one billion dollars in real estate assets. Prior to founding Iridius Capital, Mr. Jaggi was founder and CEO of one of the largest privately held mortgage banks in the United States.

Track Record

DSW Track Record

Property City, State Asset Type Acq Date SF Purchase Price Sale Price
Glenn Medical Tucson, AZ Medical Office Sep-02 35,000 SF $650,000 $5,900,000
Skyline Espalande Tucson, AZ Office Oct-03 75,000 SF $1,400,000 $19,000,000
College of Medicine Phoenix, AZ Medical Office Oct-06 50,000 SF $10,000,000 $22,000,000
Stapley Retail Mesa, AZ Retail Dec-06 14,210 SF $800,000 $6,000,000
Stapley Corporate Mesa, AZ Office Dec-06 180,000 SF $3,400,000 $34,000,000
Skyline II Tucson, AZ Office Nov-09 31,000 SF $1,200,000 $11,000,000
Grant Road Professional Tucson, AZ Medical Office Dec-10 42,000 SF $850,000 $10,000,000
Wilmot Plaza Tucson, AZ Retail Nov-16 139,000 SF $47,000,000 Projected $53,000,000
Feldmans Plaza Tucson, AZ Retail Jan-17 10,200 SF $1,400,000 Projected $5,400,000
Mesa Spectrum Mesa, AZ Power Center Mar-18 262,000 SF $42,000,000 Projected $48,000,000
Campbell Plaza Tucson, AZ Retail Oct-18 191,000 SF $35,000,000 Projected $45,000,000

G.S. Jaggi Track Record

Property City, State Asset Type Acq Date Units Land Cost Sale Price
Pima Canyon Apartments Tucson, AZ Multifamily Feb-17 240 $5,025,000 $45,850,000
Avilla Tanque Verde(85) Tucson, AZ Built for Rent Jul-11 85 $1,577,961 $12,300,000
Avilla Marana I(160) Tucson, AZ Built for Rent Mar-12 166 $2,450,000 $26,560,000
Avilla River(76) Tucson, AZ Built for Rent Oct-12 76 $970,000 $11,400,000
Avila Preserve(186) Tucson, AZ Built for Rent Feb-13 186 $2,790,000 $27,600,000
Avilla San Marcos I(112) Phoenix, AZ Built for Rent Sep-13 112 $2,375,000 $20,832,000
Avilla San Marcos II(145) Phoenix, AZ Built for Rent Jan-14 145 $3,080,000 $26,970,000
Avilla Sabino I (West)(53) Tucson, AZ Built for Rent Aug-14 53 $1,428,010 $11,763,704
Avilla Marana II(118) Tucson, AZ Built for Rent Oct-14 118 $2,184,000 $18,880,000
Avilla Sabino II (East)(130) Tucson, AZ Built for Rent Apr-15 130 $4,750,000 $30,736,296
Avilla Palm Valley(125) Phoenix, AZ Built for Rent Sep-14 125 $2,421,108 $25,100,000
Avilla Grace(193) Phoenix, AZ Built for Rent Jun-15 194 $5,085,834 $45,000,000
Avilla Heights(116) Phoenix, AZ Built for Rent Dec-15 116 $2,850,000 $27,840,000
Avilla Premier(122) Dallas, TX Built for Rent Oct-15 122 $3,920,400 $29,150,000
Avilla Town Square(152) Phoenix, AZ Built for Rent Sep-15 152 $4,000,502 $42,600,000
Avilla Victoria (Phase I)(119) Phoenix, AZ Built for Rent Dec-15 119 $2,319,134 $29,440,029
Avilla Victoria (Phase II)(105) Phoenix, AZ Built for Rent May-17 106 $2,338,880 $26,059,971
RendezVous Urban Flats Tucson, AZ Multifamily Oct-18 100 $2,650,000 $52,000,000 (Projected)
44 Monroe Phoenix, AZ Multifamily Mid 2015 184 $51,000,000 $91,000,000 (Projected)
Linda Vista Oro Valley, AZ Multifamily Jul-21 64 $1,500,000 $22,460,000 (Projected)
Avilla Deer Valley Phoenix, AZ Built for Rent Aug-16 125 $3,800,000 -
Avilla Northside Dallas, TX Built for Rent Jul-16 118 $3,293,136 -
Avilla Lehi Crossing Phoenix, AZ Built for Rent May-17 117 $2,340,016 -
Avilla Centerra Crossing Phoenix, AZ Built for Rent Sep-17 184 $3,157,500 -
Avilla Buffalo Run Denver, CO Built for Rent Feb-18 123 $1,845,000 -
Avilla Meadows Phoenix, AZ Built for Rent Mar-18 127 $2,352,230 -
Avilla Camelback Ranch Phoenix, AZ Built for Rent Oct-17 127 $1,728,000 -
Avilla Heritage Dallas, TX Built for Rent Jun-18 140 $2,493,270 -
Avilla Prairie Center Denver, CO Built for Rent Sep-18 136 $2,000,000 -
Avilla Gateway (Phase I) Phoenix, AZ Built for Rent Dec-18 127 $2,475,751 -
Avilla Eastlake Denver, CO Built for Rent Sep-19 244 $8,014,000 -
Avilla Lago Phoenix, AZ Built for Rent Sep-20 120 $2,250,000 -
Avilla Paseo Phoenix, AZ Built for Rent Sep-19 89 $1,600,000 -
Avilla Reserve Dallas, TX Built for Rent Jun-19 227 $4,700,000 -
Avilla Canyon Phoenix, AZ Built for Rent Sep-20 211 $4,500,000 -
Avilla Gateway (Phase II) Phoenix, AZ Built for Rent Dec-18 101 $2,330,733 -
Avilla Magnolia Phoenix, AZ Built for Rent Sep-20 166 $2,305,000 -
Avilla Fossil Creek Dallas, TX Built for Rent Dec-19 112 $3,200,000 -
Avilla Parkway Dallas, TX Built for Rent Mar-20 108 $2,872,219 -
Avilla Lakeridge Dallas, TX Built for Rent Nov-20 170 $3,441,678 -
Avilla Oakridge Dallas, TX Built for Rent Oct-20 209 $3,225,906 -
Avilla Suncoast Tampa, FL Built for Rent Dec-20 152 $3,737,000 -
Avilla Traditions Dallas, TX Built for Rent Nov-20 218 $4,944,816 -
Avilla Grove Dallas, TX Built for Rent Dec-19 200 $4,008,201 -
Avilla Grand Phoenix, AZ Built for Rent Jan-21 267 $5,898,024 -

