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Funded
Industrial
Paterson Industrial
NYC Metro
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Timberline Real Estate Ventures
16.07%* TARGET IRR 15.07%-17.07%
6.4%* TARGET AVG CASH ON CASH
1.88X* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 Years
Estimated First Distribution 9/2022
Minimum Investment 35000
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
Paterson Industrial (the "Property) is a 65,712 SF warehouse facility located in the high-demand NYC industrial market with long-term stable cash flow from a 12‐year newly executed NNN lease (extension) with immediate value accretion given favorable acquisition basis via an off‐market transaction.
Basis

The off-market nature of the transaction and renegotiation of Kamco's (the "Tenant") lease ahead of Closing allowed TREV to acquire the Property at a +7.0% going-in cap rate which represents at least a 250-bps discount to where fully marketed industrial cap rates are currently in New Jersey. The Purchase Price was contemplated on the current tenant's net square footage, but there is ~48,000 square feet of outdoor storage included in the lease that the tenant is not paying for. Thus, the overall footprint of the Property is much larger than the rentable square feet on the Tenant's lease. This not only makes the per square foot purchase price basis look even more attractive when compared to sales comps, but it also results in greater value to TREV and/or the potential next buyer who can release the Property inclusive of rental income from the 48,000 square feet of outdoor storage (which is customary to charge in this market).

Off-Market

The acquisition plan, which is already underway, is to increase rents to market levels to achieve instant value accretion and secure long-term, stable cash yields. The new lease terms have already been secured by renegotiating the Tenant's lease during due diligence. By acquiring at an attractive basis with a new stable lease in place and implementing institutional ownership/management, upside will be realized instantly upon acquisition given the off-market transaction from a local owner/operator.

Market

The New Jersey Industrial Market has been exceptionally strong over the last five years. JLL's 4th Quarter 2021 New Jersey Industrial Report stated New Jersey had experienced unprecedented levels of rent growth due to an imbalance of supply and demand. The Northern New Jersey and Passaic County Markets have reported sub 2% vacancy rates with a history of low vacancy rates over the last five years. The Paterson Submarket has reported strong market metrics in the previous five years. The Submarket has a current vacancy rate of 1.8% with an average asking rent of $10.47/sf. Occupancy and rental rates are expected to remain strong in Northern New Jersey and the submarket for the foreseeable future.

Property at a glance
Year Built 1940
NRSF 65,712 SF
Gross Building Area 3.35 Acres
Anchor Tenant Kamco Supply of NJ
Current Occupancy 100%
Acquisition Price

$10,000,000

Investment Highlights
Metro NYC infill location just 30 minutes from midtown Manhattan. Industrial rents have increased by over 41% in the past 4 years alone in the Metro NYC area
Investment has been de-risked with attractive fixed-rate financing and attractive going-in cap rate compared to other NYC metro industrial assets
The interest rate has been locked by the Sponsor with a below-market fixed interest rate through the projected closing date de-risking the recent financial market volatility. The fixed-rate loan includes an initial interest-only period
Long-term lease with fixed rent escalations. The longstanding tenant has been signed to a ten-year lease at new market rate rental rates and NNN lease terms
Six major interstates pass through the region and the Property is less than 1-mile to I-80 connecting the region to the interstate system/NYC and metro area. The Port of NY & NJ’s highest volume terminals are located near the Property in Newark, Elizabeth, and Bayonne. Volume at these local ports have increased and continue to be in the top 3 in the US for total through-put.
The Property is located in an Urban Enterprise Zone, which enables a high volume of products to be sold at half sales tax, as well as other state incentives. These features are difficult to find in the Northern New Jersey market and are attractive for current and future tenants.
Paterson, with its proximity to NYC, is a large submarket relative to the national norm and contains approximately 19.5 million SF of industrial space. Similar to the Metro area, logistics facilities account for the largest component of local supply encompassing about 13.7 million SF. The local inventory pool is rounded out by 5.9 million SF of specialized space. The vacancy is currently 1.8% and has remained well below 4% since 2015.
The Purchase Price of $10M ($152/SF) represents a 7.1% going-in cap rate which reflects at least a 250-bps discount to market cap rates for NJ industrial.
The Purchase Price basis of $152/SF is a discount to other recent inferior trades in the submarket which have traded from $180/SF to $255/SF.
Given the attractive basis, the exit strategy will be extremely compelling whether through an equity dividend via a refinance or a quick sale to realize the value culminated through the basis and renegotiation of the Tenant's lease at Closing. Given the attractive basis, the debt at Closing is constrained by purchase price but upon a refinance, there will be significant cash equity realized resulting in above high cash yields if held long term.
The outdoor storage space, which consists of roughly 48,000 SF, is not contemplated in the Tenant's net rentable square footage in their lease and thus they are not paying for that additional space. With the inclusion of the outdoor space, the NRSF could increase over 100K square feet. There is significant inherent value upon expiration of the Tenant's lease whether via 1) re-tenanting the space and charging a new tenant rent on the additional square footage, or 2) redevelopment of the entire site which would contemplate the additional square footage at demand higher Class A rents. A next buyer would benefit from the upside in collecting rent on additional square feet or potentially redeveloping the additional square feet, resulting in a much greater terminal value.
Management
Cumulative Distributions

