$15,000,000
Trion Properties
Trion Properties focuses on potentially maximizing investor returns by increasing net operating income throughout the holding period through a hands-on management style of heavy renovation and aggressive lease-up. Trion Properties is a private equity investment company which acquires opportunistic real estate investments that need moderate to heavy rehab on a mid to long term investment horizon.
Founded in 2005, Trion has successfully closed over $160 million in transactions through either the purchase of the fee simple interest or taking ownership of the asset through acquiring the non-performing debt. Trion Properties is managed by principals whose combined experience spans over 20 years in West Coast real estate markets and is in excess of one billion dollars in transactions.
http://www.trion-properties.com/
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Max Sharkansky, Managing Partner -
Mitch Paskover, Managing Partner
Max Sharkansky, co-founder of Trion Properties, oversees all aspects of acquisition, disposition, and property analysis for Trion Properties. Since founding Trion Properties, Max has led the acquisition, renovation and disposition of over $100,000,000 in mismanaged and distressed assets, primarily in multifamily, yielding an average IRR in excess of 30%. Max launched the foray into investments with two acquisitions of value-add multifamily properties in 2005. Following the first two closings, Max, along with partner Mitch Paskover, created the platform and formed the Company in 2005 to execute a business plan of acquiring mispriced and mismanaged properties throughout Los Angeles. Max led Trion in the execution of several acquisitions in its first two years of existence and exiting the portfolio prior to the economic crisis. With cash on hand and no resources tied up in workouts, Max assisted in implementing an acquisition strategy of targeting distressed debt secured by multifamily, and distressed multifamily REO’s, which led to the ultra-successful campaign of the acquisition of 20 properties throughout the downturn. Since the recovery and the clearing of distress from the marketplace, Max has shifted strategies to the acquisition of value-add properties where value can be created through extensive renovations, hands-on management, and improvement of operating efficiencies.
Prior to co-founding Trion Properties, Max was a Senior Associate at Marcus & Millichap from 2002 through 2006. While at Marcus & Millichap, Max managed the sale of several million dollars in real estate throughout the continental United States, specifically in the multifamily arena, elevating him to one of the top-ranking brokers in Los Angeles, California.
His ability to seek out and acquire distressed multifamily properties and his expertise of the marketplace has been instrumental in the success of Trion Properties.
He graduated from Loyola Marymount University where he earned a Bachelor's degree in Business Administration with an emphasis on Finance.
Mitch Paskover co-founded Trion Properties with Max Sharkansky in 2005 when they acquired their first investment property in Los Angeles. Mr. Paskover oversees all aspects of debt and equity placement for Trion Properties as well as the overall development of the firm. Prior to co-founding Trion Properties, Paskover was a Managing Director in the Los Angeles office of HFF (Holliday Fenoglio Fowler, L.P.). Paskover has over eight (8) years of experience in commercial real estate finance. Paskover’s primary focus was on debt and equity transactions including multifamily, office, retail and hospitality properties with an emphasis on multifamily. During the course of his career in commercial real estate, Paskover has been involved in over $2.0 billion in commercial real estate transactions. He graduated from University of Southern California where he earned a Bachelor’s degree in Business Administration with an emphasis on Finance.
