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Funded
Office
Downtown Savannah Mixed-Use - Starbucks and Regus
Savannah, GA
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By TWO Capital Partners
15.1%* TARGET IRR 15.1%-%
5.4%* TARGET AVG CASH ON CASH
3.61* TARGET EQUITY MULTIPLE
Estimated Hold Period 10 years
Estimated First Distribution 3/2017
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Overview
Property at a glance
Year Built/Renovated 1959/1992
Total Square Feet 54,945
Number of Floors Four
Number of Tenants Six
Acquisition Price

$7,542,000

Investment Highlights
"Main & Main" Location
In Place Cash Flow with Upside Potential
Experienced Commercial Real Estate Sponsor
Management
Cumulative Distributions

TWO Capital Partners

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.

http://www.twocapitalpartners.com
  • Wes G. Taubel
    Managing Partner
  • Ralph B. Wilson, III
    Managing Partner
  • Sean M. O'Brien
    Managing Partner
Wes G. Taubel
Managing Partner

Mr. Taubel has an extensive background in real estate development and construction, having built or developed over $350 million in real estate, primarily in mixed use and multifamily.  Mr. Taubel has a deep knowledge of medium to high density residential having entitled and master planned in excess of $1 billion of urban mixed use residential projects.  In his role at TWO he is responsible for setting the strategic direction of the Firm, sourcing opportunities and managing the entire development and acquisition process for the projects the Firm undertakes.

Prior to founding TWO, Mr. Taubel was an Assistant Vice President of Development at Ambling Companies, Inc., a full service multi-family real estate development firm located in Atlanta, Georgia.  Mr. Taubel was responsible for all aspects of project development on all conventional and commercial transactions. Mr. Taubel was responsible for the development, master planning and entitlement of over three million square feet of urban mixed use transaction. He has successfully negotiated numerous municipal development agreements, facilitated the creation of TADs and repeatedly worked with municipalities to create custom and innovated zoning and entitlement classifications for multi-phased mixed use transactions.  Prior to Ambling Mr. Taubel was a Regional Development Manager at Ashwood Development handling all aspects of land development in Atlanta and Northwest Florida, totaling over 1,800 lots and multiple commercial parcels.  Prior to that, Mr. Taubel was an Assistant Project Manager at Hardin Construction working on multiple hotels and luxury condominiums totaling over $100 million in construction value, most notably the Intercontinental Hotel - Buckhead.

Mr. Taubel is a graduate of Auburn University with a Bachelor’s of Science in Building Science and a minor in Business.  Mr. Taubel graduated with honors from the Goizueta Business School at Emory University, earning his MBA and membership in the National Business Honorary Society, Beta Gamma Sigma.  Mr. Taubel is an active member of the Urban Land Institute and ICSC.

Ralph B. Wilson, III
Managing Partner

Mr. Wilson has an extensive background in the investments and financing of real estate assets, having financed and developed over 2,500 units of multi-family with an approximate value of $300 million.  In his role at TWO, he is responsible for the overall operations and management of the firm with a particular focus on investment origination, capital structuring and asset management.

Prior to founding TWO, Mr. Wilson was a Finance Director for Ambling Companies, Inc., a full service multi-family real estate development firm located in Atlanta, Georgia.  In his role as Finance Director Mr. Wilson was responsible for all aspects of Project Finance and Asset Management including, legal structuring, securing competitive financing programs, investment capital formation, asset management and dispositions on conventional and affordable housing development transactions.  With a wide mix of development experience in different asset classes at Ambling Companies, Mr. Wilson has been involved with the underwriting and execution of over $1 billion dollars of real estate development.  Mr. Wilson is an expert in structuring, layering, sourcing and the packaging of multiple non-traditional funds and resources necessary to support multi-family projects.  Specific areas of demonstrated expertise include: debt structuring, utilization of tax credits, public - private partnerships, government sponsored loans, tax exempt bonds and green initiative dollars.

Mr. Wilson is a graduate of the University of Florida where he earned a Bachelor’s degree in Finance.  He is a Leadership in Energy and Environmental Design (LEED) Accredited Professional affiliated with best green practices for new developments and project renovations.

Sean M. O'Brien
Managing Partner

Mr. O’Brien owns and operates O’Brien & Company, a full service real estate consulting, brokerage and development company based in Atlanta, Georgia.  In his role at TWO, he is responsible for Fund organization, capital raising, investor relations and site selection.

