FORMALIZED DUE DILIGENCE PROCESS 
Sponsors

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Escrow accounts

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Canceled
Estimated Hold Period 3 Years
Estimated First Distribution 12/2024
...
View Our Due Diligence Process
Offered By
Pearlmark and BoundTrain
Investment Strategy Value-Add
Investment Type Equity
Minimum Investment 25000
Overview
2300 Ninth Street South is a to-be-renovated, boutique office asset located in the desirable Columbia Pike neighborhood of Arlington, VA.
Location

The Property is proximate to Amazon's HQ2 at National Landing, where construction is underway on the first phase, a 2.1mm SF complex expected to open in 2023. Columbia Pike is expected to be a major beneficiary of Amazon HQ2 at National Landing, and the Property is only 1.5 miles away from the site. Sponsorship plans to capitalize on the proximity by offering a similarly amenitized office building at discounted rents to those in Crystal City near the Amazon HQ2 site. Boeing also announced that it will be relocating its headquarters from Chicago to Arlington. In addition to its headquarters, Boeing plans to develop a research and technology center. Boeing cited the access to world-class engineering and technical talent as a reason for their move. Raytheon also recently announced that it will relocate its global headquarters from Massachusetts to Arlington in 3Q22.  Raytheon is the second-largest defense company in the world after Lockheed Martin.

Market

The Sponsor believes that 2300 Ninth will offer best-in-class amenities in an excellent neighborhood location, with a higher-than-average parking ratio of 2.4 spaces per 1,000 SF, while also offering a rent discount to comparable properties in Crystal City and the Rosslyn-Ballston (RB) Corridor. Average A /B rents in Crystal City and the RB Corridor are now averaging $44 PSF and $53 PSF, respectively, according to Compstak and Costar. New leases at the Property are underwritten at an average of $40.79 PSF. 

Basis

The Property will be completely gut-renovated and is expected to be built to a standard that current tenants in the market are seeking. Sponsor intends to deliver a LEED-Silver, Fitwel, amenitized office building in the desirable Columbia Pike neighborhood at a basis that is projected to be well below replacement cost. The total Project budget of $34.4mm ($500/SF) is below the replacement cost of approximately $900 PSF for high-rise concrete and steel construction in Arlington County. 

Property at a glance
Year Built 1970
Gross Building Area 68,786 SF
NRSF 68,156 SF
Projected Occupancy (includes MTM leases) 32.2%
Target Stabilized Return on Cost 6.9%
Price ($6.5mm) + Costs Spent to Date $8,182,317
Investment Highlights
The location in the Columbia Pike neighborhood provides proximity to the decision-makers living in McLean and Vienna, VA. This location is a 10-minute drive to much of the executive housing in Northern Virginia and is inside the Beltway.
Sponsor expects to provide a newly renovated building with best-in-class amenities including a large conference room, exterior tenant plaza, bike storage, and lockers/showers. Additionally, the building will have a brand new VRF system providing energy efficiencies, and is expected to be LEED-Silver and Fitwel certified. The Property also has a higher than average parking ratio of 2.4 per 1,000 SF versus a typical Crystal City average of 2.0/1,000 SF, which is beneficial post-COVID. In addition, the Property will offer covered parking.
The Property is proximate to Boeing’s and Raytheon’s new headquarters, as they are both relocating from out of state largely driven by the world-class engineering and technical talent in the area. Additionally, Virginia Tech is building a $1B Innovation Campus to catalyze a new generation of advanced computing degrees.
The Property allows for smaller suite sizes given the floor plates of 10,000 SF on average, which is rare in this market. This coupled with the spec suite buildout during the renovation should allow for a quick lease-up of these spaces. Additionally, the smaller floor plates provide the potential for smaller tenants to lease an entire floor, a rare opportunity in this market.
The Property boasts views of the iconic D.C. monuments, RB Corridor, and National Landing. Additionally, the location has a walk score of 94 with multiple amenities such as coffee shops, dining options, fitness studios, grocery stores, and entertainment venues within walking distance of the Property.
There is a lack of speculative office construction in Northern Virginia and availability of entitled office land inside the Beltway. There is no development in the pipeline for the Columbia Pike Corridor, and only three spec buildings under construction in Northern Virginia.
Total Project budget of $34.4mm is inclusive of $8.9mm in acquisition costs, $22.7mm in construction costs and TI/LCs, and $2.9mm in carry/financing costs. Sponsor believes that the projected stabilized return on cost of 6.9% is healthy relative to the 5.75% exit cap rate. Additionally, the projected total budget is well inside of replacement cost (~$900 PSF) for this type of product in Arlington County.
*Sponsor is projecting a 16.1% IRR and a 1.56x equity multiple net of all fees and carried interest payments to Sponsor. Net of the Administration Solution Fee to RealtyMogul, and assuming a $50,000 commitment, Sponsor is projecting a 15.2% IRR and 1.53x equity multiple to investors.
Management
Cumulative Distributions