| Sponsor Portfolio | ||||||||||
| Currently Owned Properties | ||||||||||
| Property Address | City | Property Type | Date Acquired |
# of Units |
Square Feet | Status | Purchase Price |
Total Cost Basis | BOV/ Appraisal | Valuation Date |
| 3536 Watt Ave | Sacramento, CA | MF | 4/1/2013 | 128 | - | 2016 Sale | $4,900,000 | $5,932,025 | $10,000,000 | 2/1/2016 |
| 24510 Town Center Dr | Valencia, CA | Retail | 10/22/2013 | - | 26,186 | 2016 Sale | $6,900,000 | $7,900,000 | $11,000,000 | 11/10/2015 |
| 5416 Jackson St | North Highlands, CA | MF | 1/28/2014 | 185 | - | 2016 Sale | $9,300,000 | $10,738,981 | $16,000,000 | 1/15/2016 |
| 412 S Lake St | Los Angeles, CA | MF | 8/1/2013 | 41 | - | Cash-out Refi | $1,600,000 | $4,181,454 | $8,500,000 | 2/1/2016 |
| 4620 S Slauson Ave | Los Angeles, CA | MF | 9/12/2014 | 28 | - | Cash-out Refi | $6,750,000 | $7,418,379 | $10,000,000 | 2/17/2016 |
| 1802-1820 Pacific Coast Hwy | Redondo Beach, CA | Retail | 11/24/2014 | - | 20,191 | Stabilized | $5,781,250 | $6,962,500 | $9,800,000 | 7/10/2015 |
| Penn St | Whittier, CA | N/A | 6/1/2012 | - | N/A | Entitlement | $1,100,000 | $1,100,000 | n/a | n/a |
| 28955 Pacific Coast Hwy | Malibu, CA | Retail/ Office | 2/28/2014 | - | 16,711 | Renovating | $5,750,000 | $7,500,000 | n/a | n/a |
| 1804 NE 104th St | Portland, OR | MF | 5/14/2015 | 74 | - | Renovating | $6,642,598 | $8,122,000 | n/a | n/a |
| 3635 College Ave | San Diego, CA | MF | 6/15/2015 | 98 | - | Renovating | $9,650,000 | $12,441,030 | n/a | n/a |
| 6180 Aldama | Los Angeles, CA | MF | 7/31/2015 | 15 | - | Renovating | $3,375,000 | $4,113,253 | n/a | n/a |
| 2222 SW Spring Garden | Portland, OR | MF | 8/14/2015 | 44 | - | Renovating | $4,450,000 | $5,713,266 | n/a | n/a |
| 324 S Catalina St | Los Angeles, CA | MF | 11/23/2015 | 47 | - | Renovating | $7,540,000 | $8,245,741 | n/a | n/a |
| 23924 2nd St | Hayward, CA | MF | 12/23/2015 | 30 | - | Renovating | $6,650,000 | $7,830,000 | n/a | n/a |
| 348 Estabrook | San Leandro, CA | MF | 1/4/2016 | 38 | - | Renovating | $7,200,000 | $8,574,811 | n/a | n/a |
| Total | 728 | 63,088 | $87,588,848 | $106,773,440 | ||||||
| Sold Properties | ||||||||||
| Property Address | City | Property Type | Date Acquired |
# of Units |
Square Feet | Purchase Price |
Total Cost Basis | Sale Value | Sale Date | |
| 909 Sunshine Ave | El Cajon, CA | MF | 4/10/2013 | 22 | - | $2,350,000 | $2,619,213 | $3,740,000 | 5/7/2015 | |
| 3298 Mooney Blvd | Visalia, CA | Retail | 12/31/2012 | - | 57,254 | $2,746,650 | $2,756,277 | $4,000,000 | 6/1/2013 | |
| 7629-7633 Normal Ave | La Mesa, CA | MF | 11/20/2012 | 21 | - | $1,900,000 | $2,263,689 | $3,580,000 | 6/9/2015 | |
| Arden Loan Portfolio | Sacramento, CA | MF | 7/26/2012 | 224 | - | $5,750,000 | $6,085,860 | $7,134,385 | 2/1/2013 | |
| 1535 N Cedar Ave | Fresno, CA | MF | 7/13/2012 | 124 | - | $3,248,750 | $4,435,709 | $5,500,000 | 3/4/2015 | |
| 4318 Avalon | Los Angeles, CA | MF | 1/3/2012 | 11 | - | $515,000 | $563,902 | $680,000 | 7/18/2012 | |
| 2280 South Drive | Auburn, CA | MF | 12/30/2011 | 16 | - | $1,350,000 | $1,727,568 | $2,400,000 | 7/12/2012 | |
| 210 43rd Place | Los Angeles, CA | MF | 9/26/2011 | 30 | - | $949,000 | $1,040,393 | $1,480,000 | 6/25/2012 | |
| 8833 Tobias Ave | Panorama City, CA | MF | 9/21/2011 | 20 | - | $1,169,000 | $1,278,675 | $1,430,000 | 12/30/2011 | |
| 225 N Avenue 53 | Los Angeles, CA | MF | 4/28/2011 | 20 | - | $1,249,463 | $1,526,243 | $2,075,000 | 5/12/2012 | |
| 4620 Coliseum | Los Angeles, CA | MF | 12/17/2010 | 35 | - | $1,800,000 | $1,985,773 | $2,550,000 | 12/29/2011 | |
