The team at our affiliated broker-dealer, RM Securities, conducts diligence on of the issuer, including detailed background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to screening for any criminal background, we may also turn down sponsors due to poor reference checks, even if the background and criminal checks are satisfactory.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent.* When an investor makes an investment with such sponsors using the RealtyMogul platform, the investor’s money is transferred directly into a third-party escrow account. All closing conditions in connection with a sponsor’s contingency offering need to be met before the third-party escrow agent will approve releasing investor funds to the issuer or general partner. For example, if an issuer or general partner plans to use funds for a real estate acquisition that does not ultimately transact, the third-party escrow agent will not transfer investor funds to the issuer or general partner, and funds will be returned to investors.
Unless otherwise disclosed, escrow accounts are not required for some investments that accommodate 1031 investments where the property is already acquired.
Our processes typically includes visiting certain properties (or a subset of properties if it's a fund) to confirm the real estate is what and where the real estate is supposed to be. For certain properties that accommodate 1031 exchange investments, the team will review third-party prepared due diligence reports in lieu of a site visit.
We have formalized processes and checklists for every private placement deal listed on the platform.
The Palladius team has taken careful consideration for the construction of the "PREF I" portfolio which aims to combine lower risk, cash-flowing assets with value-add high return communities resulting in a balanced fund of stable cash flows and attractive risk-adjusted upside.
New investors have an opportunity to deploy capital into a seeded portfolio of cash-flowing residential properties acquired at a discount to replacement costs and participate in Palladius' acquisitions pipeline.
The team in its current and prior firms has a compelling track record of value creation on realized investments. The team believes that its data-driven and hands-on operational approach enables it to have swift and nimble reactions to property level trends aimed to capture alpha.
Palladius Capital Management, LLC
Palladius is a tactically contrarian real estate investment manager that leverages institutional best practices, technology, and operational expertise in an effort to drive value creation for institutional and individual investors. Led by a team of commercial real estate, finance, and technology veterans, Palladius pursues value-add and core-plus strategies targeting multifamily, student housing, hospitality, and other thematic investment strategies through its affiliates. Based in Austin, TX, Palladius manages and operates approximately $400 million of real estate across the USA. Palladius is focused on building a highly progressive platform that promotes diversity and inclusion.
https://palladius.com/Historical Track Record Summary(1)
($ in millions) | Assets | Units / Beds (3) | MSA | Total Capitalization | Equity | Debt | Hold Period (Yrs) | Gross IRR | Gross Equity Multiple |
Net IRR | Net Equity Multiple |
Realized Investments(2) | |||||||||||
Student Housing | |||||||||||
Austin East End Portfolio | 3 | 810 / 2,284 | Austin | $70.5 | $23.5 | $47.0 | 2.8 | 61.2% | 4.1x | 49.6% | 3.3x |
Ballpark North | 1 | 282 / 768 | Austin | $31.6 | $8.3 | $23.3 | 6.1 | 43.3% | 5.0x | 37.6% | 3.8x |
Town Lake | 1 | 216 / 648 | Austin | $29.5 | $12.0 | $17.5 | 4.0 | 48.8% | 3.8x | 35.7% | 2.7x |
Multifamily | |||||||||||
Captiva | 1 | 357 | Tampa | $28.4 | $8.5 | $19.9 | 2.4 | 27.6% | 1.8x | 23.2% | 1.6x |
Ansley | 1 | 219 | Atlanta | $23.3 | $6.4 | $16.9 | 3.7 | 28.8% | 2.1x | 23.8% | 1.8x |
Three Corners Portfolio | 3 | 1,103 | Houston | $82.4 | $16.0 | $66.4 | 3.3 | 32.9% | 2.3x | 26.7% | 2.0x |
Villa De Palmas | 1 | 659 | Houston | $41.1 | $11.6 | $29.5 | 3.0 | 30.9% | 2.1x | 25.0% | 1.9x |
Westchase (1031 Exchange) | 1 | 400 | Houston | $53.1 | $22.4 | $30.7 | 4.1 | 16.0% | 1.8x | 13.8% | 1.7x |
Total / Average | 12 | 4,046 / 3,700 | $359.9 | $108.7 | $251.2 | 3.7 | 41.0% | 2.9x | 33.9% | 2.4x | |
PREF I, LP Portfolio | |||||||||||
($ in millions) | Acquired | Assets | Units / Beds(3) | MSA | Total Capitalization | Equity | Debt | Hold Period (Yrs)(4) | |||
Unrealized Investments | |||||||||||
Student Housing | |||||||||||
The Oasis | Feb 2022 | 1 | 240 / 672 | Austin | $31.6 | $10.3 | $21.3 | 4.0 | |||
Multifamily | |||||||||||
Dominion at Oak Forest | Oct 2021 | 1 | 136 | Houston | $25.5 | $6.4 | $19.1 | 4.0 | |||