Pearlmark and BoundTrain

Pearlmark Real Estate

Pearlmark Real Estate ("Pearlmark") is a real estate private equity firm specializing in middle-market commercial real estate with a focus on office, industrial, and multifamily properties. It also seeks to invest in high-yield real estate debt opportunities throughout the United States. Pearlmark was founded in 1996 and is headquartered in Chicago, Illinois. Pearlmark operates as a boutique real estate manager and principal investor, allowing the company to be nimble, decisive, and creative in executing direct equity and debt investment strategies. Pearlmark’s expertise stretches across various property types in both primary and secondary markets, where the firm is dedicated to creating value via core-plus and value-add areas of the risk-return spectrum. Pearlmark’s principals invest personally alongside the firm’s investors in order to best align interests. Pearlmark has sponsored more than a dozen real estate equity and debt investment programs and completed 560 real estate equity and debt transactions on behalf of investors, representing approximately $5.3 billion in equity capital commitments and $13.8 billion in gross investment value. 

https://www.pearlmark.com/

BoundTrain Real Estate

BoundTrain Real Estate (“BoundTrain”) was founded in 2018 by Michael Klein and is led by principals Michael Klein, Jeff Tarae, and Kyle Wood. Headquartered in Falls Church, VA, BoundTrain pursues value-add and opportunistic office, residential, and retail; focused on Washington, DC along with select east coast markets. BoundTrain is in the process of their first office redevelopment in Falls Church, VA. Most of the major upgrades have been completed and they are working on the second phase of the spec suite program as of 2Q22. Prior to BoundTrain, Michael Klein was a Managing Director and Principal at Penzance and Vice President of Acquisitions and Finance at Akridge. Prior to BoundTrain, Jeff Tarae was a Managing Director at Newmark Knight Frank, responsible for leasing an average portfolio of 7mm SF in Northern Virginia. In this role, he executed on behalf of global real estate organizations such as The Blackstone Group, J.P. Morgan, ADIA, New York Life, and Prudential. Prior to BoundTrain, Kyle Wood was a Vice President at Penzance where he was responsible for the financial performance of an office and multifamily portfolio. Additionally, Kyle oversaw leasing strategy and execution, capital improvements, dispositions and refinancing, and managed joint venture relationships.

https://www.boundtrain.com/

  • Stephen Quazzo
    Chief Executive Officer (Pearlmark)
  • Douglas Lyons
    Managing Principal (Pearlmark)
  • Michael Klein
    Managing Principal (BoundTrain)
Stephen Quazzo
Chief Executive Officer (Pearlmark)

Stephen Quazzo is the Co-Founder and Chief Executive Officer of Pearlmark, with responsibility for leading the firm’s Investment and Management Committees. Prior to co-founding Pearlmark in 1996, Mr. Quazzo served as President of Equity Institutional Investors, Inc., a subsidiary of investor Sam Zell's private holding company, Equity Group Investments, Inc. Prior to joining the Zell organization, Mr. Quazzo served as a Vice President in the Real Estate Department of Goldman Sachs.

Mr. Quazzo is a Trustee for the Urban Land Institute and its Foundation, a member of the Pension Real Estate Association, and a licensed real estate broker in Illinois. He serves as a director of Marriott Vacations Worldwide Corp. (NYSE: VAC) and Phillips Edison & Company. In addition, Mr. Quazzo serves on the nonprofit boards of Rush University Medical Center, the Chicago Symphony Orchestra Endowment, the Chicago Parks Foundation, and Deerfield Academy. Mr. Quazzo earned his AB cum laude from Harvard University and his MBA from the Harvard University Graduate School of Business Administration.