The above bios and track record were provided by the Sponsor and have not been independently verified by RealtyMogul.

Business Plan

DSW in conjunction with Deloache will develop residential build-for-rent infill housing projects in Tucson, AZ. The principals of this group have a long history of successful real estate development in Southern Arizona, across multiple asset classes. The development team will build small build-for-rent projects (30-50 units) in infill locations that are acquired, entitled, and programmed for development.

  • La Vida at 1100 (River 1) is a 2.05-acre site located on River Road that will accommodate 29 rental units east of La Canada Road.
  • La Vida at River & La Cholla (River 2) is a 4.11-acre site located on River Road that will accommodate 46 rental units east of La Cholla Road.
  • Both 1100 W. River and River and La Cholla were recently successfully rezoned to allow high-density residential to accommodate the two development projects. These infill sites currently have a population of over 200,000 people within five miles. The quarterly vacancy rate in the target market ranges between 3.3% and 4.8%.
  • Vida at Civano (Civano) is a 2.02-acre site located on Drexel Road, east of Houghton Road. The site will accommodate a 27-unit residential development. The Civano infill site currently has a population of 80,335 within five miles. The quarterly vacancy rate in the Civano target market is approximately 4.4%.

All the sites will have amenities not available in competitor properties, including garages and outdoor decks. In addition, the sites all have a desirable location and proximity to entertainment, shopping, restaurants, and proximity to the River Walk which is a recreational focal point in the metro area. DSW has engaged a civil engineer, a land planner, a land-use attorney, and an architectural firm to garner necessary approvals for the project. The engagement contracts have commenced for the consultants' work. Approved entitlements for the parcels and the requisite permits were received in January of 2022 for River I and River II.

The construction contract and budget have been recently approved and the lender has been chosen for the project. The loan is expected to fund and construction to start on the first of the projects (1100 W. River) in late February to early March of 2022, each subsequent project will start 60-90 days later. Total project construction for each one of the three projects is estimated at 9-12 months. Lease-up is expected to occur quickly for the units, and the Sponsor would then seek to sell the projects quickly - likely within a year after completion of construction).

