TWO Capital Partners (“TWO”) is a private real estate investment and development firm based in Atlanta, Georgia that specializes in real estate development and acquisitions throughout the southeast United States. In addition, the company raises money and manages funds for direct investment in real estate.
The Management Team of TWO combines a unique set of skills and relationships that create a high performance team. The partners bring hands on experience and operating skills gained from developing, acquiring, leasing, managing, and financing over $1 billion of real estate assets. The partners’ expertise spans office, retail, multi-family, single-family, and mixed use and covers every functional discipline (investments, acquisitions, financing, planning, development, construction and leasing).
Specifically on office properties, the partners of TWO have a deep history in the Savannah market with site selection, predevelopment and preleasing of a 330,000 square foot office building and a 75,000 square foot medical office building in a mixed-use project called Savannah River Landing. The partners led the design team and construction due diligence while managing the local leasing team on all prospects, lease structures and profit implications. In addition, the partners identified and negotiated several corporate office leases in the Historic District of Savannah.
Located in the heart of Savannah's Historic District, the Property is a mixed-use office and retail building situated at the "main and main" intersection of Bull and Broughton Streets, the commercial and tourism center of Downtown Savannah. The Property is located blocks away from the Downtown riverfront and in the heart of the east/west retail corridor. Retail occupies the ground-floor while office occupies floors two through four. Retail tenants include Starbucks, Kayak Cafe, Sperry Top-Sider Shoes and Fitness on Broughton while Regus is the office tenant. The Property is a historic building built in 1959 with the most recent renovation occurring in 1992.
Major Tenants
Starbucks Corporation (NASDAQ: SBUX) operates as a roaster, marketer and retailer of specialty coffee worldwide. The company operates in four segments: Americas; Europe, Middle East, and Africa; China/Asia Pacific; and Channel Development. Starbucks currently operates approximately 22,000 cafes. Starbucks Corporation was founded in 1985 and is based in Seattle, Washington.
Regus is a multinational corporation that provides a global workplace such as executive offices. It currently operates approximately 2,300 business centers across 120 countries. Founded in Brussels, Belgium, in 1989, Regus is based in Luxembourg City, Luxembourg, has 6,500 employees, is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.
Sperry Top-Sider were the first boat shoes introduced into the boating and footwear markets. Today the Sperry brand is owned by Wolverine World Wide (NYSE: WWW) and is headquartered in Lexington, Massachusetts.
| Sales Comps | |||||
| Address | Sale Date | Size (Square Feet) | Price | $/Square Foot | |
| 214 Drayton Street | Feb-16 | 10,260 | $2,800,000 | $272.90 | |
| 10 Whitaker Street | Mar-15 | 11,160 | $2,700,000 | $241.94 | |
| 125 E. Broughton Street | Jul-14 | 5,400 | $1,208,000 | $223.70 | |
| 309 W. Broughton Street | Jun-14 | 5,400 | $1,199,401 | $222.11 | |
| 232 E. Broughton Street | May-14 | 10,000 | $1,945,000 | $194.50 | |
| 20 E. Broughton Street | Apr-14 | 5,400 | $1,450,000 | $268.52 | |
| 18 E. Broughton Street | Apr-14 | 8,052 | $1,900,000 | $235.97 | |
| Average | 7,953 | $237.15 | |||
| Subject | 54,945 | $137.26 | |||
| Leasing Comps | ||||
| Deal | Size (Square Foot) | Lease Rate | Term (Year) | Lease Type |
| 2 East Bryan Street | 4,085 | $20.00 | 5.0 | FS |
| 2 East Bryan Street | 3,354 | $20.59 | 3.0 | FS |
| 2 East Bryan Street | 954 | $20.88 | 3.0 | FS |
| 300 Bull Street | 9,640 | $24.75 | 3.0 | NNN |
| 7 East Congress Street | 4,030 | $22.00 | 5.0 | FS |
| 7 East Congress Street | 7,947 | $20.28 | 3.0 | FS |
| 22 Barnard Street | 3,920 | $29.00 | 10.0 | FS |
| 22 Barnard Street | 3,755 | $28.00 | 10.0 | FS |
| 22 Barnard Street | 2,011 | $28.00 | 10.0 | FS |
| Average | 4,411 | $23.25 | 5.8 | |
| Subject - In Place | 54,945 | $14.21 | ||
| Subject - Projected | 54,945 | $25.50 | ||
The comparables included in the above tables were either sourced from CoStar, Real Capital Analytics or they were provided by the Sponsor
