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Completed Equity
Multifamily
Westchester Apartments
Decatur, GA
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By St. Clair Holdings, LLC - St. Clair Apartments
15.8%* TARGET IRR 15.8%-%
4.5%* TARGET AVG CASH ON CASH
1.33* TARGET EQUITY MULTIPLE
Estimated Hold Period 2 years
Estimated First Distribution 12/2016
*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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Explore this Project
Overview
Property At A Glance
Years Built 1955 & 1961
Unit Type Entire Property is two bedroom, one bathroom units
Unit Size 850 square feet per unit
Parking Ratio 1.75 per unit
Acquisition Price

$2,470,000

Investment Highlights
Atlanta Suburb with Potentially Favorable Demographics
Located Near Atlanta and Downtown Decatur
Appreciation Potential Through Rental Increases
Institutional Local Sponsor
Management
Cumulative Distributions

St. Clair Holdings, LLC - St. Clair Apartments

St. Clair Holdings is a real estate investment company focused on a combination of opportunistic acquisitions and value-added programs that lead to high yield investment opportunities throughout the Southeast and Midwest United States.  The firm focuses on three strategic investment areas: student housing, residential development, and apartments.  St. Clair has over $300 million in assets under management between its three investment strategies.

St. Clair Apartments is St. Clair Holdings' existing multi-family investment arm.  They seek to acquire underperforming properties in prime locations across the Southeast and transform them into well-managed, vibrant communities that deliver attractive yields for investors.  Through well-conceived asset renovations and increasing operational efficiency, St. Clair Apartments seeks to offer optimally-located housing options that provide superior residential experiences while generating a strong return for investors.

http://www.stclairholdings.com/
  • W. Colin Cavill - Managing Principal - St. Clair Holdings, LLC
    Managing Principal
  • David P. Lang - Managing Principal - St. Clair Holdings, LLC
    Managing Principal
  • Robert Mascaro - President - St. Clair Apartments
    President
W. Colin Cavill - Managing Principal - St. Clair Holdings, LLC
Managing Principal

W. Colin Cavill has over 25 years of success on two continents in leadership, operations and capital markets and with deep experience as an entrepreneur, real estate investor and developer, operator, and business owner.  An Australian native, Colin began his commercial real estate career in Brisbane.  Colin is very well known in the real estate industry for setting standards, an eye for detail, creativity, and driving results.  For over 15 years, Colin served as a Partner and broker for industrial assets with Colliers International where he specialized in complex investment sales, equity placement, and joint ventures.  During his tenure with Colliers, Colin completed over 370 transactions in 32 states and represented over $1.3 billion in volume.

Colin takes an active, hands-on approach to his work, from rezoning negotiations, site development, construction, leasing, operational support, and asset management.  He leads his current company, St. Clair Holdings, LLC with impeccable integrity and believes that the key to success is to build equity, trust, and life-long partnerships.  His repeat institutional partners include JP Morgan, Lubert-Adler, and Protective Life Insurance.

Colin holds a Bachelor of Business in Real Estate Valuation from the University of Queensland and the Australian designation of chartered surveyor, Australian Valuers and Land Economists, AVLE (Econ).  Colin has been a lifelong supporter of Children’s causes and serves in leadership roles for both The Empty Stocking Fund and Downtown Children Development Center.  Colin also serves on the Trust for Public Land Advisory Board and the national Sustainable Development Council for ULI.

David P. Lang - Managing Principal - St. Clair Holdings, LLC
Managing Principal

With 27 years of experience, David Lang is an expert in value investing in the real estate industry. His primary investment philosophy is to risk the profit, but not the principle.  Prior to forming St Clair Holdings, David founded DPL Ventures in 2006, where he has been engaged as a consultant on various mixed-use land development projects valued in excess of $500 million. Since 2010, David has purchased and profitably sold a number of distressed multi-family properties, often acquiring control through note purchases.

From 1994 to 2005, David served as Executive Vice President for a private equity fund where he led acquisition efforts. In this role, he purchased over $750 million of office and multi-family properties.  From 1986 to 1994, David launched his real estate career as an investment analyst and broker at CBRE in Chicago, Illinois. In this role, he sold apartments, office and industrial buildings for institutions and private investors.

David holds a Masters of Business Administration from the Thunderbird School of Global Management and a Bachelor of Arts in International Relations from Michigan State University.