Montabella at Oak Forest | Oct 2021 | 1 | 178 | Houston | $33.0 | $10.0 | $23.0 | 4.0 | |||
The Beverly at Shadow Lake | Dec 2021 | 1 | 624 | Houston | $113.8 | $31.6 | $82.2 | 4.0 | |||
100 Forest | Mar 2022 | 1 | 234 | Chicago | $82.6 | $22.2 | $60.4 | 4.0 | |||
The Chloe | Sep 2022 | 1 | 342 | Austin | $98.5 | $38.5 | $60.0 | 3.0 | |||
Total / Average | 6 | 1,754 / 672 | $385.0 | $118.9 | $266.0 | 3.8 | |||||
($ in millions) | Acquired | Assets | Units / Beds(3) | MSA | Total Capitalization | Equity | Debt | Hold Period (Yrs)(4) | |||
Unrealized Investments | ` | ||||||||||
Student Housing | |||||||||||
Avalon Place | Aug 2017 | 1 | 246 / 440 | San Antonio | $33.0 | $11.5 | $21.5 | 7.0 | |||
The Mix (1031 Exchange) | Jun 2021 | 1 | 237 / 685 | Atlanta | $80.1 | $32.0 | $48.1 | 7.0 | |||
Multifamily | |||||||||||
Parc at South Green | Sep 2017 | 1 | 428 | Houston | $38.6 | $13.0 | $25.6 | 7.0 | |||
District at Greenville (1031 Exchange) | Apr 2018 | 1 | 350 | Dallas | $57.1 | $23.5 | $33.6 | 7.0 | |||
Lux on Main (1031 Exchange) | Apr 2020 | 1 | 352 | Dallas | $63.4 | $21.6 | $41.8 | 7.0 | |||
Total / Average | 5 | 1,613 / 1,125 | $272.1 | $101.5 | $170.6 | 7.0 |
The above bios and track record were provided by Palladius Capital Management, LLC and have not been independently verified by RealtyMogul.
(1) All deals are prior to the formation of PCM. Please see endnotes in the Project Summary for important information.
(2) Performance information presented is through May 31, 2022 except as otherwise indicated. There can be no assurance that the return results will be consistent with the results set forth above. Please note that return calculations are provided for illustrative purposes and no single investor has experienced the performance stated above. For further information regarding the information presented, please see endnotes in the Project Summary.
(3) Beds are included within the individual units for student housing and are not in addition to the unit count.
(4) The “Hold Period (Yrs)” for the Unrealized Investments is estimated and based on the original underwriting at acquisition.
FUND AT A GLANCE
Fund Size | $100,000,000 | Target # of Properties | 6 to 8 |
Investment Period | Ends 4/8/2023 (+6 month extension) | Target Asset Classes | Multifamily & Student Housing |
Target IRR | 15%* - 20%* | Target Cash on Cash | 6%* - 8%* |
BUSINESS PLAN
The fund will seek to produce attractive risk-adjusted returns by making investments (“Investments”) through the acquisition, management, ownership, and disposition of interests in entities that own and operate real property assets. The fund will primarily target residential real estate assets, including multifamily rental and student housing rental properties. However, the manager may elect for the fund to provide equity to portfolio companies for the acquisition, rehabilitation, and/or construction of any type of real estate asset, including, without limitation, industrial real estate, commercial real estate, mixed-use properties, and hospitality-oriented real property assets.
Palladius utilizes a data-driven approach to identify where capital should be deployed and which assets to focus on. Below is an outline of their (UEEI) target market filter:
URBANIZATION – population critical mass
- MSAs with >900,000
- Demographic and density analysis
- Walkability index
- Concentration of jobs / educated young people
- Net rising income versus cost of living
EDUCATION – proximity to an educated workforce
- MSAs that have Tier 1 Universities and/or
- State government
- Projected student body growth
- University relationships with the private sector
EMPLOYMENT
- MSAs that have a concentration of future industries (high-tech / biotech / green energy)
- Identify cycle-resistant economies utilizing statistical methodologies
INFRASTRUCTURE
- In-place infrastructure to support long-term growth and the ability for companies to scale (air / water / road)
- Industrial / logistic centers and hubs
Execution plans are optimized by evaluating property-level key performance indicators. The manager will perform diligence on each potential investment to evaluate the merits of each investment opportunity. Such diligence will typically be based on certain key macro-level criteria and local market dynamics including the real estate market cycle, economic conditions, capital markets trends, capital flows, demographics, income levels, competing supply, and many other factors. In addition, the manager may consider specific asset features such as the location, construction quality and type, physical condition of the interior and exterior of the buildings, desirability of design and amenities, and/or tenant profile and mix.