Development Costs:

Acquisition Costs $ Amount Per Unit Per SF
   Purchase Price $2,322,449 $22,769 $20
   Closing Costs $436,667 $4,281 $4
   Financing Costs $1,807,466 $17,720 $16
   Acquisition Fee  $46,449 $455 $0
Total Acquisition Costs $4,613,031 $45,226 $40
       
Hard Costs $ Amount Per Unit Per SF
   Hard Costs (GC) $22,305,159 $218,678 $193
   Hard Cost Contingency $446,103 $4,374 $4
Total Hard Costs $22,751,262 $223,052 $197
       
Soft Costs $ Amount Per Unit Per SF
   Developer Fee $429,587 $4,212 $4
   Architect / Engineering $399,960 $3,921 $3
   Permit and Impact Fees $1,902,753 $18,654 $17
   Professional Fees - General Legal $401,900 $3,940 $3
   Additional Contingency $55,834 $547 $0
Total Softs Costs $3,190,034 $31,275 $28
       
Reserves $990,751 $9,713 $9
       
Grand Total $31,545,078 $309,265 $274
Property
Property Details

DSW's three La Vida projects are build-for-rent communities ranging from 29 doors to 46 doors. Located in prime locations in Tucson, these projects are completely surrounded by quality residential housing with very low vacancy (4-5% approximately). All projects are completely entitled and are shovel-ready. The build-for-rent housing sector is considered to be one of the hottest investments in real estate today. One of DSW's top investor partners, G.S. Jaggi, is involved in these projects. Jaggi is considered one of the early pioneers of build-for-rent housing.

River 1

Floor Plan # of Units Avg SF/Unit $ / Unit $ / SF % of Total
River 1 2x2 12 1,026 $1,621 $1.58 41%
River 1 3x2 17 1,187 $1,911 $1.61 59%
Total/Averages 29 1,120 $1,791 $1.60 100%

River 2

Floor Plan # of Units Avg SF/Unit $ / Unit $ / SF % of Total
River 2 2x2 15 1,026 $1,652 $1.61 33%
River 2 3x2 31 1,187 $1,935 $1.63 67%
Total/Averages 46 1,135 $1,843 $1.62 100%

River 3

Floor Plan # of Units Avg SF/Unit $ / Unit $ / SF % of Total
Civano 2x2 9 1,026 $1,611 $1.57 33%
Civano 3x2 18 1,187 $1,899 $1.60 67%
Total/Averages 27 1,133 $1,803 $1.59 100%

Combined

  # of Units Avg SF/Unit $ / Unit $ / SF
Total/Averages 102 1,130 $1,817 $1.61

 

Comparables

Lease Comparables

  Avilla River The Hedrick on Mountain McCormick Urban Living Avila Tanque Verde Sabino Vista Averages Subject
Year Built 2013 2020 2017 2011 2014 2015 2022
# of Units 76 60 25 85 53 60 102
Average Rental Rate $1,764 $1,743 $2,035 $1,794 $2,129 $1,893 $1,817
Average Unit Size 984 SF 1,000 SF 1,289 SF 971 SF 1,102 SF 1,069 SF 1,130 SF
Average $/SF $1.79/SF $1.74/SF $1.58/SF $1.85/SF $1.93/SF $1.78/SF $1.61/SF
Distance from subject 0.1 mi 3.5 mi 5.4 mi 7.9 mi 9.6 mi    
               
$/Unit (2x2) $1,751 $1,660 $1,815 $1,775 $1,949 $1,790 $1,631
SF (2x2) 965 SF 900 SF 1,142 SF 922 SF 965 SF 979 SF 1,026 SF
$/SF (2x2) $1.81/SF $1.84/SF $1.59/SF $1.93/SF $2.02/SF $1.84/SF $1.59/SF
               
$/Unit (3x2) $1,991 $1,868 $2,139 $2,049 $2,315 $2,072 $1,919
SF (3x2) 1,244 SF 1,150 SF 1,358 SF 1,244 SF 1,244 SF 1,248 SF 1,187 SF
$/SF (3x2) $1.60/SF $1.62/SF $1.58/SF $1.65/SF $1.86/SF $1.66/SF $1.62/SF

Sales Comparables

  McCormick Urban Living Galeria del Rio Averages Subject
Date Sold 7/1/2021 2/1/2020   July 2023
Year Built 2014 2017 2016 2022
# of Units 101 25 63 102
Average Unit Size 1,573 SF 1,289 SF 1,431 SF 1,130 SF
Sale Price $32,025,000 $8,150,000 $20,087,500 $34,783,036
$/Unit $317,079 $326,000 $321,540 $341,010
$/SF $202/SF $253/SF $227/SF $302/SF
Building Size 158,870 SF 32,222 SF 95,546 SF 115,278 SF
Distance from subject 0.9 mi 5.4 mi 3.2 mi  
Location