Timberline Real Estate Ventures

Timberline Real Estate Ventures ("TREV") is a fully integrated, operationally focused privately held real estate operator and investment manager focused on the industrial/cold storage and residential sectors, having acquired more than $2.5 billion of total investments ($1.1B of invested equity) since its inception in 2012. TREV specializes in the development, acquisition, and operation of industrial, student housing, multifamily, and mixed-use retail/residential communities through a combination of individual, portfolio, and corporate equity and debt transactions.

Based in New York, TREV is a relative value investor across the capital stack (i.e. common equity, preferred equity, mezzanine, convertible debt) with diverse risk profiles from the core through opportunistic and value add opportunities yielding attractive risk-adjusted returns for its partners. TREV evaluates direct investments with co-investment partners, including high net worth individuals, family offices, foreign/sovereign partners, US public pension plans, and national/international investment advisors.

TREV emphasizes a consistent relative value investment thesis in acquiring core, core plus and value add real estate and creating alpha through intensive hands-on sourcing, structuring, and operating approach differentiating itself from many of its peers. TREV’s Relative Value investment thesis is how they have been successful in sourcing institutional quality assets and applying the same level of innovation, productivity, service, integrity, and most importantly, results, as they did initially over a decade ago yielding alpha for their partners in value add deals through core, urban assets.

https://www.timberlinerev.com
  • Andrew Stark
    Principal
  • Nate Fowler
    Principal
Andrew Stark
Principal

Andrew is a founding Principal of Timberline Ventures where he leverages his 25 years of hands-on real estate experience. Widely regarded as an entrepreneurial and innovative thinker in the real estate industry, Andrew’s experience crosses many disciplines including, legal, finance, land development, construction, strategic planning, and capital markets. Under Andrew’s leadership, he grew the Campus Evolution Villages brand to approximately 10,000 beds since his launching of the company in 2012. Campus Evolution was recognized as a leader in student housing and has gained ranking as a top 20 student housing owner by Student Housing Business; today Andrew also serves as Executive Vice President of B.Hom Student Living. Student housing is not new to Andrew, as Mr. Stark was instrumental in launching American Campus Communities (NASDAQ: ACC), an early student housing company, which later went on to be the first company in the sector to go public on a US stock exchange.

Andrew and his partners brought the capital to ACC to acquire its first asset and then acquired the company, built out the management team, and provided all growth capital leading up to its IPO. This initial venture was successful in bringing creative thinking and capital to this student housing vehicle in a sector that was in its infancy. Prior to launching Campus Evolution, Mr. Stark oversaw and consummated the recapitalization of a ’34 Act specialty finance company with private equity funding during the economic downturn of the late 2000s. He was responsible for negotiating and completing this highly complex transaction in the face of shareholder challenges and pending SEC investigations. Mr. Stark secured capital commitments for the transaction, and after closing, immediately implemented action items to stabilize the management of the organization and commenced asset dispositions to move the company into positive cash positions for future originations and growth. As Managing Director of Cantor Fitzgerald, Mr. Stark focused on opportunistic investments in real estate assets and platform vehicles, including distressed land assets, development projects, and strategic investments in capital-constrained assets. As President of the Northeast and Mid-Atlantic regions of a publicly-traded homebuilder to which he sold his company, Andrew oversaw the company he grew ten-fold in revenue to be a leading regional homebuilder prior to consummating a combination with the public company.