| 1324 57th St | Los Angeles, CA | MF | 11/23/2010 | 14 | - | $875,000 | $977,018 | $1,155,000 | 10/28/2011 | |
| 6407 10th Ave | Los Angeles, CA | MF | 5/5/2010 | 28 | - | $1,500,000 | $1,763,512 | $2,125,000 | 7/29/2011 | |
| East West Bank Portfolio | Los Angeles County, CA | MF | 8/14/2009 | 21 | - | $725,000 | $740,024 | $960,000 | 9/1/2010 | |
| 13490-13520 Foothill Blvd | Sylmar, CA | MF | 6/4/2007 | 81 | - | $11,150,000 | $11,786,570 | $12,850,000 | 7/1/2008 | |
| 7445 Vineland | Sun Valley, CA | MF | 4/10/2007 | 20 | - | $1,867,125 | $1,928,485 | $2,250,000 | 8/5/2008 | |
| 4632 Laurel Canyon (1) | Valley Village, CA | MF | 3/20/2007 | 44 | - | $5,225,000 | $5,529,035 | $4,851,125 | 5/29/2009 | |
| 12717 Barbara Ann | North Hollywood, CA | MF | 11/2/2006 | 24 | - | $2,625,000 | $2,800,887 | $3,200,000 | 4/10/2009 | |
| 417 W Los Feliz | Glendale, CA | MF | 12/30/2005 | 34 | - | $2,200,000 | $2,444,000 | $3,495,000 | 5/17/2007 | |
| 7355 - 7359 Vineland | Sun Valley, CA | MF | 12/28/2005 | 12 | - | $1,147,466 | $1,263,093 | $1,600,000 | 4/11/2007 | |
| Realized Total | 801 | 57,254 | $50,342,454 | $55,515,926 | $67,055,510 | |||||
| Combined Portfolio Total | 1,529 | 120,342 | $137,931,302 | $162,289,366 | ||||||
In this transaction, RealtyMogul.com investors will invest in Realty Mogul 64, LLC. Realty Mogul 64, LLC is to subsequently invest in 180 Buckingham Avenue, LLC, a limited liability company that plans to (through another wholly-owned entity) acquire, renovate, and manage the Property. This will be RealtyMogul.com's second equity raise with the Sponsor.
Trion Properties (the "Sponsor") believes that rents at the Property are currently below market, and plans to implement approximately $968,000 ($20.2k/unit) of interior and exterior renovations to achieve rental increases averaging $689/unit, a 40% increase over average in-place rents and an 18% increase over the highest rents that have been achieved at the property. Interior renovations will include vinyl wood plank flooring, stainless steel appliances and stovetops, new cabinetry, quartz countertops, new doors, window treatments, plumbing and fixtures, smart locks, vanities, re-glazed bathtubs, paint, and lighting. Exterior renovations will include new paint, wood paneling, new fixtures, an elevator, lounge improvements, landscaping, and new signage.
The Sponsor also intends to enhance the overall operations of the Property through improved management and marketing efforts, drawing from their ownership experience of over 1,500 multifamily units to date.
RealtyMogul.com, along with Trion Properties (the "Sponsor"), is providing the opportunity to invest in the acquisition and renovation of a 48-unit multi-family property located in Redwood City, CA (the "Property").
The primary objective of this investment is to acquire the Property, perform interior and exterior renovations, bring rents up to market, and sell the Property within approximately five (5) years.
The Sponsor sees this investment as an opportunity to capitalize on an under managed asset that is currently leasing at below market rents. Recent leasing at the Property suggests that average in-place rents are currently below market, and the Rent Comps survey suggests that the Property is 32% below market when compared to renovated properties in the area that are comparable to the product that the Sponsor intends to deliver. The Sponsor plans to implement a $968,000 ($20.2k/unit) renovation that is expected to increase rents and bring them in line with the market.