Market Overview

The Tucson apartment market has performed well throughout the pandemic. Vacancies were low heading into 2020 and were supported by limited single-family construction and steady employment and population growth. Tucson was not immune to the impact of the virus, but its recovery has been swift compared to other metro areas. Rents temporarily dipped during the onset of the pandemic but returned to pre-pandemic levels within months. The impressive performance is due to an influx of new residents that are able to work remotely and are searching for affordability in Tucson. Additionally, federal and state stimulus has gone a long way in Tucson, and with the aid, renters have been able to pay the rent. In the years before the pandemic, employment growth gained momentum following a long and slow recovery from the Great Recession. Tucson was attracting businesses that were generating quality jobs and supporting higher incomes. An acceleration in job growth and the large student renter pool supported apartment demand. Net absorption had outpaced new supply on an annual basis for most of the past decade, compressing vacancies near all-time lows. Sales volume reached a record high in 2020, and that momentum has carried into 2021. Tucson has been a liquid market for multifamily players, especially for its size. The market is expected to continue to attract opportunistic buyers looking for higher cap rates than can be realized in their home states. The expanding pull of out-of-state buyers has bolstered competition and pushed up pricing, which has squeezed out some of the local players in the market.

Submarket Overview

Two of DSW's projects are located in northern Tucson, specifically the Casas Adobes area. These submarkets have achieved the most significant rent growth and consist of affluent neighborhoods and command some of the highest rents in the metro. The other DSW project (Civano) is located in southeastern Tucson, specifically in the unique Civano neighborhood that was conceived in the late 1990's as a model for a sustainable community and originally envisioned as “Tucson’s Solar Community.” At the core of the neighborhood is the one-acre neighborhood center with a landscaped plaza.  The neighborhood also features a neighborhood center, tennis court, two swimming pools, a shaded playground for tots, a community garden, an expansive nursery, and over 50 local businesses - including a dance studio, optometrist, naturopathic doctor, hair salon, fitness studio, cafe, and more.  The project sits near a small community school (K-5) and middle school that are part of the highly ranking Vail School District.  

Photos
Financials
Sources & Uses

Total Capitalization

Sources of Funds $ Amount $/Unit
Debt $25,236,062 $247,412
GP Investor Equity $1,264,016 $12,392
LP Investor Equity $5,045,000 $49,461
Total Sources of Funds $31,545,078 $309,265
     
Uses of Funds $ Amount $/Unit
Land Acquisition Cost $2,322,449 $22,769
Closing Costs* $2,290,582 $22,457
Hard Costs $22,751,262 $223,052
Soft Costs $3,190,034 $31,275
Reserve $990,751 $9,713
Total Uses of Funds $31,545,078 $309,265

The Sponsor’s equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor.

(1) RM Technologies, LLC, an affiliate of RealtyMogul, operates the RealtyMogul Platform.  RM Technologies, LLC charges a fixed, non-percentage-based fee for real estate companies and their sponsors to use the Platform and for Platform-related services.  Please see the Fees and Disclaimers sections below for additional information concerning fees paid to RM Technologies, LLC. 

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Lender: Trez Capital
  • Term: 16 months commencing from the Interest Adjustment Date
  • Loan to Cost:  80.0%
  • Estimated Proceeds: $25,236,062
  • Interest Type: Floating
  • Spread Above One-Month LIBOR: 4.25% over the Wall Street Journal Prime Rate (WSJ) per annum, payable monthly and calculated on a 365 day basis with a floor rate of 7.5%
  • Interest-Only Period: Full-term
  • Amortization: N/A
  • Prepayment Terms: N/A
  • Extension Requirements: Borrower may request, within sixty (60) days notice of expiration of the Term, two (2) six (6) months extension options, subject to the satisfaction of customary extension conditions, including, without limitation to:
    a. Payment of 0.5% of the outstanding balance for the first Extension Option and 0.5% of the outstanding balance for the second Extension Option; 
    b. LTV at completion to be no more than 76% of the stabilized value as determined by the Lender;
    c. No Event of Default shall exist, and no event shall have occurred and no condition shall exist which, after notice or lapse of time, or both, would constitute an Event of Default.