Nate Fowler
Principal

Nathaniel is a founding Principal at Timberline Real Estate Ventures. With over 15 years of hands-on real estate, private equity, and investment banking experience, Nathaniel has been a leader in all aspects of real estate analysis, acquisitions, asset management, capital raising, and operations for high-net-worth and institutional investment partners. Nathaniel partnered with Andrew Stark in 2012 and launched Campus Evolution Villages growing the company from two employees to a top 20 student housing owner/operator with more than 250 employees across the country. Today, Nathaniel serves as Executive Vice President of B.Hom Student Living.

Prior to launching Campus Evolution Villages, he worked in the Investment Banking group at Cantor Fitzgerald where he helped execute various strategic advisory transactions and capital raises for alternative investment funds, structured investment vehicles, traditional private placements, primary and secondary offerings as well as equity-linked, preferred debt and mezzanine securities. Previously, he worked on the investment and asset management team for a value-add private equity fund at LaSalle Investment Management, where he helped acquire over $2 billion in real estate assets on behalf of institutional investors. Nathaniel graduated from the University of Notre Dame and the University of Chicago Booth School of Business.

Track Record

Property City, State Asset Type Acq Date Units or SF Purchase Price Current Value/Sale Price Notes
Multifamily and Student Housing  25 Different States Multifamily/Student Housing 2012-2022 8,000 units / 22,000 beds $2,053,389,396 $2,585,895,000 Since 2012, TREV and its affiliates have acquired more than $2.5 billion of student housing, multifamily, and mixed-use retail/residential communities ranging from core to deep value-add assets consisting of approximately 22,000 beds and 8,000 units across 25+ assets in the U.S. Timberline's realized returns exceed their pro forma returns by more than 750-bps in aggregate.
Realized 10 Different States Multifamily/Student Housing 2012-2018 2,500 units / 8,000 beds $420,955,919 $595,895,000  
Current Assets 20 Different States Multifamily/Student Housing 2012-2022 5,500 units / 14,000 beds $1,632,433,477 $1,990,000,000  
               
Industrial Various Industrial 2003-2022 ~1.2M sq ft ~$125M N/A Includes deals acquired, financed and portfolio/asset managed at prior firms. 
Office Various Office 2003-2020 ~5.0M sq ft ~$1.1B N/A Includes deals acquired, financed and portfolio/asset managed at prior firms. 
Storage Various Storage 2003-2020 ~950K sq ft ~$200M N/A Includes deals acquired, financed and portfolio/asset managed at prior firms. 

The above bios and track record were provided by Timberline Real Estate Ventures and have not been independently verified by RealtyMogul.

Note: Though Timberline Real Estate Ventures predominantly focuses on residential real estate, as Sponsors, it has acquired numerous other asset classes, inclusive of industrial, throughout both the careers of the principals and this company. Timberline Real Estate Ventures prides itself on being able to identify, acquire and extract value out of various real estate opportunities when presented, even if that asset class does not fall within the predominant focus of its operation.

Business Plan

The tactical off-market acquisition is a large part of the business plan. By renegotiating a long-term lease with the Tenant at Closing, much of the value accretion will be realized at Closing as the new lease creates strong value enhancement for Timberline’s investors. The Tenant's previous lease ran through July 31, 2024, at $8.40/SF with the Tenant paying all expenses except RET. By acquiring for an attractive basis with a new stable lease in place and implementing TREV’s institutional ownership/management, the upside will be realized instantly upon acquisition given the off-market transaction from a local owner/operator.