Built in 1962, the Property is a three-story apartment building comprised of 48 non-rent controlled units, including studio, one bedroom/one bath, and two-bedroom/one bath floor plans. Situated on .57 acres and offering 34,125 of residential square feet, the Property features covered and subterranean parking, on-site laundry facilities, a BBQ area and a courtyard. The Property is currently 96% occupied.
| Unit Mix | |||||
| Unit Type | # Units | % of Total | Unit SF | Avg. In-Place Rent | Avg. In-Place Rent/ SF |
| Studio | 3 | 6.25% | 475 | $1,627 | $3.43 |
| 1 Bed / 1 Bath | 37 | 77.08% | 700 | $1,669 | $2.38 |
| 2 Bed / 1 Bath | 8 | 16.67% | 850 | $2,097 | $2.47 |
| Total/ Average | 48 | 100.00% | 711 | $1,738 | $2.46 |
Buckingham Apartments is conveniently located in Redwood City, CA, 28 miles from downtown San Francisco and 2.5 miles from Menlo Park. The Property is approximately two miles from US-101 and 4 miles from I-280, offering access to the greater Bay Area. SamTrans, which provides bus service throughout San Mateo County and portions of San Francisco and Palo Alto, has a stop within half a mile of the Property, and Caltrain has a stop within a mile and half, which offers a rail system between San Francisco and San Jose.
Box.com, Google, Facebook, Electronic Arts, and Oracle all have significant office spaces within 5.5 miles of the Property. Atherton, the most expensive zip code in the U.S. according to Forbes in 2015, is less than two miles from the Property. Stanford University is 3.9 miles away and is constructing a 1.5 million square foot satellite campus in Redwood City only 2.3 miles from the Property.
| Major Silicon Valley Employers | Industry | Location | Distance from Property | Approx. Headcount in Region |
| Internet/Technology | Headquarters | <10 miles | 19,000 | |
| Stanford University | Education | Main Campus | <4 miles | 11,128 |
| Oracle | Internet/Technology | Headquarters | <6 miles | 6,750 |
| Internet/Technology | Headquarters | <6 miles | 2,800 | |
| Electronic Arts | Internet/Technology | Headquarters | <6 miles | 2,367 |
| Box.com | Internet/Technology | Headquarters | <2 miles | 950 |
| Shutterfly | Internet/Technology | Headquarters | <8 miles | 481 |
| *The information above was obtained from Google Maps, cnbc.com, businessinsider.com, redwoodcity.org, statista.com, oracle.com, nytimes.com, forbes.com, finance.yahoo.com, bbb.org, and facts.stanford.edu | ||||
Market Overview
Redwood City is home to approximately 83,000 residents, while the greater Silicon Valley, which sits just to the south, boasts an estimated three million people inhabiting the area. Silicon Valley constitutes 9.6% of California’s annual GDP and 9.3% of its jobs. Job growth in Silicon Valley reached 4.1%, in 2015, the highest it’s been since 2000, adding nearly 58,000 jobs (bringing the total to 1.48 million in Q2 2014) and exceeding the 2013-2014 job growth rate of the Bay Area as a whole (+3.5%), San Francisco (+3%), California (+2.5%) and the nation (+1.8%). Forty-seven percent of Silicon Valley residents have a bachelor’s, graduate or professional degree, compared with only 32% in California and 29% in the United States (jointventure.org).
Submarket Overview
According to Axiometrics, the South San Mateo submarket had the highest occupancy in the entire San Francisco-Redwood City-South San Francisco Metropolitan Statistical Area (out of seven submarkets), with a Q1 2016 average occupancy of 96.6%. Axiometrics predicts a 3.9% average vacancy rate over the next five years for the submarket, along with an effective average annual rent growth of 3.3% over the same period.
| Axiometrics Market Performance Summary Report | |||||
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Vacancy Rate | 4.0% | 3.7% | 3.3% | 3.6% | 3.9% |
| Rent Growth | 2.4% | 3.2% | 4.4% | 3.9% | 2.7% |
Demographic Information
| Demographics | 1 Mile | 3 Miles | 5 Miles | |
| Population (2015) | 39,116 | 138,113 | 267,332 | |
| Growth (2010-2015) | 9.3% | 9.7% | 7.3% | |
| Growth (2015-2020) | 6.7% | 6.7% | 6.3% | |
| Median Household Income (2015) | $58,158 | $93,141 | $97,939 | |
Demographic information above was obtained from CoStar and Census.gov
| Total Capitalization | |
| Sources of Funds | |
| Debt | $12,780,000 |
| Equity | $4,468,078 |
| Total Sources of Funds | $17,248,078 |
| Uses of Funds | |
| Purchase Price | $15,000,000 |
| Unit Renovation | $768,000 |
| Interest Reserves | $454,478 |
| CapEx Budget | $200,000 |
| Loan Fees and Rate Caps Purchase | $255,600 |
| Working Capital | $300,000 |
| Acquisition Fee (1%) | $150,000 |
| Broker Dealer Fee (3%) | $45,000 |
| Closing Costs | $75,000 |
| Total Uses of Funds | $17,248,078 |
The projected terms of the debt financing are as follows:
Bridge Loan
- Lender: Thorofare Capital
- Principal Balance: $12,780,000
- Term: Two Years
- Rate: 30-Day LIBOR + 515 bps (with a 0.45% LIBOR floor)
- Amortization: Interest Only
- Extension Options: Two (2) six month extension options
- Loan to Cost: 74%
- Loan to Purchase Price: 85%
Permanent Loan
- Principal Balance: $14,210,549
- Rate: 4.00%
- Amortization: 30 Years
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.