Douglas Lyons
Managing Principal (Pearlmark)

Douglas W. Lyons is a Managing Principal of Pearlmark, with responsibility for the firm’s capital markets and debt investment activities. He is also a member of the firm’s Management and Investment Committees. Prior to joining Pearlmark in 1996, Mr. Lyons was Vice President of Equity Institutional Investors, Inc. where he was responsible for merchant banking activities and strategic portfolio management projects for the Zell/Merrill Lynch Real Estate Opportunity funds, the Zell/Chilmark Fund, and other Sam Zell-related affiliates. In addition, Mr. Lyons actively managed an institutional portfolio of REIT stocks. Previously, he worked in the New York Real Estate Capital Markets groups for Bankers Trust Company (1989-1991) and Merrill Lynch & Co. (1987-1989).

Mr. Lyons earned a BA degree in History from Amherst College, where he was a two-time All-American in soccer, and his MBA from the Harvard University Graduate School of Business Administration. He currently serves several nonprofits including the Harvard Alumni Real Estate Board, the U.S. Soccer Foundation, and the JDRF Illinois Chapter as Chairman of the Real Estate Games. Mr. Lyons is also a member of the Pension Real Estate Association and the Urban Land Institute, where he is a Trustee. Mr. Lyons currently serves as a Trustee of the Loomis Chaffee School chairing its Buildings and Grounds Committee and previously served as a Trustee for Lycée Français de Chicago and Chair of its Facilities Committee and as Treasurer of St. James Cathedral in Chicago.

Michael Klein
Managing Principal (BoundTrain)

Michael brings more than 15 years of real estate experience handling an estimated $3.8 billion in assets to his role as strategic, investment and development lead at BoundTrain.

Prior to founding BoundTrain, Michael was a Managing Director and Principal at Penzance, where he managed the investments team and Investment Committee process, executed investment strategy, identified and structured promising deals, oversaw due diligence for acquisitions, monitored leasing and asset management, and was responsible for the valuation of the portfolio as well as potential investments.

Before joining Penzance, Michael served as the Vice President of Acquisitions and Finance at Akridge.

Michael is a member of the Urban Land Institute, National Multifamily Housing Council, and NAIOP, where he serves on the Board of Directors of the Northern Virginia Chapter. Michael also spends his time outside of work and family coaching in the Great Falls Basketball Program. He is the 5th-grade boys Select Team A coach for the 2020/2021 season after coaching the 4th-grade boys Development Team in 2019/2020.  

A Boston native, he received his Bachelor of Science in Management from Rensselaer and his MBA from Hult International Business School.

Track Record

Pearlmark's Recent Equity Transactions

Property City, State Asset Type Acq Date Units or SF
Phoenix Gateway Center Phoenix, AZ Office 12/21/2011 437,603 SF
Redstone Corporate Center I & II Lynnwood, WA & Mountlake Terrace, WA Office 1/6/2012 327,899 SF
300 Grant San Francisco, CA Retail 12/21/2012 39,162 SF
2305 Mission College Boulevard Santa Clara, CA Office 12/9/2013 358,503 SF
Fairfield Inn New York, NY Hotel 9/6/2014 239 keys
5301 Patrick Henry Santa Clara, CA Office 12/19/2014 129,199 SF
Moffett Gateway Sunnyvale, CA Office 5/8/2015 612,691 SF
276-278 Newbury Boston, MA Retail 7/27/2015 12,593 SF
Abelia & Nolina Flats Austin, TX Multifamily 1/20/2016 732 units
La Jolla Terrace Fort Worth, TX Multifamily 7/31/2020 340 units
340-350 Royal Palm Way Palm Beach, FL Office 7/12/2013 44,625 SF
1001 Hawkins Nashville, TN Office 10/31/2016 37,572 SF
1125 17th Street Denver, CO Office 1/6/2017 494,689 SF
49 Music Square West Nashville, TN Office 11/6/2017 62,179 SF
Pleasant Creek Lancaster, TX Multifamily 1/29/2019 159 units
760 Aloha Seattle, WA Office 2/28/2019 14,000 SF
Pavilion Village Charlotte, NC Multifamily 6/20/2019 294 units
Meridian Park Nashville, TN Multifamily 2/25/2020 158 units
Hudson Valley Portfolio Kingston, NY Multifamily 1/29/2021 539 units
Park West & Parliament Bend San Antonio, TX Multifamily 5/4/2021 560 units
CEV Wilmington - Portfolio Wilmington, NC Multifamily / Student Housing 10/1/2021 415 units
Spartan Crossing Greensboro, NC Student Housing 4/28/2022 157 units

The Pearlmark and BoundTrain Principals bios and Pearlmark recent equity transactions were provided by Sponsor and have not been verified by RealtyMogul.