There can be no assurance that the Sponsor will secure debt on the rates and terms noted above, or at all.  All of the Sponsor’s estimated 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 risk of loss.  If the Sponsor were unable to pay the payments on the borrowed funds (called a "default"), the lender might foreclose, and the Sponsor could lose its investment in its property.

Distributions

DSW intends to make distributions as follows:

  1. To the Investors, pari passu, all operating cash flows to a 10.0% IRR;
  2. 65% / 35% (65% to Investors / 35% to Promote/Carried Interest) of excess cash flow to a 20.0% IRR;
  3. 50% / 50% (50% to Investors / 50% to Promote/Carried Interest) of excess cash flow thereafter.

DSW 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 February 2024 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of DSW, who may decide to delay distributions for any reason, including maintenance or capital reserves.

DSW will receive a promoted/carried interest as indicated above, and a portion of this promoted/carried interest may be received by RM Admin, LLC.

Cash Flow Summary
    Year 1 Year 2
Effective Gross Revenue   $39,988 $2,033,941
Total Operating Expenses   $70,448 $374,618
Net Operating Income   ($30,460) $1,659,323
           
Project-Level Cash Flows
  Year 0 Year 1 Year 2
Net Cash Flow ($6,309,016) $0 $9,597,349
           
Investor-Level Cash Flows(1)
  Year 0 Year 1 Year 2
Net Cash Flow ($5,045,000) $0 $7,122,147
           
Investor-Level Cash Flows - Hypothetical $50,000 Investment(1)
  Year 0 Year 1 Year 2
Net Cash Flow ($50,000) $0 $70,586

(1) Returns are net of all fees.  Such Fees include fees paid to RM Admin, an affiliate of RealtyMogul, who charges an annual fixed administrative fee for providing certain ongoing administrative services to the Sponsor.  Please see the Fees and Disclaimers sections and Disclaimers sections below for additional information concerning fees paid to RM Admin. 

RM Technologies, LLC and its affiliates does not provide any assurance of returns.  The content on this Page, including Sponsor’s pro forma projections, was provided by the Sponsor or an affiliate thereof.  Although RM Technologies, LLC believes the Sponsor reliably produced this content, RM Technologies, LLC makes no representations or warranties as to the accuracy of such information and accepts no liability therefor.  The assumptions and projections included in the content on this Page, including the Sponsor’s pro forma projections, are not reflective of the position of RM Technologies, LLC or any other person or entity other than the Sponsor or its affiliates.  There can be no assurances that all or any of the Sponsor’s assumptions will be true, that actual performance will bear any relation to these hypothetical illustrations, or that the Sponsor’s investment objectives will be achieved.  For additional information concerning the Sponsor’s assumptions and projections, and the significant risks involved in investing in real estate, please see the Disclaimers section below. 

Fees

Certain fees and compensation will be paid over the life of the transaction; please refer to DSW's materials for details. The following fees and compensation will be paid(1)(2)(3)(4):

One-Time Fees:
Type of Fee Amount of Fee Received By Paid From
Developer Fee 1.5% of the hard cost for River 1 and River 2, 3.0% of the hard cost for Civano DSW Capitalization
Acquisition Fee 2.0% of the Land Purchase Price DSW Capitalization
Loan Guarantee Fee 2.0% of Loan Proceeds G.S. Jaggi Capitalization
       
Recurring Fees:
Type of Fee Amount of Fee Received By Paid From
Administrative Services Fee 1.0% of Equity Invested(1) RM Admin(3) Cash Flow
Asset Management Fee 1.0% of Invested Capital DSW Cash Flow

(1) Only applies to equity raised through the RealtyMogul Platform

(2) Fees may be deferred to reduce impact to investor distributions.

(3) RM Technologies, LLC, an affiliate of RealtyMogul, operates the RealtyMogul Platform.  RM Technologies, LLC charges a fixed, non-percentage-based fee for real estate companies and their sponsors to use the RM Technologies, LLC’s proprietary Platform and receive Platform-related services.  An estimate of this fee is included in the Closing Costs above and is intended to be capitalized into the transaction at the discretion of the Sponsor.  The Platform fees received by RM Technologies, LLC are disclosed in the relevant operating agreement(s).  RM Technologies LLC’s receipt of Platform fees creates a conflict of interest between RealtyMogul and its affiliates, and investors or prospective investors.

(4) RM Admin, an affiliate of RealtyMogul, charges an annual fixed administrative fee for providing certain ongoing administrative services to the Sponsor. RM Admin’s administrative services and fees are disclosed in the relevant operating agreement(s). RM Admin’s receipt of administrative fees creates a conflict of interest between RealtyMogul and its affiliates, and investors or prospective investors.