180 Buckingham Avenue, LLC will make distributions to Realty Mogul 64, LLC as follows:
Order of Distributions to Realty Mogul 64, LLC (Operating Income, Sales, or Refinance Proceeds)
- First, to members for any accumulated unpaid preferred return, based on an 8% cumulative, non-compounding preferred return
- Second, to the Sponsor until it has received an amount equal to 30% of the sum of all Preferred Returns paid to members (the "Catch-Up")
- Third, to the Sponsor to pay any accrued but unpaid Cost Overrun Returns(1)
- Fourth, to the Sponsor until all unreturned Cost Overrun Contributions(1) have been returned to zero (0)
- Fifth, to members, until their Capital Contribution balance has been returned to zero (0)
- Then, any excess balance will be split 70% to members pari passu and 30% to the Sponsor
If, upon the final liquidation of assets, the Company does not have enough money to return 100% of members' capital contributions, the Sponsor entity will repay any Catch-Up received previously, up to the total amount of all Catch-Up payments received, and apply the refunded amounts to a pro-rata repayment of the members' Capital Contributions. Realty Mogul 64, LLC will distribute 100% of its share of cash flow (after expenses) to the members of Realty Mogul 64, LLC (the RealtyMogul.com investors). The manager of Realty Mogul 64, LLC will receive a portion (up to 10%) of the Sponsor's promote interest.
Distributions are projected to start in December 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.
| Cash Flow Projections | |||||||
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |||
| Effective Gross Revenue | $664,133 | $1,402,981 | $1,445,070 | $1,488,422 | $1,533,075 | ||
| Total Operating Expenses | $396,541 | $433,225 | $445,790 | $460,323 | $478,409 | ||
| Net Operating Income | $267,592 | $969,756 | $999,280 | $1,028,099 | $1,054,666 | ||
| Distributions to Realty Mogul 64, LLC Investors | $0 | $421,286 | $58,061 | $67,736 | $2,642,719 | ||
(1) In the event there is a capital shortfall as a result of renovation costs exceeding the budgeted costs for the same, then the Sponsor shall contribute additional capital to the Company in an amount necessary to meet such cost overruns. Such capital contributions shall be considered “Cost Overrun Contributions,” and such amounts shall accrue interest at a rate equal to the interest of the senior loan on the Property (the “Cost Overrun Return”).
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/ Guarantor Fee | $150,000 | Sponsor | Capitalized Equity Contribution | 1.0% of the Property purchase price |
| Broker-Dealer Fee | 3.0% | North Capital (1) | Capitalized Equity Contribution | 3.0% based on the amount of equity invested by Realty Mogul 64, LLC |
| Mortgage Broker Fee | 1.0% | Continental Funding Group | Capitalized Equity Contribution | 1.0% of the loan amount. Continental Funding Group is a separate but affiliated entity of the Sponsor and its principals.
|
| Recurring Fees: | ||||
| Property Management Fee | 4.0% | Sponsor | Operating Cash Flow | The greater of 4.0% of Effective Gross Income or $2,500/month |
| Management and Administrative Fee | 1.0% | RM Manager, LLC | Distributable Cash | 1.0% of amount invested in Realty Mogul 64, LLC. RM Manager, LLC is the Manager of Realty Mogul 64, 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 64, 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.