BoundTrain purchased the Property in July of 2020 and has spent time advancing the design and business plan enabling the Project to start construction and leasing within the next few months. Pearlmark and BoundTrain, collectively as Sponsor, plan to renovate and amenitize the Property, rebrand, and cater to local, private sector tenants who appreciate the quality and service but have limited options at a reasonable rent for this type of space.  

Sponsor plans to complete a full gut renovation down to steel/concrete on each floor with spec suites on floors three through seven, upgrades to the building façade, new mechanical, electrical, storefront/entrance, main lobby, exterior plaza, common areas, shared conference room, restrooms, elevator cabs, and deliver new technology updates and security enhancements.

Sponsor plans to first spec suite the entire third floor to allow for expedited lease-up and cater to the small tenants in the market who like to move quickly when leasing space. Upon completion of the third floor spec suites, Sponsor will continue to spec suite floors 4 through 7. Immediately following the completion of the build-out, Sponsor will bring the Property to stabilization, and ultimately exit the investment.

Performance Care Clinics (a physical therapy provider) leased 1,903 SF of the first floor retail space to take occupancy upon delivery of improvements.  Additionally, LEDC, an in-place tenant has signed an LOI for a 440 SF spec suite on the third floor. Sponsor is nearing the final stages of lease negotiations with a leading national residential realtor to take a total of 7,355 SF. This will bring the Property to 32.2% leased including the in-place month-to-month (MTM) tenants. 

Anchor Tenant Overview

Performance Care Clinics is a physical therapy group with locations in Northern Virginia and Tampa, FL. They provide 1 on 1 physical therapy as well as sports performance and personal training.  

Part of the first and all of the second floor is expected to be occupied by an office of one of the leading national residential realtors, with the intent for 2300 Ninth to be their main South Arlington, VA office. The tenant plans to use TI dollars as well as invest further into the space and hopes to install a stairway to connect the first and second floors to create a cohesive environment. 

The building has received initial interest from tenants in the following industries:

  • Government Contractors attracted to close proximity with quick access to the Pentagon and greater D.C. Government agencies
  • Business Services firms attracted to large, nearby multi/single-family housing markets in need of their services
  • Tech firms attracted to being near Amazon HQ2 coupled with the variety of housing mix for their employees 
Active Tenant Pursuits Touring Market:
  • Association – 7,000 SF
  • Non-Profit – 10,000 SF
  • Law Firm – 5,000 SF
  • Government Contractors – multiple requirements from 2,500 SF to 25,000 SF
  • Cyber Security Firm – 3,500 SF
  • Clean Medical – 10,000 SF 
Leasing Opportunity:
  • Sponsor is tracking 427 leases with expirations through 12/2023 and which currently occupy space in Arlington
  • ~70% of those groups are currently occupying 10K SF or less
  • Of that group, over 60% are in the 5K SF and under category 
Summary

Investor Q&A 7/14/2022

Property Information

BoundTrain purchased the Property in July 2020 and has spent almost 2 years planning and designing the redevelopment. The Property has seen few updates since construction in 1970 aside from elevator modernization and roof replacement. The Sponsor plans to complete a full gut renovation down to steel/concrete on each floor with spec suites on floors three through seven, upgrades to the building façade and roof, new mechanical, electrical, storefront/entrance, main lobby, exterior plaza, common areas, shared conference room, restrooms, elevator cabs, and deliver new technology updates and security enhancements.

Sponsor plans to capitalize on providing a well-amenitized, boutique office option that will cater to local, private sector tenants who have limited options at a reasonable rent for this type of product (15-20% below competition according to Costar) in the Arlington, Virginia office market, which is currently the most sought-after market in the D.C. Metro.