O’Brien & Company, founded in 2003 has completed over 600 real estate transactions in the capacity of tenant representation for such clients as Staples, Gander Mountain, Home Depot, RadioShack, GameStop, C2 Education, Camping World, Arby’s, Palm Beach Tan, Stoney River Steakhouse, Fatburger, Caribou Coffee, SportClips, Ten Thousand Villages, Yum! Brands and Stevi B’s Pizza.  The firm differentiates itself from its competition through its rigorous market research, intimate knowledge of its clients’ needs and through focused, detailed performance modeling of retail units.  Prior to starting O’Brien & Company, Mr. O’Brien was a leasing agent for Equity Investment Group where he was responsible for redeveloping, leasing and managing several shopping centers throughout the southeast.

Mr. O’Brien is a graduate of Arizona State University with a Bachelor’s of Science in Marketing.  Mr. O’Brien earned his MBA from the Goizueta Business School at Emory University.

Track Record

Property Address Type Year
Acquired
# of
Units
Square Feet Total Capitalization Date Sold Sale Price
Capital Circle, Largo, MD Land 2011 N/A N/A $6,360,000 9/1/2011 $7,632,000
Capital Place at Southwood, Tallahassee, FL MF 2012 216 N/A $21,505,000 4/1/2015 $27,875,000
Virginia Commons, Tifton, GA Retail 2013 N/A 36,500 $1,950,000 12/1/2014 $2,900,000
Capital Club at Goldley Station, Savannah, GA MF 2013 256 N/A $25,144,320 5/1/2015 $34,975,000
Capital Park at 72, Huntsville, AL MF 2014 233 N/A $24,460,000    
Capital Creek at Heritage, Wake Forest, NC MF 2015 214 N/A $25,860,000    
Capital Crest at Godley Station, Savannah, GA MF 2015 203 N/A $25,350,000    
Total     1,122 36,500 $130,629,320    
Business Plan

In this transaction, RealtyMogul.com investors will invest in Realty Mogul 59, LLC. Realty Mogul 59, LLC will subsequently invest in Capital Bull Street, LLC, the entity that will hold title to the Property.

Upon acquisition, TWO Capital Partners (the "Sponsor") plans to:

  • Demo the third and fourth floors for conversion from single-tenant floors to multi-tenant floors.
  • Build out an approximately 2,700 square foot spec office space. 
  • Renovate and modernize the lobby and restrooms.
  • Hire the local CBRE office to lease the Property to market occupancy and rental rates.

CBRE is the current leasing agent on the Property and has already seen improving interest since a new ownership group has been announced.  CBRE and the Sponsor plan to meet with all the leasing agents in the city to reintroduce the asset to the community.

The Property is currently about 47% vacant with the submarket averaging 7.5% vacancy.  Because of the central location and quality of the Property, RM and the recent CBRE appraisal used 5% vacancy in the UW and appraisal, respectively, beginning in year three.  In-place rents average $14.00 per square foot while the UW market rents are $25.50 per square foot according to the recent CBRE appraisal and representative market comparables.  Also, the master lease (please see the FAQs for more information on master leases) for the majority of the retail is currently paying $6.63 per square foot when market is around $35.00 per square foot according to the recent CBRE appraisal.  The current retail situation allows the Property potential upside with in place rents being under market.  There is a lack of upgraded office space in the Broughton Street area.

Property

RealtyMogul.com, along with TWO Capital Partners (the "Sponsor"), is providing the opportunity to invest in the acquisition and ownership of an approximately 54,945 square foot office and retail property located in Savannah, GA (the "Property").

The primary objective of this investment is to acquire the Property below replacement cost, perform renovations to the lobby and vacant spaces, lease the vacant space and sell the Property within approximately ten (10) years. 

The Sponsor sees this investment as an opportunity to capitalize on an under managed asset with an irreplaceable location in an in-demand, historic market.

Property Details

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.