Robert Mascaro - President - St. Clair Apartments
President

With 40 years of experience, Robert Mascaro is an expert in real estate acquisition and value creation. As President of St. Clair Apartments, a division of St Clair Holdings, Bob is responsible for transforming underperforming multifamily communities into high yield returns for investors.  He leverages his deep and expert industry knowledge to assess, acquire, and lead physical and operational strategies to restore these communities’ vibrancy and value.

Prior to joining St. Clair, Bob served as the VP of Acquisition for GFI Capital Resource where he led the acquisition of income producing properties in the Southeast.  In this role, Bob purchased over $500 million multifamily properties (5,670 units).  From 2003 to 2006, Bob served as CEO for Wilkinson Real Estate Advisors.  During his tenure with Wilkinson, Bob purchased over $100 million in multifamily assets totaling 2,700 units.  From 1996 to 2003 Bob was Senior Vice President at the Atlanta Housing Authority (AHA), where he oversaw the privatization of AHA’s housing portfolio.  During his stint with AHA, he established the agency’s acquisition group and secured its first replacement housing property.  From 1981 to 1996, Bob served as Regional VP of the Southeast office for Dain Corp, a real estate syndicator based in Minneapolis. Bob grew the portfolio to over $150 million (3,500 units).

Bob is a Certified Property Manager and licensed Real Estate Broker in Georgia.  He attended Penn State University, majoring in real estate and real estate law.

Track Record

Sponsor Portfolio - St. Clair Apartments Assets
Property Name Location Asset Type # of Units Total Capitalization $/Unit
Azalea Woods Valdosta, GA Multifamily 81 $4,235,000 $52,284
Park at Riverview Atlanta, GA Multifamily 228 $12,768,000 $56,000
Peachtree Memorial Atlanta, GA Multifamily 50 $6,783,335 $135,667
Peachtree Hills Atlanta, GA Multifamily 118 $11,189,220 $94,824
Stacks on Main Nashville, TN Multifamily 268 $42,511,518 $158,625
             
  SubTotals/Averages 745 $77,487,073 $104,009
               
Sponsor Portfolio - Student Quarters Assets (St. Clair's Student Housing Arm)
University Property Name Location Asset Type # of
Units
# of Beds Total Capitalization $/Unit $/Bed
East Tennessee State The Heights at 1301 Johnson City, TN Student Housing 132 528 $15,368,533 $116,428 $29,107
Middle Tennessee State Raiders Crossing Murfreesboro, TN Student Housing 96 276 $9,522,365 $99,191 $34,501
Middle Tennessee State University Gables Murfreesboro, TN Student Housing 180 648 $17,598,323 $97,768 $27,158
Middle Tennessee State Woods at Greenland Murfreesboro, TN Student Housing 78 276 $8,753,103 $112,219 $31,714
Sam Houston State  Montgomery Village Huntsville, TX Student Housing 48 192 $5,970,350 $124,382 $31,096
University of Alabama University Downs Tuscaloosa, AL Student Housing 225 435 $24,330,575 $108,136 $55,932
University of NC - Greensboro Fulton Place Greensboro, NC Student Housing 86 244 $9,784,144 $113,769 $40,099
University of NC - Greensboro The Parc Greensboro, NC Student Housing 94 336 $12,323,478 $131,101 $36,677
Valdosta State Brooks Trace Valdosta, GA Student Housing 49 98 $4,661,523 $95,133 $47,567
Valdosta State Brookwood Forrest Valdosta, GA Student Housing 56 112 $4,638,529 $82,831 $41,415
Valdosta State Jackson Square Valdosta, GA Student Housing 80 168 $8,737,025 $109,213 $52,006
Valdosta State Little Jo Court Valdosta, GA Student Housing 32 64 $4,251,452 $132,858 $66,429
Valdosta State Sustella Townhomes Valdosta, GA Student Housing 42 126 $5,935,034 $141,310 $47,103
Valdosta State Azalea Woods Valdosta, GA Student Housing 117 334 $4,200,000 $35,897 $12,575
West Georgia Campus Walk Carrolton, GA Student Housing 121 204 $5,800,000 $47,934 $28,431
West Georgia University Lofts Carrolton, GA Student Housing 45 180 $4,070,000 $90,444 $22,611
Western Michigan 1324 Lafayette Kalamazoo, MI Student Housing 237 422 $14,699,672 $62,024 $34,833
Western Michigan Greenwood Kalamazoo, MI Student Housing 33 65 $2,264,168 $68,611 $34,833
Western Michigan Fraternity Drive Kalamazoo, MI Student Housing 32 154 $5,364,335 $167,635 $34,833
                 
    Subtotals/Averages 1,783 4,862 $168,272,609 $94,376 $34,610
                 
    Overall Totals/Averages** 2,528 4,862* $245,759,682 $198,386 $34,610*

*Note:  Overall Totals per bed figures only consider student housing assets held by Saint Clair.