Rent Roll

Tenant SF % of Total Rent/SF Lease Start Lease Expiration Lease Type
In-Place Tenants and Fully Executed Leases
Performance Care Clinics 1,903 3% $35.00 7/1/2022 6/30/2033 Base Year Stop Net of Electric
Washington Workplace 1,686 2% $26.00 1/1/2020 10/31/2022 Base Year Stop
TMG Construction  3,396 5% $17.52   MTM Base Year Stop
Harner and Sarli (LAB) 647 1% $27.00   MTM Base Year Stop
SBDA 1,222 2% $21.00   MTM Base Year Stop
Blue Land Media 810 1% $24.00   MTM Base Year Stop
Alan Dobson, Attorney 860 1% $27.00   MTM Base Year Stop
Capitol Bridge, LLC 3,842 6% $20.00   MTM Base Year Stop
    21%        
In Negotiations/Under LOI
LEDC 440 1% $39.20 9/1/2022 11/30/2027 Base Year Stop
National Residential Realtor 7,355 11% $38.75 10/1/2022 9/30/2034 Base Year Stop
             
Total 22,161 32.2% $28.64      
Comparables

Lease Comparables

  Connexus Corporation Stg International Radiance Technologies Brown & Root Industrial Services American Association for Homecare Silicon Valley Bank Monument Economics Group Averages Subject
Date Signed Q4 2020 Q2 2019 Q1 2022 Q3 2021 Q2 2021 Q1 2022 Q3 2021    
Year Built 1985 2001 1980 1990 1970 1981 1981 1984 1970
Tenant Lease Size 2,354 SF 8,078 SF 7,909 SF 3,798 SF 1,516 SF 4,563 SF 4,790 SF 4,715 SF  
Building NRSF 221,389 SF 233,446 SF 451,572 SF 398,329 SF 316,353 SF 559,479 SF 559,479 SF 391,435 SF 68,156 SF
Rental Rate $33.00/SF $35.00/SF $46.50/SF $47.00/SF $54.00/SF $55.50/SF $56.42/SF $46.77/SF $40.79/SF
Lease Type Modified Gross Modified Gross Modified Gross Modified Gross Modified Gross Modified Gross Modified Gross   Modified Gross
Address 2800 Shirlington Rd 2900 South Quincy  1550 Crystal Drive 2451 Crystal Drive 1400 Crystal Drive 1000 Wilson Blvd 1000 Wilson Blvd   2300 9th Street South
Distance from Subject 1.5 miles 1.7 miles 1.8 miles 2.0 miles 1.8 miles 2.2 miles 2.2 miles 1.8 miles  

Source: Compstak and Costar

Sales Comparables

  1300 Wilson Blvd 1400 Crystal 2100-2120 S Washington Blvd Presidential Tower 1300 17th St N Averages Subject
(Total Budget)
Date Sold 2/1/2022 12/1/2021 9/1/2021 5/1/2019 1/1/2018    
Year Built 1968 2013 1987 1972 1980 1984 1970
NRSF 363,112 SF 316,353 SF 369,215 SF 383,524 SF 398,000 SF 366,041 SF 68,786 SF
Sale Price $245,000,000 $203,000,000 $204,400,000 $123,230,000 $250,000,000 $205,126,000 $34,361,553
$/SF $675/SF $642/SF $554/SF $321/SF $628/SF $564/SF $501/SF
Cap Rate 5.25% 5.45% 5.50% 5.75% 5.60% 5.51% 7.10%
Address 1300 Wilson Blvd 1400 Crystal Drive 2100-2120 S Washington Blvd 2550 S Clark 1300 17th St N   2300 9th Street South
Distance from Subject 2.1 miles 1.8 miles 0.6 miles 1.9 miles 2.1 miles 1.7 miles  

Source: Costar

Location Information

Market Overview

Washington DC is an economy anchored by the presence of the Federal Government, but its blossoming biotechnology sector in Maryland and cloud software and defense sectors in Northern Virginia could drive occupancy higher in the near term.  

Large mixed-use developments will house many of the prominent employers in the region. Amazon, Marriott, Fannie Mae, Volkswagen, and Chemonics are just a handful of companies expanding into new headquarters. On the government side, the Transportation Security Administration is moving into its new Springfield offices, and the Washington Metropolitan Area Transit Authority and the Security and Exchange Commission will move into new projects as well.

With many of the under-construction projects opening as corporate headquarters and build-to-suits, the space set to enter the market should not add excess pressure on availabilities. Leasing activity has been driven by relocations of companies already in the market, as well as expansions of new companies. Additionally, there has been an ongoing flight to quality trend in the market.  

SOURCE: COSTAR

Submarket Overview

Northern Virginia continues to attract HQ relocations. In 2Q21, Starkist Tuna announced it will relocate from Pittsburgh to Reston Town Center. 