TREV has capitalized ~$600K upfront to address deferred maintenance on the Tenant's roof. Over the past few years, the previous Seller has incurred costs to fix certain aspects of the roof. During the first year of the hold, TREV will address the remaining needs for the roof to ensure a well-maintained building for the tenant and the eventual next buyer.

Given the favorable purchase price and basis, the acquisition loan is constrained by the purchase price. TREV has underwritten a refinance scenario after YR 2 in order to obtain higher proceeds on a greater valuation of the Property given the long-term lease and rental rate. Underwriting a refinance strategy at the end of YR 2 and utilizing a conservative 5.0% cap rate for valuation and a 60% LTV assumption, the underwriting assumes a net equity dividend of ~$1.2M, which will, in turn, enhance cash yields starting in YR 3. At the time of refinancing, there will also be an opportunity to entertain a sale given the intense appetite for Northern New Jersey industrial in the capital market environment. At that time, there will be 8 years remaining on the Tenant's lease, which is the ideal amount of time for institutional buyers and NNN buyers. Thus, given the attractive basis and capital market environment around industrial, there will be significant optionality with either a refinance or sale in the short term of the hold.

Anchor Tenant Overview

The Property is 100% occupied by Kamco Supply Corporation of New Jersey. Founded in 1939, the parent Kamco Supply is one of the largest commercial residential building material suppliers in the New York Metro Area. The Company's customers include small to large general contractors, subcontractors, developers, builders, remodelers, and facility managers. Kamco has a fleet of 50 trucks, boom capability of up to 10 stories, and spider forklifts that can speed up delivery. Kamco offers 24-hour delivery, among other services. The Company has four locations in the New York Metro Market. Kamco's location on the Property is their only facility in New Jersey.

Property
Property Details

Timberline negotiated a lease extension through June 31, 2032, starting at $11.00/SF under a true NNN lease structure in advance of closing. The Tenant's previous lease ran through July 31, 2024, at $8.40/SF with the tenant paying all expenses except real estate taxes. The new lease extension and terms commence on the date of acquisition and represent a healthy net effective rent increase via rate and structure and further enhance going in yield and profit margin on exit. Additionally, the Property is located in an Urban Enterprise Zone, which enables a high volume of products to be sold at half sales tax, as well as other state incentives. These features are difficult to find in the Northern New Jersey (“NNJ") industrial market and very enticing to the current tenant and other future tenants. Lastly, the outdoor storage space, which consists of roughly 48,000 SF, is not contemplated in the Tenant's net rentable square footage in their lease and thus they are not paying for that additional space. Given the intense demand for industrial and outdoor storage space in this very desirable infill Northern New Jersey submarket, there is significant inherent value and optionality that a next buyer can attribute to this additional space in the future which creates a more accretive and liquid exit for the Sponsor.

Investment has been De-Risked with attractive fixed-rate financing and attractive going-in cap rate compared to other NYC metro industrial assets

The Sponsor has rate locked on its financing at an attractive 3.90% for the full 5 years of the projected hold period with flexible prepay options if needed. The debt has 12 months of interest-only payments and then amortizes based on a 30-year schedule. The property has a 1.67x DSCR and a going-in debt yield of 9.5% which are very attractive and conservative metrics for industrial debt financing. Market cap rates for acquisitions of infill metro NYC industrial range from 3.5% - 4.5% as this market is one of the most highly sought-after industrial markets in the country. The Sponsor is acquiring the property at a 7.10% going-in cap rate due to its executed new lease for the tenant increasing its rental rate and extending the lease term.