Apartment Complex Competition Risks
Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses. The Property will compete with other residential alternatives to attract tenants, including other apartment units that are available for rent, as well as new and existing apartment residences. If development of apartment complexes by other operators were to increase, due to increases in availability of funds for investment or other reasons, then competition with the Property could intensify. Competitive apartment residences in a particular area could adversely affect the ability of Sponsor to sell the property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.
Apartment - Minimal Tenant Diversification
The Property is smaller than many larger apartment complexes, and the 48 tenants of the Property represent a smaller and thus less diversified tenant base than would be the case for a larger multi-family property involving a greater number of tenants. If one or more of the Property’s units become vacant or do not meet the Sponsor’s expectations in terms of projected rental rates to be realized, such issues will have a proportionately larger adverse effect on the Property’s results of operations (and the value of the Company’s investment) than they would for a property involving a larger and more diverse tenant base.
Renovation Risks
The Sponsor intends to renovate the Property in order to be able to demand the significantly higher rents it is projecting to receive at the Property following such renovations. Such renovations are expected to include approximately $968,000 in unit and common area upgrades. There can be no assurance that such renovations will be consummated on a timely basis or that such work will not materially adversely affect other aspects of the operation of the Property. Any delays or adverse effects of such renovation work could adversely affect the Property’s financial results or business operations and thus the value of the Realty Mogul 64, LLC's investment.
Following the renovations, the sponsor expects to be able to rent the apartment units at average rates that would represent an approximate 40% increase over the average existing rental rates. Although the Sponsor believes that comparable properties are currently achieving rental rates that are greater than the future rental rates expected from the Property, there can be no assurance that such increased 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 64, LLC’s investment.
Lease-Up Risks
The Property currently has approximately a 96% occupancy level, and the Sponsor intends to implement a capital improvement plan involving the renovations of certain units and a leasing program in its effort to maintain 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 maintaining 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 the Company’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 Company’s investment.
Vacancies and Tenant Defaults May Reduce the Property's Revenues
A vacancy or default of a tenant on its rent will cause Sponsor Entity to lose the revenue from that unit and, if enough effective vacancies occur, it could cause Sponsor Entity 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 Company may be adversely affected.
Bridge Loan
The loan used to acquire the Property is a bridge loan. Financing risk is inherent in the mortgage lending industry, and there can be no assurance that the lender will complete financing on the rates and terms including in the underwriting being presented in the model for this investment opportunity. Should the terms of the debt financing change materially and adversely, investors will be notified.
Interest-Only Loan
The bridge loan being used to acquire the Property is an interest only loan, which means that there will be no reduction in the principal balance.
Rising Interest Rates
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 an 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).
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 64, 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.
Management Risk
Investors will be relying solely on the Sponsor for the execution of its business plan. The Sponsor may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of 180 Buckingham Avenue, LLC (including Realty Mogul 64, 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. While the Sponsor has significant operating experience, 180 Buckingham Avenue, LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 64, LLC is pursuing a venture capital strategy through its investment in 180 Buckingham Avenue, LLC, and the manager of Realty Mogul 64, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.
Manager of Realty Mogul 64, LLC Will Participate in Sponsors' Promote Interest
The manager of Realty Mogul 64, 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 64, 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 64, LLC) from either net cash from operations or proceeds from the sale or refinancing of the asset. The 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. The Sponsor has chosen to make distributions quarterly.
Risk of Interest Charges for Sponsor Capital Calls
The amount of capital that may be required by 180 Buckingham Avenue, LLC from Realty Mogul 64, LLC is unknown, and although 180 Buckingham Avenue, 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 64, LLC does not intend to participate in a capital call if one is requested by 180 Buckingham Avenue, LLC, and in such event the manager of 180 Buckingham Avenue, LLC may accept additional contributions from other members of 180 Buckingham Avenue, LLC. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 64, LLC's interest in 180 Buckingham Avenue, LLC will suffer a proportionate amount of dilution. In addition, in the event that less than all of the members make additional capital contributions, the other members of the company shall have the right to make disproportionate additional capital contributions on behalf of any noncontributing members. Any such amounts shall accrue interest at a rate equal to the interest of the senior loan on the Property and the return of the disproportionate additional capital contributions have priority in the waterfall over the return of the capital contributions of Realty Mogul 64, LLC to 180 Buckingham Avenue, LLC.
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 64, 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.
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 64, 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.