Comparables

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 

Location

The Property is located in Historic Downtown Savannah, the largest National Historic Landmark District in the United States.  Its historic architecture, cobblestone streets, manicured gardens and live oak-shaded squares decorated by fountains and sculpture make it one of the most beautiful cities in the world.  In addition, it is a very walkable city, thanks to the urban plan laid by General Oglethorpe in 1733.  Many Savannah urbanites claim the City’s lush squares as their front yards.  Not only is it walkable, you can take your cocktails to go as you stroll through this neighborhood and visit the shops, cafes, art galleries and museums.  Downtown Savannah is alive with residents, tourists, business people and students and is never short on activities.  Downtown Savannah forms the city’s governmental, financial and cultural hub.  Area hotels are reporting occupancy around 70% as a result of a strong tourism industry.  Savannah’s Historic District encompasses a 2.5-square-mile area with 2,358 architecturally or historically significant buildings.  Approximately 85% to 90% of these buildings have been restored and with the support of the Savannah Development and Renewal Authority (SDRA), more restoration projects are planned. 

Atlanta developer, Ben Carter, announced his plan for The Broughton Street Collection in early 2014.  This $75 million project, funded in part by Acadia Realty Trust (NYSE: AKR), was aimed at revitalizing historic Broughton Street.  Currently, this project contains 37 properties totaling about 700,000 square feet.  About a third is ground-floor retail, another third is office space and the remainder is apartments.  The Subject property is in the heart of this revitalization at the true "main & main", Bull and Broughton Streets.

The Savannah College of Art and Design (“SCAD”) is a large institute of higher learning, located in downtown Savannah.  The institution offers a variety of degree programs, with roughly 8,000 students, including roughly 10% international students.  SCAD plays a vital economic role to the regional economy, as one of the largest employers in the region.  The school is comprised of over 60 facilities, totaling 1.5 million square feet of space in Savannah’s downtown neighborhoods.

Along the south side of the Savannah River is River Street, which extends about 10 blocks and is one of the major tourist attractions in Savannah.  The subject has a prominent location, just south of the central portion of River Street.  This cobblestone river walk features over 100 retail, restaurant/bar, and hotel uses, occupancy historic storefronts.  Retailers include candy shops, art galleries and apparel and gift stores.  Restaurants and bars range from the Chart House to Wet Willies, home of the “world’s greatest daiquiris”.  Inns and hotels include charming bed and breakfasts in restored inns to the Hyatt Regency Savannah and the Savannah Marriott Riverfront.

A couple of blocks south from River Street is City Market where art studios, galleries and specialty shops occupy a restored two-block market square.  In addition, the development includes some upper level office uses as well as street level restaurants.

Photos of the Market

                         

Market Overview

According to CBRE, the makeup of Savannah’s employment is changing and doing so swiftly. Professional and business services employment growth has raced ahead of the pack, growing 12.3% year-over-year, while mining, construction, and government job growth has trended downward. This is a boon for Savannah’s increasing number of millennials, who as a group are more likely to be employed in one of these growing number of professional and business services jobs. Since 2010, Savannah’s population has seen the percentage of millennials jump from 23% to 26%. By 2020, millennials could make up over a third of Savannah’s population. As the number of jobs in the professional and business service sector increases along with the labor force to fill them, Savannah’s office market could begin to heat up—especially in the urban core of the city where millennials are more likely to reside.

Submarket Overview

According to CBRE, office space in the revitalized heart of Historic Downtown Savannah does not come cheap. Asking office rents in area are $25.00 per square foot - 25% higher than the average for downtown Savannah.

Demographic Information

Demographics 1 Mile 3 Miles 5 Miles
Population (2015)   10,265 65,909 112,576
Growth (2010-2015) 2.46% 5.35% 5.41%
Growth (2015-2020) 5.88% 6.53% 6.54%
Median HH Income (2015)  $21,741 $25,864 $30,797

Demographic information above was obtained from CoStar

Photos
Financials
Sources & Uses

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

 

Debt Assumptions

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.

Distributions

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.

Cash Flow Projections

  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
Fees

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.

Documents
Disclaimers
Disclaimers

Sponsor's Lack of Office Investment History

Sponsor has no prior experience with acquiring and operating an office property. However, the Principals combine for over $1 billion of development, acquisition, leasing, management and financing experience across all commercial product types. The Principals 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. Investors should consider the experience of Sponsor prior to making an investment decision.