In 2Q22, Boeing announced that it will relocate its headquarters from Chicago to Arlington. In addition to its headquarters, Boeing plans to develop research and technology. Boeing cited the access to world-class engineering and technical talent as a reason for their move. Raytheon also recently announced that it will relocate its global headquarters from Massachusetts to Arlington in 3Q22, a move that will see four of the top five U.S.-based aerospace and defense contractors headquartered in Virginia. Raytheon is the second-largest defense company in the world after Lockheed Martin.

Amazon has purchased 2 sites to develop 4.1mm SF. Construction on the first phase of Amazon's HQ2 is underway in National Landing, which Sponsor believes will be a catalyst for regional growth. Amazon has already leased 857k SF, and Phase I of construction will include 2mm SF in 2 office buildings. Amazon plans to add a minimum of 25,000 jobs by 2030 with the potential for 12,850 more by 2034 with an average salary of $150,000. Columbia Pike is expected to be a major beneficiary of Amazon HQ2. 

As tenants return to the office, they will continue to embrace a flight-to-quality trend that is unfolding across the region. In particular, buildings in close proximity to amenities stand to outperform, while functionally obsolete products could be candidates for conversion to residential or data centers.   

SOURCES: JLL AND COSTAR

Cap Stack
Sources & Uses

Total Capitalization

Sources of Funds $ Amount $/SF
Debt $21,975,000 $319
GP Investor Equity(1) $2,477,310 $36
LP Investor Equity $9,909,242 $144
Total Sources of Funds $34,361,553 $500
     
Uses of Funds $ Amount $/SF
Purchase Price $6,500,000 $94
Acquisition Fee $87,874 $1
Loan Fees $715,183 $10
Closing Costs $605,073 $9
Capitalized Costs Spent to Date $1,682,317 $24
Future TI/LC $3,747,090 $54
Future CapEx $15,150,275 $220
Future Spec Suites Floors 4-7 $3,730,721 $54
Working Capital  $231,289 $3
Interest/Operating Reserves $1,600,000 $23
Other Reserves $311,731 $5
Total Uses of Funds $34,361,553 $500

(1) The Sponsor’s equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor.

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Lender: Forbright Bank
  • Term: 3 years + two 12-month extensions (Senior); 20 years (C-PACE Term)
  • LTC: 64.0%
  • Estimated Proceeds: $18,275,000 (Senior Loan); $3,700,000 (C-PACE Loan). Amounts subject to change.
  • Interest Type (Senior): Floating
  • Spread above SOFR (Senior): 4.50%
  • Interest Type (C-PACE): Fixed
  • Annual Interest Rate (C-PACE): 4.70%
  • Interest-Only Period: 36 months (Senior); 60 months (C-PACE)
  • Amortization: 30 years (Senior); 15 years (C-PACE)
  • Prepayment Terms: $1,318,000 minimum interest on Senior loan; C-PACE prepayment penalty of 5% in year 1, 4% in year 2, 3% in year 3, 0% thereafter.
  • Extension Requirements: 0.25% extension fee; maximum 50% LTV on the then "as-is" value; minimum DSCR of 1.50x and DY of 11.0%
  • Modeled Refinance: No

(2) A substantial portion of the total acquisition for the Property will be paid with borrowed funds, i.e., debt.  Please carefully review the Disclaimers section below for additional information concerning the Sponsor's use of debt. 

Distributions

Pearlmark and BoundTrain intend to make distributions as follows:

  1. To the Investors, pari passu, all net cash flows to an 8.0% IRR;
  2. 20% promote over an 8.0% IRR;
  3. 30% promote over a 12.0% IRR;
  4. 40% promote over a 16.0% IRR.

Pearlmark and BoundTrain intend 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 4Q24 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Pearlmark and BoundTrain, who may decide to delay distributions for any reason, including maintenance or capital reserves.

Pearlmark and BoundTrain will receive a promoted/carried interest as indicated above.

Projected Cash Flow Summary
    Year 1 Year 2 Year 3
Effective Gross Revenue   $162,097 $1,343,776 $3,176,132
Total Operating Expenses   $492,886 $691,219 $803,819
Net Operating Income   ($330,789) $652,557 $2,372,313
         
Project-Level Cash Flows
  Year 0 Year 1 Year 2 Year 3
Net Cash Flow ($12,386,552) $0 $0 $20,608,997
         
Investor-Level Cash Flows - Hypothetical $50,000 Investment(3)(4)
  Year 0 Year 1 Year 2 Year 3
Net Cash Flow ($50,000) $0 $0 $76,488

(3) RM Technologies, LLC and its affiliates do not provide any assurance of returns.  Returns presented are net of all fees.  Please carefully review the Fees and Disclaimers sections below for additional information concerning Sponsor’s use or projected returns and fees paid to Sponsor and RM Technologies, LLC.