**Note:  Sponsor has additional investments in development projects which are not included in the above table.

 

Business Plan

In this transaction, RealtyMogul.com investors will invest in Realty Mogul 65, LLC. Realty Mogul 65, LLC will subsequently invest in SCH Scott Blvd Owner, LLC, the entity that will hold title to the Property.

Soon after the acquisition, the Sponsor intends to begin implementing an external capital expenditure plan across the Property.  The Sponsor intends to replace roofing across the six buildings while touching-up the parking lot, updating the public stairwells in the buildings and updating landscaping across the Property.  In addition to the external renovations the Sponsor has planned, an internal capital expenditure plan of approximately $6,300 per unit is also budgeted for the Property.  The money set aside for the interiors will be focused primarily on upgrading the bathrooms in the units, with the Sponsor anticipating improving the plumbing, vanities and restroom floorings across the Property. In addition to the restroom renovations, the Sponsor plans to improve and replace flooring, countertops, HVAC, and water heating systems across the Property as necessary. 

The Sponsor intends to notify tenants that upon their lease expirations that their rent will be increased to $1,175 and the renovations completed.  Should the existing tenants elect to stay the Sponsor has said that implementing the planned internal capital expenditure can be done in a short amount of time without moving the tenants out of their units.  Should existing tenants choose to leave upon receiving notice of the increase in rental rates then the Sponsor will be positioned to quickly implement the capital improvements in the vacated unit and begin marketing the newly improved unit for release. 

A summary of the capital expenditure planned at the Property is as follows:

Property

RealtyMogul.com, along with St. Clair Holdings, LLC (the "Sponsor"), is providing the opportunity to invest in the acquisition and ownership of a 24-unit apartment complex in Decatur, GA (the "Property").  The Property is comprised of six buildings with four identical two bedroom, one bathroom units in each.

The primary objective of this investment is to acquire the Property below replacement cost, successfully implement planned interior and exterior capital expenditures, bring the in-place rents up to market, and sell the Property within approximately two (2) years.

The Sponsor sees this investment as an opportunity to acquire a well-located apartment complex, increase its current rents through planned capital expenditures and active leasing efforts, and potentially achieve upside appreciation upon the sale of the asset. 

 

The Westchester - Aerial Video from Realty Mogul on Vimeo.

Property Details

Built in 1955 and 1961, the Property is comprised of 24 two bedroom, one bathroom units across six buildings.  The units have effectively identical floorplans, and are about 850 square feet each.  The seller of the Property, Habersham Properties, has upgraded the kitchens in 20 of the 24 units at the Property with new cherry cabinetry and new appliances.  The lot size of 2.0 acres is relatively large for a 24-unit apartment complex in the area, as most new construction is allowed to have a greater unit density per lot size than The Westchester does.  The site is laid out in two groups of three buildings facing Scott Boulevard in a half circle.  The Property has parking behind the buildings and away from the road, with 1.75 parking spaces per unit.  The site layout allows for a central lawn area between the buildings and Scott Boulevard, creating communal outdoor area at the Property.

Comparables

Sales Comps (Property Appraisal)
Address Sale Date # of Units Year Built Purchase Price $ per Unit
70 Spruce Street, Atlanta, GA July 2015 28 1962 $2,985,000 $106,607
913 Briarcliff Road, Atlanta, GA July 2015 19 1963 $2,225,000 $117,105
1931 Briarcliff Circle, Atlanta, GA December 2016 82 1980 $13,750,000 $167,683
493 N Highland Avenue, Atlanta, GA January 2016 17 1969 $2,340,300 $137,665
Average September 2015 37 1969 $5,235,075 $145,892
Subject June 2016 24 1955 & 1961 $2,470,000 $104,167
Leasing Comps - Two Bedroom One Bathroom Units (Property Appraisal)
Deal Year Built Average Square Feet / Unit Average Rental Rate / Unit Average Rental Rate / Square Foot
411 Drexel Avenue, Decatur, GA 1964 985 $1,035 $1.05
142 Scott Boulevard, Decatur, GA 1961 1,049 $1,350 $1.29
432 Sycamore Drive, Decatur, GA 1950 790 $1,150 $1.46
219-A Garden Lane, Decatur, GA 1948 1,034 $1,250 $1.21
119 Willow Lane, Decatur, GA 1948 1,130 $1,195 $1.06
510 Coventry Road, Decatur, GA 1963 923 $1,095 $1.19
Average 1956 985 $1,179 $1.20
Subject - In-Place 1955 / 1961 985 $906 $1.07
Subject - Projected Post-Renovation 1955 - 1961 985 $1,175 $1.38