Lease-up Risks

The Property currently has a 53% occupancy level, and the Sponsor intends to implement a capital improvement plan and a leasing program in its effort to significantly increase that occupancy level.  There can be no assurance that such renovations will be consummated on a timely basis, that such work will not materially adversely affect other aspects of the operation of the Property, or that the planned lease-up program will result in the Property increasing its occupancy level at rental rates in line with those projected.  Any delays or adverse effects of such renovation work or lease-up efforts could adversely affect the Property’s financial results or business operations and thus the value of Realty Mogul 59, LLC's investment.

Although the Sponsor believes that comparable properties are currently achieving rental rates that are in line with those expected from the Property, there can be no assurance that such increased occupancy levels or rental rates will be achieved.  Failure to realize such increased rental rates could adversely affect the Property’s financial results or business operations and thus the value of the Realty Mogul 59, LLC's investment. 


Flood Risk

Savannah, Georgia is located near the Savannah River, which can be subject to sometimes destructive floods.  It is uncertain if the Sponsor Entity intends to procure flood insurance for the Property.  There can be no assurance that a sizable flood will not cause significant damage to the Property, in which case the business and financial condition of the Sponsor Entity, and thus the Company, would be materially adversely affected.


Office Properties

Office buildings are subject to market forces affecting supply and demand just like other types of commercial space, but the economic drivers for office space are sometimes different than those for other real estate investments. 

Rents and valuations for offices are primarily influenced not just by employment growth but also by a region’s economic focus.  Office properties are especially influenced by specific types of employment -- namely, sectors with very high proportions of office use.  These economic segments are generally those that utilize service and professional employees such as attorneys, accountants, engineers, insurance personnel, real estate brokers and related service providers (like title and escrow providers), and people working in banking, financial services, consulting, medical, dental, and pharmaceutical fields.

Office space tends to be leased for relatively long periods, with tenants often having the option to renew leases for additional terms.  This means that office properties often have leases that can lag current market lease rates, and an appropriate “step-up” of rental rates may not be able to be imposed until a lease expires.

Economic downturns can affect office buildings more than residential buildings, since businesses can go bankrupt even while people continue to need housing.  Re-leases of office space can often require significant lead time to consummate. 


Retail Center Competition

Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses.  In addition, internet-based retailing presents significant competition to certain types of retailers.  If development of retail centers by other operators were to increase due to increases in availability of funds for investment or other reasons, or if internet-based retailing continues to draw consumers away from making purchases of goods and/or services of the types offered by tenants of the Property (or if it decreases the prices that such consumers are willing to pay for such goods and/or services), then this competition with the Property and its tenants could cause the value of the Property and the cash flow from the Property to decrease.


Tenants’ Loss of Revenues Could Reduce the Sponsor Entity’s Cash Flow

Tenants of the Property may encounter significant macroeconomic, governmental and competitive forces.  Adverse changes in consumer spending or consumer preferences for particular goods, services or store-based retailing could severely impact these tenants’ ability to pay rent.  The default, financial distress, bankruptcy or liquidation of one or more of the Property’s tenants could cause substantial vacancies, which would likely reduce Capital Bull Street, LLC‘s revenues, increase property expenses and could decrease the value of the Property.  Upon the expiration of a lease, the tenant may choose not to renew the lease and/or Capital Bull Street, LLC may not be able to re-lease the vacant space at a comparable lease rate or without incurring additional expenditures in connection with such renewal or re-leasing.


Vacancies and Tenant Defaults May Reduce the Property’s Revenues

A vacancy or default of a tenant on its rent will cause the Capital Bull Street, LLC to lose the revenue from that unit and, if enough effective vacancies occur, it could cause the Capital Bull Street, LLC to have to find an alternative source of revenue to meet any loan payments and other operating expenses for a particular property and it may not be possible to have to find a viable alternative source of revenue.  If the company managing the investment property does not employ sufficiently aggressive marketing campaigns and/or lease incentive programs, vacancies may increase and an investment in the Realty Mogul 59, LLC may be adversely affected.


Interest Only Loan

The loan being used to acquire the Property is expected to have an interest-only period during the first two years of the term, which means that there will be no reduction in the principal balance during that interest-only period.


Forward-Looking Statements

Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated”, “projected”, “forecasted”, “estimated”, “prospective”, “believes”, “expects”, “plans”, “future”, “intends”, “should”, “can”, “could”, “might”, “potential”, “continue”, “may”, “will” and similar expressions to identify these forward-looking statements.