Rent Roll

Tenant SF % of Total Rent/SF Lease Start Lease Expiration Lease Type
Kamco Supply 65,712 100% $11.00 7/1/2022 6/30/2032 NNN
Total 65,712 100% $11.00      
Comparables

Lease Comparables

  440 Allwood Rd, Clifton, NJ 95 Mayhill St, Saddle Brook, NJ 356 Getty Ave, Clifton, NJ 2 Alsan Way, Little Ferry, NJ 55 Webro Rd, Clifton, NJ Averages Subject
Date Signed 11/1/2021 8/1/2021 1/1/2021 11/1/2020 8/1/2020   7/1/2022
Year Built 1959 1970 1967 1963 1970 1966 1940
Tenant Lease Size 30,059 SF 66,920 SF 20,000 SF 31,222 SF 93,250 SF 48,290 SF 65,712 SF
Building NRSF 114,714 SF 430,000 SF 120,722 SF 31,225 SF 93,250 SF 157,982 SF 65,712 SF
Rental Rate $11.95/SF $10.25/SF $12.50/SF $12.25/SF $8.98/SF $11.19/SF $11.00/SF
Lease Type NNN NNN NNN NNN NNN NNN NNN
Address 440 Allwood Rd, Clifton, NJ 95 Mayhill St, Saddle Brook, NJ 356 Getty Ave, Clifton, NJ 2 Alsan Way, Little Ferry, NJ 55 Webro Rd, Clifton, NJ   845 E 25th St, Paterson, NJ
Distance from Subject 8.1 miles 5.2 miles 2.6 miles 7.8 miles 5.2 miles 5.8 miles  

Please see attachments for more details.

Sales Comparables

  1200 Madison Ave, Paterson NJ 47 Sindle Ave, Little Falls, NJ 9 Bridewell Place, Clifton, NJ 319 Edmund Ave, Paterson, NJ Averages Subject (Going-in)
Date Sold 12/1/2021 5/1/2021 12/1/2020 9/1/2020   N/A
Year Built 1968 1965 1959 1935 1957 1940
NRSF 245,529 SF 18,738 SF 45,670 SF 12,830 SF 80,692 SF 65,712 SF
Sale Price $62,500,000 $3,700,000 $8,250,000 $2,300,000 $19,187,500 $10,000,000
$/SF $255/SF $197/SF $181/SF $179/SF $203/SF $152/SF
Address 1200 Madison Ave, Paterson NJ 47 Sindle Ave, Little Falls, NJ 9 Bridewell Place, Clifton, NJ 319 Edmund Ave, Paterson, NJ   845 E 25th St, Paterson, NJ
Distance from Subject 1.0 mile 6.7 miles 8.1 miles 3.2 miles 4.8 miles  
Location

Property Enjoys an Attractive and Affordable Market Position

Infill Metro New York City industrial is in extraordinarily high demand and difficult to secure given the extremely high barriers to entry because of rent costs and available land. Since 2018, the average asking rent for non Class A space in NYC metro area has increased by over 41% with more properties every quarter approaching $30.00+ PSF rents.  This cost for tenants coupled with sub 2% vacancy has led to extreme demand for last-mile industrial properties outside of New York City and into Northern New Jersey given the significant transportation nodes in and out of the NYC Metro and the discount to NYC metro rents.

Transportation Nodes Connecting Paterson to the NYC Metro and Beyond

The Gateway Region is an area designated by the New Jersey State Department of Tourism, which comprises Bergen, Essex, Hudson, Passaic, Union, and Middlesex Counties. The Gateway Region has some of the densest transportation infrastructures in the nation. Rail service includes New Jersey Transit train lines, which take commuters to and from New York City, Amtrak's Northeast Corridor, which links Boston and Washington, D.C., and the PATH, a 24/7 rapid transit network that conveys passengers across the Hudson River from Newark, Jersey City, and Hoboken.

Major roadways that pass through the Region include Interstates 78, 80, 95, 280, 287, and 495, as well as multiple New Jersey and U.S. Highways. The Gateway Region also includes Newark Liberty International Airport (EWR), which serves nearly 46 million passengers per year, and the Port of New York and New Jersey, which is the busiest port on the East Coast and the third busiest in the United States.

I-80 is less than one mile south of the Property. The Interstate is a distribution corridor and is the second-longest interstate highway in the United States. Interstate 80's designated terminus is in Ridgefield Park, New Jersey where it connects to I-95, providing access to the George Washington Bridge and the NYC Metro.