The appraiser who completed the Property's appraisal is local to Atlanta and thus was able to source lease comps from smaller, niché properties.  The lease comps the appraiser used are similar in age and quality to the Property.  However, it should be noted that the lease comparables used are entirely duplex / triplex / quadplexes, whereas The Westchester is a 24-unit apartment complex.  

Location

The Property is located approximately 1.5 miles from Downtown Decatur and is about 6.5 miles from Downtown and Midtown Atlanta.  Both Downtown and Midtown are approximately a 15 - 20 minute commute from the Property, which sits on Scott Boulevard, a thoroughfare which averages 43,000 vehicles per day.  The Property is located directly across the street from Westchester Elementary School and is approximately one mile from Downtown Decatur, GA and Decatur High School.  Downtown Decatur has several restaurant options, a new Sprouts, and access to the East-West metro line into Downtown Atlanta.  With such a wealth  of dining and entertainment options, Livability recently ranked Decatur as the 36th best small town in the United States.  In addition to the metro line in Downtown Decatur, there is a bus line that runs down Scott Boulevard into Downtown Atlanta.  The Property's relatively close access to both Downtown and Midtown Atlanta make it a logical suburban living option for Atlanta locals working in either part of town.  Additionally, the Property is about a six minute commute to both the Emory Hospital and Center for Disease Control (approximately 16,000 employees) and the Atlanta VA Medical Hospital, two of the major employers in the Decatur area.

Market Overview 

According to Colliers, the fundamentals in the Atlanta multi-family market either improved or remained strong across the board in 2015.  With market vacancy at approximately 5% and rent growth of almost 7% for 2015, Atlanta was a strong national performer in 2015, and Colliers projects underlying fundamentals to either remain consistent or continue to improve during 2016.  The strong growth and other economic indicators across the Atlanta multi-family market in 2015 led to a total sales transaction volume which put the Atlanta market fourth in the national rankings despite it only being the ninth most populous metropolitan area in the US.

Submarket Overview

According to CoStar Portfolio Strategy, the Decatur multi-family submarket has seen falling vacancy (currently at 5.5% overall) and strong rent growth (7.6% over the past year) despite an influx of new properties being added to the submarket.  Additionally, the vacancy in older and cheaper product in the submarket, such as The Westchester, is below the overall market vacancy of about 5%.  

Thanks to Downtown Decatur, the Decatur submarket offers a concentration of restaurants, bars, shopping, transportation and employment options to residents.  The combination of Downtown Decatur's social appeal, the submarket's strong job economy and the ease of access to jobs in Downtown and Midtown Atlanta from the area have not only allowed for improving fundamentals, but have led to a larger concentration of families earning $100,000+ in the submarket in recent years. The increase in high-earner families in the submarket should help dampen the expected increase in vacancies among newly constructed apartments in the coming year, as more residents in the submarket will be able to afford the new, more expensive apartment options.

Demographic Information

Demographics 1 Mile 3 Miles 5 Miles
Population   13,383 101,066 325,599
Projected Growth (2015-2020) 4.18% 4.07% 5.41%
Median HH Income  $53,028 $60,257 $53,095
Median Home Value $285,066 $303,054 $254,199
% of Renter Households 47.19% 45.16% 52.43%

Demographic information above was obtained from CoStar

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds  
Debt   $1,910,000
Equity   $1,103,006
Total Sources of Funds $3,013,006
     
Purchase Price $2,470,000
CapEx Reserve $262,706
Sponsor Acquisition Fee   $50,000
Sponsor Legal Costs $35,000
North Capital Broker Dealer Fee $35,000
Lender Origination and Legal $34,113
Title and Due Diligence $29,687
Interest Rate Cap $12,000
Legal Fees paid to Outside Counsel $10,000
Operating Reserve $40,000
Closing Costs & Prorations  $34,500
Total Uses of Funds $3,013,006
Debt Assumptions

The projected terms of the debt financing are as follows:

  • Lender: State Bank & Trust Company
  • Proceeds: $1,190,000
  • Term: 35 months
  • Rate: LIBOR + 2.95%* - Rate Locks first day of Month 13**
  • Amortization: 25 years
  • Interest Only Period: 12 months
  • Prepayment Fee:  None

*Note:  Anticipated effective interest rate at the time of the Property's purchase is 3.43%.