Disclaimers/FAQs
Disclaimers

The content on this Page was provided by the Sponsor or an affiliate thereof.  Although RM Technologies, LLC believes the Sponsor reliably produced this content, RM Technologies, LLC makes no representations or warranties as to the accuracy of such information and accepts no liability therefor.  No part of the content and information on this Page is intended to be binding on RM Technologies, LLC or its affiliates, or to supersede any of the Sponsor’s offering materials.  None of the opinions expressed on this Page are the opinions of, nor are they endorsed by, RM Technologies, LLC or its affiliates.

The content on this Page, including of the principal terms of the Sponsor’s offering, is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s 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").  The content on this Page 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.  The content on this page should not be used as a primary basis for an investor’s decision to invest.  In the event of an inconsistency between the content on this Page and the Investment Documents, investors should rely on the information contained in the Investment Documents.  The content on this Page and the information in the Investment Documents are subject to last minute changes up to the closing date at the discretion of the Sponsor. 

Assumptions and projections included in the content on this Page are not reflective of the position of RM Technologies, LLC or its affiliates, or any other person or entity other than the Sponsor or its affiliates.  There can be no assurance that the Sponsor’s methodology used for calculating any projections, including Target IRR, Target Annualized Cash-on-Cash Return, and Target Equity Multiple (“Targets”), are appropriate or adequate.  The Sponsor’s Targets are hypothetical, are not based on actual investment results, and are presented solely for the purpose of providing insight into the Sponsor’s investment objectives, detailing its anticipated risk and reward characteristics and for establishing a benchmark for future evaluation of the Sponsor’s performance. The Sponsor’s Targets are not a predictor, projection or guarantee of future performance.  There can be no assurance that the Sponsor’s Targets will be met or that the Sponsor will be successful in meeting these Targets.  Target returns should not be used as a primary basis for an investor’s decision to invest.

This real estate investment is speculative and involves substantial risk.  There can be no assurances that all or any of the assumptions will be true or that actual performance will bear any relation to the hypothetical illustrations herein, and no guarantee or representation is made that investment objectives of the Sponsor will be achieved.  In the event that actual performance is below the Sponsor’s Targets, your investment could be materially and adversely affected, and there can be no assurance that investors will not suffer significant losses.  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.  Please see the Sponsor’s Investment Documents for additional information, including the Sponsor’s discussion concerning risk factors.

Please see the applicable Investment Documents for disclosure relating to forward-looking statements.  All forward-looking statements attributable to the Sponsor or its affiliates apply only as of the date of the offering and are expressly qualified in their entirety by the cautionary statements included elsewhere in the Investment Documents.  Any financial projections are preliminary and subject to change; the Sponsor undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.  Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.

The interests offered by the Sponsor 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 interests will not be registered under any state securities laws in reliance on exemptions from registration.  Such interests are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption.  All Private Placements on the RealtyMogul Platform are intended solely for “Accredited Investors,” as that term is defined Rule 501(a) of the Securities Act.  Prospective investors must certify that they are Accredited Investors and provide either certain supporting documents or third party verification, and must acknowledge that they have received and read all investment materials.

RM Technologies, LLC, an affiliate of RealtyMogul, operates the RealtyMogul Platform.  RM Technologies, LLC charges a fixed, non-percentage-based fee for real estate companies and their sponsors to use the RM Technologies LLC’s proprietary Platform and receive Platform-related services.  An estimate of this fee is included in the Closing Costs above and is intended to be capitalized into the transaction at the discretion of the Sponsor.  The Platform fees received by RM Technologies, LLC are disclosed in the relevant operating agreement(s). RM Technologies LLC’s receipt of Platform fees creates a conflict of interest between RealtyMogul and its affiliates, and investors or prospective investors.

RM Admin, an affiliate of RealtyMogul, charges an annual fixed administrative fee for providing certain ongoing administrative services to the Sponsor.  RM Admin’s administrative services and fees are disclosed in the relevant operating agreement(s). RM Admin’s receipt of administrative fees creates a conflict of interest between RealtyMogul and its affiliates, and investors or prospective investors.

RealtyMogul is not a registered broker-dealer, investment adviser or crowdfunding portal.  Nothing on this Page should not be regarded as investment advice, either on behalf of 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, and we recommend that you consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any real estate investment.

For additional information on risks and disclosures visit https://www.realtymogul.com/investment-disclosure.

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