Route 46 spans the entire State of New Jersey, running east and west through the northern part of the State. The highway connects to Route 3, heading directly into the Meadowlands region and the Lincoln Tunnel into the heart of New York City. The Property is less than two miles from Route 46.

Port of New York and NJ Creates Increased Industrial Demand

The Port of New York and New Jersey is the port district of the New York-Newark metropolitan area. It includes a system of navigable waterways in the New York-New Jersey Harbor Estuary, which runs along 650 miles of shoreline in the vicinity of New York City and northeastern New Jersey, as well as the Region's airports and supporting rail and roadway distribution networks. The Port is considered one of the largest natural harbors in the world and is the third-largest by tonnage in the United States as of 2018, and the busiest on the East Coast.

The Port's highest volume terminals are located near the Property in Newark, Elizabeth, and Bayonne. A key driver of industrial market demand in Northern New Jersey is shipping container volume. Shipping container volume is measured in TEUs (20' equivalent container units). According to the Port Authority of New York & New Jersey ("PANYNJ") statistics, the area's Port terminals continued their 11-year record-breaking run reaching 3.92 million TEUs in 2020, a 52% increase over 2010s 2.58 million TEUs.

This increase of 1.34 million TEUs created new demand for as many as 14.7 million pallets in area warehouses. Year-to-date April 2021 TEU volume increased by 23.7% over the same period last year, indicating another record-breaking year for 2021 is likely. This steady growth in shipping container volume is expected to continue to grow, with the PANYNJ projecting TEU growth to double by 2050.

Market Overview

2021 surpassed 2020 as the market’s strongest year in history. Renewal volume accounted for nearly 50 of leasing in the fourth quarter. Additionally, 2021 logged an all-time high of 450 transactions, representing over 45.3 million SF of product leased in the market, and total annual absorption struck nearly 25 million SF, driven chiefly by the 3 PL and Logistics Distribution sectors. Even more compelling is that Class A rents increased nearly 40% year over year, effectively doubling what landlords were asking just six years ago.

Leasing volume in the fourth quarter was subdued due only as a result of an overall lack of available products in the market which bodes well for this Property. 7.3 million SF was leased in the quarter, trailing the eight quarter average of 11.1 million SF due to record low vacancy and strong preleasing on the State's under construction product. As a result, 44.9% of total leasing velocity was renewals In the largest lease of the quarter, PetCo renewed 1.0 million SF at Link Logistics' 257 Prospect Plains Rd in Cranbury Similarly, Volkswagen renewed for 929,000 SF at DWS's 47 Station Road in Cranbury. In response to the supply constraints, developers broke ground on 6.9 million SF of new product in the fourth quarter, nearly double the 2020 average of 3 8 million SF. Nearly 50.0% of these groundbreakings were in the Meadowlands, the Port area, and Exit 12 bringing total construction activity in these submarkets to 6.4 million SF.

The relatively low leasing velocity in Q4 failed to derail the market from a record 45.3 million SF of leasing in 2021, 21.3% higher than the trailing five year average and surpassing 2020, the previous calendar year high. The 3 PL and Logistics industries accounted for 33.3% of all Class A leasing, surpassing e-commerce, which was the state leader from 2016 to 2020. This leasing boom resulted in 25.0 million SF of absorption, 24.8% higher than the previous peak in 2016 which has driven vacancy 140 basis points lower year over year. In particular short supply is the Class A market which has a vacancy rate of 0.5%. This has resulted in a near 40% increase in Class A asking rents year over year and has buoyed the Class B and C segments, which have seen 18.8% and 25.1% growth, respectively.

Submarket Overview

Paterson is a large submarket relative to the national norm and contains approximately 19.5 million SF of industrial space. Similar to the Metro area, logistics facilities account for the largest component of local supply encompassing about 13.7 million SF. The local inventory pool is rounded out by 5.9 million SF of specialized space. The vacancy is currently 1.8% and has remained well below 4% since 2015.