Illiquid Investment - Transfer Restrictions & No Public Market

The transferability of membership interests in Realty Mogul 59, 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.


Uncertainty Surrounding Future Sales Price

There is risk associated with the Sponsor being unable to sell the Property as projected.


Interest Rate Risk

The Federal Reserve has methodically reduced the amount of stimulus it was earlier injecting into the U.S. economy, and has signaled that increases in the federal funds rate may be forthcoming. This could potentially lead to rising interest rates offered by other lenders and could have a negative effect on the future value of the Property (since higher loan interest rates might mean that potential buyers would face proportionately higher debt service expenses).


Mortgage Risk

The Sponsor has a signed term sheet with a lender to provide the debt financing for the acquisition of the Property, but there can be no assurance that the lender will complete financing on the rates and terms included in the underwriting being presented in the model for this investment opportunity. All rates and terms of the debt financing are subject to final lender committee approval, including but not limited to a modification in lender held capital reserve requirements that may result in a corresponding movement of certain funds currently projected as being held in a Sponsor controlled capital escrow account.

A refinancing is expected to be in the form of a permanent loan to be obtained on the Property.  The loan is expected to be for a fixed rate, to have a seven year term and to amortize on a 25-year schedule.  There can be no assurance that the Property will be able to obtain such refinancing on a timely or favorable basis, and any failure to obtain financing on the terms anticipated  may adversely affect the Property’s financial condition or results of operations and thus the value of the Realty Mogul 59, LLC’s investment.


Management Risk

Investors will be relying solely on the managers of Turtle Crossing Sponsor, LLC (the entity holding indirect title to the property that SunCap 8 - Turtle Crossing, LLC has invested in) for the execution of its business plan. That manager in turn may rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of SunCap 8 - Turtle Crossing, LLC (including Realty Mogul 69, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan.


Manager of Realty Mogul 69, LLC Will Participate in Sponsors' Promote Interest

The manager of Realty Mogul 69, LLC will be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the Property realized upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 69, LLC. Investors must recognize and agree to waive and bear the risk of this conflict of interest.


Uncertain Distributions

The Sponsor cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 69, LLC) from either net cash from operations or proceeds from the sale or refinancing of the asset. Sponsor, in its discretion, may retain any portion of such funds for tenant improvements, tenant refurbishments and other lease-up costs or for working capital reserves. Sponsor has chosen to make distributions quarterly.


Risk of Interest Charges for Sponsor Capital Calls

The amount of capital that may be required by Turtle Crossing, LLC, Turtle Crossing Sponsor, LLC and SunCap 8 - Turtle Crossing, LLC from Realty Mogul 69, LLC is unknown, and although Sun Cap 8 - Turtle Crossing, LLC does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or additional capital. Realty Mogul 69, LLC does not intend to participate in a capital call if one is requested by SunCap 8 - Turtle Crossing, LLC, and in such event the manager of SunCap 8 - Turtle Crossing, LLC may accept additional contributions from other members of SunCap 8 - Turtle Crossing, LLC. Amounts that the manager of SunCap 8 - Turtle Crossing, LLC advances on behalf of Realty Mogul 69, LLC will be deemed to be a manager loan at an expected interest rate of 10%. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 69, LLC's interest in SunCap 8 - Turtle Crossing, LLC will suffer a proportionate amount of dilution.


Uncertain Exit Timing

Although it is anticipated that the Property will be sold at the end of the expected five (5) year hold period, Realty Mogul 69, LLC will not have full control over the timing of the sale of the Property, and therefore we cannot offer assurances of when the exit will occur. If the Property is not sold after ten (10) years, Realty Mogul 69, LLC may have the right (either at that point or at a later time), subject to other contractual limitations such as the loan on the Property and the requirements of the operating agreement of SunCap 8 - Turtle Crossing, LLC, to force a sale of the Property or force a sale of the interests of Realty Mogul 69, LLC in SunCap 8 - Turtle Crossing, LLC.


General Economic and Market Risks

 While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not rental rates will be achieved or investor sentiment and the capital markets will be favorable to the Property at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the Sponsor.


The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Issuer Document Package for a discussion of additional risks.

The above presentation is based upon information supplied by the Sponsor and others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 69, 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.

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