(4) Sponsor is projecting a 16.1% IRR and a 1.56x equity multiple net of all fees and carried interest payments to Sponsor. Net of the Administration Solution Fee to RealtyMogul, and assuming a $50,000 commitment, Sponsor is projecting a 15.2% IRR and 1.53x equity multiple to investors.

 

Fees

Certain fees and compensation will be paid over the life of the transaction; please refer to Pearlmark and BoundTrain's private placement memorandum (PPM) and LLC agreement for details. The following fees and compensation will be paid(5)(6)(7)(8):

One-Time Fees:
Type of Fee Amount of Fee Received By Paid From
Acquisition Fee 1.0% of Purchase Price, capital spent prior to closing, and closing costs Pearlmark Upfront Capitalization
Base Building Construction Management Fee(7) 5% on cumulative costs up to $1,000,000; 4% on cumulative costs between $1,000,000 and $2,000,000; 3.5% on cumulative costs over $2,000,000. Maximum $290,000 BoundTrain Upfront Capitalization
Spec Suite/TI/LC Construction Management Fee(7) 5% on cumulative costs up to $250,000; 4% on cumulative costs between $250,000 and $500,000; 3.5% on cumulative costs over $500,000 BoundTrain Upfront Capitalization
Leasing Oversight Fee(8) 1% on gross rent due over initial lease term (up to 10 years) on new leases; 0.50% on renewals; 0.75% on expansions BoundTrain Upfront Capitalization
Other LP Fee $125,000, equal to 1.0% of Other LP Commitment, which is expected to be $5,000,000 Other LP Upfront Capitalization
Technology Solution Licensing Fee(6) Flat one-time licensing fees of $15,000 plus $1,500 per each prospective investor onboarded by Sponsor through its license and use of RM Technologies’ Technology Solution RM Technologies, LLC

Upfront Capitalization

       
Recurring Fees:
Type of Fee Amount of Fee Received By Paid From
Administration Solution Licensing Fee(6) Flat quarterly licensing fee of $125 per investor serviced by Sponsor through the license and use of  RM Technologies’ Administration Solution RM Technologies, LLC Distributions to investors sourced through the RealtyMogul Platform.
GP Cost Reimbursement $10,000 annually Pearlmark Cash Flow
Accounting Fee $10,000 annually Pearlmark Cash Flow
Asset Management Fee 1% of contributed equity 50% Pearlmark, 50% BoundTrain Cash Flow
Property Management Fee The greater of 2.5% of effective gross revenue and $3,250/month (grown 3.0% annually) Colliers Cash Flow

(5) See Investment Documents for more information on fees. 

(6) Please see the Fees and Disclaimers sections below for additional information concerning fees paid to RM Technologies, LLC.

(7) If the tenant elects not to use BoundTrain (or an affiliate of BoundTrain) for construction management, BoundTrain will receive a one percent (1%) oversight fee of the total tenant improvements budget for such project, such fee to be deducted from the tenant improvement allowance.

(8) Underwriting assumes a leasing fee of 7% to a third-party broker.

The following offering documents have been prepared and are being delivered by the Sponsor of this investment opportunity, and not by RM Securities, LLC. RM Securities, LLC and its associated persons did not assist in preparing, do not explicitly or implicitly adopt or endorse, and are not otherwise responsible for, the Sponsors offering documents posted below or any content therein.
RM Securities, LLC and its Affiliates Compensation

RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.

For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.

No Approval, Opinion or Representation, or Warranty by RM Securities, LLC

Sponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.

Sponsor’s Information Qualified by Investment Documents

The information on this Page is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete and subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.

Risk of Investment

This investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.

No Reliance on Forward-Looking Statements; Sponsor Assumptions

Sponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.

Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.

No Reliance on Past Performance

Any description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.

Sponsor’s Use of Debt

A substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.

Sponsor’s Offering is Not Registered

Sponsor’s securities offering will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement”). In addition, the offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership interests) are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.

No Investment Advice

Nothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.

1031 Exchange Risk

Internal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.

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