This vacancy rate is likely substantially lower as the vacant inventory includes limited demand space on upper levels of older multi-story industrial buildings. The Submarket posted 380,000 SF of net absorption over the past year, but on average, annual absorption has been essentially flat over the past five years. Rents increased by 7.8% over the past 12 months to approximately $10.24/SF, the strongest rate of rent growth observed in Paterson in several years. There are no supply-side pressures on vacancy or rent in the near term, as no new development is underway. Moreover, the inventory has contracted over the past ten years, as demolition activity has outpaced new construction. Industrial properties traded with regularity last year, consistent with the generally high level of activity over the past three years.

Photos
Financials
Sources & Uses

Total Capitalization

Sources of Funds $ Amount $/SF
Debt $7,500,000 $114
TREV LP Equity $727,570 $11
LP Investor Equity $4,000,000 $61
Total Sources of Funds $12,227,570 $186
     
Uses of Funds $ Amount $/SF
Purchase Price $10,000,000 $152
Acquisition Fee $200,000 $3
Loan Fee $18,750 $0
Closing Costs(1) $1,023,180 $16
CapEx $600,000 $9
Working Capital  $170,640 $3
Loan Closing Costs $215,000 $3
Total Uses of Funds $12,227,570 $186

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: Blue Foundry Bank
  • Term: 5 years
  • LTC: 61.3%
  • LTV: 75.0%
  • Estimated Proceeds: $7,500,000
  • Interest Type: Fixed
  • Annual Interest Rate: 3.90%
  • Interest-Only Period: 12 months
  • Amortization: 30 years
  • Prepayment Terms: 3%, 3%, 2%, 1%, 0%
  • Extension Requirements: TBD
  • Modeled Refinance: Yes

Refinance Information:

  • Lender: TBD
  • Term: 5 years
  • Estimated Proceeds: $8,533,098
  • Interest Type: Fixed
  • Annual Interest Rate: 4.75%
  • Interest-Only Period: 36 months
  • Amortization: 30 years

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

Timberline Real Estate Ventures intends to make distributions from Paterson Investors I LLC as follows:

  1. To the Investors, pari passu, all operating cash flows to an 7.0% IRR;
  2. 70% / 30% (70% to Investors / 30% to Promoted/Carried Interest) of excess cash flow to a 12.0% IRR;
  3. 60% / 40% (60% to Investors / 40% to Promote/Carried Interest) of excess cash flow to a 17.0% IRR;
  4. 50% / 50% (50% to Investors / 50% to Promote/Carried Interest) of excess cash flow thereafter.

Timberline Real Estate Ventures 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 September 2022 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Timberline Real Estate Ventures, who may decide to delay distributions for any reason, including maintenance or capital reserves.

Timberline Real Estate Ventures 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 Year 3 Year 4 Year 5
Effective Gross Revenue   $1,027,079 $1,031,429 $1,084,291 $1,092,717 $1,148,737
Total Operating Expenses   $317,389 $321,917 $331,742 $340,509 $350,907
Net Operating Income   $709,690 $709,512 $752,549 $752,208 $797,830
             
Project-Level Cash Flows
  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Net Cash Flow ($4,727,570) $313,486 $181,086 $1,420,209 $242,118 $8,289,732
             
Investor-Level Cash Flows(1)
  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Net Cash Flow ($4,000,000) $265,241 $153,217 $1,201,640 $204,856 $5,712,910
             
Investor-Level Cash Flows - Hypothetical $50,000 Investment(1)
  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Net Cash Flow ($50,000) $3,316 $1,915 $15,020 $2,561 $71,411

(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 Timberline Real Estate Ventures's materials for details. The following fees and compensation will be paid(1)(2):

Real Estate Company Fees:
Type of Fee Amount of Fee Received By Paid From
Acquisition Fee 2% of Purchase Price TREV Capitalized Equity Contribution
Debt Placement Fee 1% of Loan Amount TREV Capitalized Equity Contribution
 
Recurring Fees:
Type of Fee Amount of Fee Received By Paid From
Administrative Solution Fee Flat quarterly fee of $125 per investor services through the Administration Solution RM Technlologies, LLC(2) Cash Flow
Asset Management Fee 1% of Total Equity TREV Cash Flow

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

(2) 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.

Disclaimers
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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