| Total Capitalization | ||
| Sources of Funds | ||
| Debt | $6,000,000 | |
| Equity | $3,375,000 | |
| Total Sources of Funds | $9,375,000 | |
| Uses of Funds | ||
| Purchase Price | $7,542,000 | |
| Acquisition Fee | $150,000 | |
| Broker-Dealer Fee | $40,000 | |
| Pre-Development/Feasibility | $18,400 | |
| Financing Costs | $57,000 | |
| Tenant Improvements | $604,700 | |
| Exterior Deferred Maintenance | $42,500 | |
| Lobby Renovation | $78,750 | |
| Other Hard Costs | $30,000 | |
| Leasing Commissions | $278,474 | |
| Lender Reserve (Released at a 1.35x Debt Service Coverage) | $200,000 | |
| Legal Fees paid to Outside Counsel | $10,000 | |
| Soft Costs | $137,500 | |
| Owner Contingency | $185,676 | |
| Total Uses of Funds | $9,375,000 | |
The projected terms of the debt financing are as follows:
- Lender: Bank of North Georgia (Synovus)
- Proceeds: $6,000,000 ($1,500,000 will be reserved for renovation and leasing costs)
- Estimated Rate: 30-Day Libor plus 2.75%
- Amortization: 25 years, with two (2) years of interest-only
- Term: Three (3) years
- Extension Option: One (1), two (2) year term
- Recourse: Limited guaranty of $3,000,000 for each of the three principals
There can be no assurance that a lender will provide debt on the rates and terms noted above, or at all. All rates and terms of the debt financing are subject to lender approval, including but not limited to possible increases in capital reserve requirements for funds to be held in a lender controlled capital reserve account.
Capital Bull Street, LLC intends to make distributions to Realty Mogul 59, LLC as follows:
- Pro rata share of cash flow to a 10% Internal Rate of Return ("IRR") hurdle
- Excess balances will be split 80% to members pari passu and 20% to Sponsor to a 15% IRR hurdle
- Any excess balance will be split 60% to members pari passu and 40% to Sponsor
Distributions are projected to start in March 2017 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Sponsor, who may decide to delay distributions for any reason, including maintenance or capital reserves. Realty Mogul 59, LLC will distribute 100% of its share of excess cash flow (after expenses) to the members of Realty Mogul 59, LLC (the RealtyMogul.com investors). The manager of Realty Mogul 59, LLC will receive a portion (up to 10%) of the Sponsor's promote interest.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Effective Gross Revenue | $426,755 | $895,911 | $1,018,051 | $1,050,628 | $1,084,149 |
| Total Operating Expenses | $213,578 | $286,181 | $298,577 | $307,616 | $316,924 |
| Net Operating Income | $213,177 | $609,730 | $719,474 | $743,012 | $767,225 |
| Distributions to Realty Mogul 59, LLC Investors | $2,539 | $70,725 | $41,490 | $48,181 | $55,063 |
| Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | |
|---|---|---|---|---|---|
| Effective Gross Revenue | $1,118,640 | $1,154,126 | $1,180,193 | $1,185,922 | $1,250,273 |
| Total Operating Expenses | $326,511 | $336,384 | $346,133 | $355,330 | $367,140 |
| Net Operating Income | $792,129 | $817,742 | $834,060 | $830,592 | $883,133 |
| Distributions to Realty Mogul 59, LLC Investors | $62,141 | $69,419 | $73,859 | $72,274 | $3,173,481 |
Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
| One-Time Fees: | ||||
|---|---|---|---|---|
| Acquisition Fee | $150,000 | Sponsor | Capitalized Equity Contribution | 2.0% of the property purchase price |
| Broker-Dealer Fee | The greater of 4.0% or $40,000 | North Capital (1) | Capitalized Equity Contribution | 4.0% based on the amount of equity invested by Realty Mogul 59, LLC |
| Recurring Fees: | ||||
| Asset Management Fee | $48,000 (grown at CPI annually) | Sponsor | Operating Cash Flow | |
| Property Management Fee | 4% of the effective gross income | Sponsor | Operating Cash Flow | |
| Management and Administrative Fee | 1.5% of amount invested in Realty Mogul 59, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of Realty Mogul 59, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2) |
Notes:
(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.
(2) Fees may be deferred to reduce impact to investor distributions
The above presentation is based upon information supplied by the Sponsor or others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 59, LLC, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.
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.