**Note:  Anticipated effective interest rate at the time of the rate locking for the Property is 3.70%.

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

SCH Scott Blvd Owner​, LLC intends to make distributions to Realty Mogul 65, LLC as follows: pro rata to the Members (including Realty Mogul 65, LLC) until all Members have received a 10.0% Internal Rate of Return ("IRR"), then a 77/23 (77% to members, 23% to Sponsor) of excess cash flows and appreciation to a 15.0% IRR to the Members.  Thereafter excess cash flow and appreciation shall be split 65/35. Realty Mogul 65, LLC will distribute 100% of its share of excess cash flow (after expenses and fees) to the members of Realty Mogul 65, LLC (the RealtyMogul.com investors). The manager of Realty Mogul 65, LLC will receive a portion (up to 10%) of the Sponsor's promote interest.

Distributions are projected to start in December 2016 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
Effective Gross Revenue $268,591 $319,812
Total Operating Expenses $127,801 $133,145
Net Operating Income $140,790 $186,666
Annual Debt Service $68,368 $113,246
Distributions to Realty Mogul 65, LLC Investors $48,907 $1,213,097
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 $50,000 Sponsor Capitalized Equity Contribution 2.02% of the property purchase price
Broker-Dealer Fee $35,000 North Capital (1) Capitalized Equity Contribution 3.66% of Realty Mogul 65, LLC invested equity
Recurring Fees:
Construction Management Fee 9.0% of Hard Costs Sponsor Capital Expenditure Reserve  
Asset Management Fee 2.0% of Effective Gross Income Sponsor Operating Cash Flow  
Management and Administrative Fee 1.0% of amount invested in Realty Mogul 65, LLC RM Manager, LLC Distributable Cash  RM Manager, LLC is the Manager of Realty Mogul 65, 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 65, 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/FAQs
Disclaimers

Apartment Complex Competition

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 but not limited to other apartment units that are currently available for rent, new apartments that are built and condominiums/houses that are for rent or sale. 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. If the Property is not able to successfully complete with the competitive residential alternatives in the local or regional area this could adversely affect the ability of Sponsor Entity to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Georgia Tornado Risk

Decatur, Georgia lies in the central part of the state of Georgia, in an area which can be subject to frequent and sometimes destructive tornadoes. There is no guarantee that the Sponsor Entity will obtain tornado insurance. If no insurance is obtained, a tornado could have a material adverse impact on the Sponsor Entity, and thus the Company. Further, even if tornado insurance is obtained, there can be no assurance that a tornado will not cause significant damage to the Property or otherwise interrupt its operations in a manner not covered by the Property’s insurance, in which case the business and financial condition of the Sponsor Entity.


Renovation Risks

The Sponsor intends to renovate the Property in order to be able to demand the significantly higher rents. 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 Company’s investment. There also 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 Company’s investment.


Interest Only Loan

The loan being used to acquire the Property is expected to have an interest-only period during the first twelve months 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 65, 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.


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 SCH Scott Blvd Owner​, LLC (including Realty Mogul 65, 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, SCH Scott Blvd Owner, LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 65, LLC is pursuing a venture capital strategy through its investment in SCH Scott Blvd Owner, LLC, and the manager of Realty Mogul 65, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.


Manager of Realty Mogul 65, LLC Will Participate in Sponsors' Promote Interest

The manager of Realty Mogul 65, 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 65, 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 65, 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 semi-annually.


Risk of Interest Charges for Sponsor Capital Calls

The amount of capital that may be required by SCH Scott Blvd Owner, LLC from Realty Mogul 65, LLC is unknown, and although SCH Scott Blvd Owner, 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 65, LLC does not intend to participate in a capital call if one is requested by SCH Scott Blvd Owner, LLC, and in such event the manager of SCH Scott Blvd Owner, LLC may accept additional contributions from other members of SCH Scott Blvd Owner, LLC. Amounts that the manager of SCH Scott Blvd Owner, LLC advances on behalf of Realty Mogul 65, 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 65, LLC's interest in SCH Scott Blvd Owner, 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 two (2) year hold period, Realty Mogul 65, 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 65, 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 SCH Scott Blvd Owner​, LLC, to force a sale of the Property or force a sale of the interests of Realty Mogul 65, LLC in SCH Scott Blvd Owner​, 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 65, 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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