Current Portfolio - Palladius Real Estate Fund I, LP
Property Name | Dominion at Oak Forest | Montabella at Oak Forest | Ranch at Shadow Lake | The Heights | 100 Forest | Citizen House |
Asset Information | ||||||
City, State | Houston, TX | Houston, TX | Houston, TX | San Marcos, TX | Chicago, IL | Kyle, TX |
Units / Beds | 136 | 178 | 624 | 240 / 672 | 234 | 342 |
Acquired | Oct 2021 | Oct 2021 | Dec 2021 | Feb 2022 | Mar 2022 | Sept 2022 |
Target Return Profile | Value-add | Value-add | Value-add | Value-add | Value-add | Value-Add |
Target Asset Type | Multifamily | Multifamily | Multifamily | Student Housing | Multifamily | Multifamily |
Total Capitalization | $25.5MM | $32.9MM | $113.8MM | $31.0MM | $81.6MM | $98.53M |
LTC% | 75.0% | 70.1% | 72.2% | 67.6% | 73.0% | 60.9% |
Equity ($ in MMs) | $6.4MM | $9.8MM | $31.6MM | $10.0MM | $22.1MM | $38.53M |
Target Hold Period | 4 Years | 4 Years | 4 Years | 4 Years | 4 Years | 3 Years |
Webinar from March 14, 2022
Target Geographies
The properties in which the fund invests are likely to be located primarily in suburban and urban areas and target investments will likely have some of the following characteristics:
- Opportunities to implement value-add strategies and raise rents significantly, typically as a result of building renovations, enhancement of onsite amenities, or other improvements to the assets.
- Under-managed assets where rents can be increased and/or expenses can be reduced based on the efficiency of onsite management.
- Located in markets with strong job growth and favorable demographic trends that are producing rental growth or growth in demand (taking into account the general increased desirability of suburban and exurban areas and reduced desirability of urban areas in light of the COVID-19 pandemic).
- Located in desirable suburban neighborhoods with easy access to employment, shopping, and entertainment.
- Acquisition price reflects a discount to current replacement cost.
Target Asset Classes
The fund will primarily target residential real estate assets, including multifamily rental and student housing rental properties. The manager will determine the amount and relative size of the fund’s investment into these types of assets based on a variety of factors.
Palladius Capital Management, LLC intends to make distributions as follows:
- Return of Investor Capital Contribution(s)
- Preferred Return to Investors 7% per annum, compounded annually
- Catch-Up to General Partner until the General Partner has received 25% of Preferred Return paid to Investors
- Excess: 75% to Investors and 25% to General Partner (“Fund Carried Interest”)
Palladius Capital Management, LLC 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).
Distributions are expected to start in August 2022 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Palladius Capital Management, LLC, who may decide to delay distributions for any reason, including maintenance or capital reserves.
Palladius Capital Management, LLC will receive a promoted/carried interest as indicated above.
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.
Certain fees and compensation will be paid over the life of the transaction; please refer to Palladius Capital Management, LLC's materials for details. The following fees and compensation will be paid(1)(2)(3)(4)(5)(6)(7)(8):
Real Estate Company Fees: | |||
Type of Fee | Amount of Fee | Received By | Paid From |
Acquisition Fee | 1.25% of total purchase price | Sponsor | Deal Capitalization |
Construction Management Fee(1) | 7.00% of hard and soft costs | Sponsor | Deal Capitalization |
Financing Fee(2) | 1.00% of debt proceeds | Debt Broker | Deal Capitalization |
Fund Liquidation Fee(3) | $70,000 | Sponsor | The Fund |
Recurring Fees: | |||
Type of Fee | Amount of Fee | Received By | Paid From |
Management Fee (Fund) | 1.50% on capital deployed | Sponsor | Cash Flow |
Asset Management Fee (Property) | 1.50% of effective gross property income | Sponsor | Cash Flow |
Administrative Services Fee(4) | 1.00% of equity invested | RM Admin, LLC(5) | Cash Flow |
(1) In exchange for overseeing any capital projects (including without limitation tenant improvements or other remodeling work) with respect to an Investment or Portfolio Company, the Fund Manager or one of its affiliates may charge such Investment or Portfolio Company a construction management fee (the “Construction Management Fee”) in an amount up to the market rate for such fees (generally equal to a fixed percentage of the total costs of any construction) as may be determined in good faith by the Fund Manager or the Fund GP.
(2) Financing fees are generally payable to third parties in connection with financings and refinancings and are determined based upon market conditions with third parties. To the extent that the third party fee is less than 1.00% of loan proceeds, the Sponsor and its affiliates may retain any savings.
(3) One-time liquidation fee budgeted for expenses associated with fund liquidation at the end of fund life
(4) Only applies to equity raised through the RealtyMogul Platform
(5) 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.
(6) Fees may be deferred to reduce impact to investor distributions.
(7) 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 Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe information on this Page is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete and subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.
Risk of InvestmentThis investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.
No Reliance on Forward-Looking Statements; Sponsor AssumptionsSponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.
Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.
No Reliance on Past PerformanceAny description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.
Sponsor’s Use of DebtA substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.
Sponsor’s Offering is Not RegisteredSponsor’s securities offering will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement”). In addition, the offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership interests) are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.
No Investment AdviceNothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
1031 Exchange RiskInternal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.