Low leverage of 60.5% loan-to-cost and positive leverage with a purchase capitalization rate of 5.02%. Further, the Property closed August 8th, 2022 with secured bank financing at low rate (given the current interest rate environment) of term SOFR + 200bps with a 200bps cap leading to a maximum all-in rate of 4%.
The Property has a strong history of operational performance including rent growth and strong occupancy. There is also significant upside through continuing the renovation program on the remaining 190 unrenovated units where each renovated unit provides an additional $201 in monthly premium. Renovation premiums have led to an increase in rent by roughly 20% and have been proven on previous renovations completed by the seller.
The Property is a unique, waterfront asset with 1,800 feet of direct frontage on Oso Bay. Additionally, the community is low density for the area, with 12 units per acre, and has unique amenities such as a climate-controlled storage facility, boat parking, the largest dog park in the market, bayside sports courts, gym with Peloton bikes and CrossFit equipment, and “Concerts on the Green”.
Pegasus Real Estate
Pegasus Real Estate is a Dallas-based private commercial real estate investment firm primarily focused on the acquisition and repositioning of properties located in major metropolitan markets. Pegasus is led by two senior professionals with a combined +30 years of experience in commercial real estate investments. The firm targets properties with unique attributes in strategic locations with favorable supply/demand fundamentals. Its goal is to achieve attractive, risk-adjusted returns for its investors and partners. The company has acquired over $450 million of assets over its history, with a focus to date on multifamily and industrial investments. It currently has an AUM in excess of $325 million, including a portfolio of multifamily properties in excess of 1,000 units under ownership. The company has achieved strong returns on all of its exited investments to date.http://pegasusre.com/
Justin has invested in, financed, and provided advisory services for over $2 Billion of Commercial Real Estate Projects.
- Previously founded StreetWealth Investments, an investment syndication platform.
- Previously Senior Director at Metropolitan Capital Advisors (MCA), a real estate investment banking firm.
- Prior to MCA, Justin worked at various private equity and investment banking firms including Aviva Investors, Ackman-Ziff and Jones Lang LaSalle (JLL).
- BA from Occidental College and an MS in Real Estate Finance from NYU.
Jonas has invested in, financed, acquired or disposed of over $5 Billion of Commercial Real Estate Projects.
- Previously served as Director of Investments at Silverado Interests, where he focused on the firm's investment opportunities.
- Previously worked at Behringer Harvard in both the multifamily fund and the holding company's capital markets group.
- Additionally, Jonas has worked for JP Morgan and Fidelity Investments.
- BBA in Finance from UNT and an MBA with a concentration in Finance from SMU.
|Property||City, State||Asset Type||Acq Date||Units or SF||Purchase Price||Sale Price||Distributions to Date||IRR Achieved||Multiple on Invested Capital|
|Ashford Apartment Homes||Carrollton, TX||Multi-Family||4/15/2019||265||$38,750,000||$69,500,000||$42,645,485||38.92%||2.55x|
|Summit Park A||Austin, TX||Light Industrial||1/6/2020||53,509||$8,250,000||-||$587,204|
|Villas of Arlington (FKA Vineyard at Arlington)||Arlington, TX||Multi-Family||3/9/2020||396||$32,150,000||$44,000,000||$16,204,942||44.12%||1.99x|
|Cornerstone at Overlook (FKA Collection at Overlook)||San Antonio, TX||Multi-Family||10/9/2020||411||$32,500,000||-||$1,161,725|
|2803 NE Loop 410||San Antonio, TX||Light Industrial||10/30/2020||74,733||$9,350,000||-||$732,953|
|Stonegrove Fall Creek||Humble, TX||Multi-Family||4/29/2021||322||$48,400,000||$71,967,000||$33,260,009||167.88%||3.22x|
|Westwood Business Park||Dallas, TX||Light Industrial||9/15/2021||227,894||$34,100,000||-||$391,000|
|4040 Royal and Commerce Center||Dallas, TX||Light Industrial||12/23/2021||271,014||$41,500,000||-||$572,000|
|Rienzi at Turtle Creek||Dallas, TX||Multi-Family||2/25/2022||152||$66,880,000||-||-|
|NOAH Apartments||San Antonio, TX||Multi-Family||3/10/2022||224||$42,250,000||-||$162,810|
The bio and track record were provided by the Sponsor and have not been verified by RealtyMogul
*Please see investment deck for more details
Pegasus Real Estate (PRE), the “Sponsor”, is seeking LP investors for the acquisition of Baypoint Apartments (the “Property”), a 1998 vintage 350-unit luxury waterfront multifamily property prominently located in Corpus Christi, Texas. The Property has direct frontage on Oso Bay, providing unmatched views and a large waterfront greenbelt with resort-style amenities. Previous ownership completed over $6 million of capital projects, including an extraordinary clubhouse renovation that grabs the attention of potential renters. Additionally, there is currently a unit enhancement program in place on 46 percent of the units, thus leaving significant upside for a new investor. The current ownership is achieving on average a $201 premium on the units with quartz counters. Baypoint presents investors with a unique value add opportunity that sets it apart from other Class A product in Corpus with substantial headroom to push rental rates. The Property has recently undergone an extensive renovation to all common area amenities, leaving the new buyer to focus on continuing the interior renovation plan. The capital improvement plan includes $14,000 per unit to renovate 54% of the units which contain classic interiors. Previous ownership recently began signing leases with a monthly $30 amenity fee, versus a one-time $75 fee. The Sponsor plans to continue this, which will translate to a significant increase in other income.
The Sponsor plans to buy and hold the Property, continuing the interior renovation program and improving its operating metrics through diligent expense management and pushing rents to match the growth of the submarket. The Property is currently 94% occupied with in place scheduled rents of $1,402 per month ($1.46/sf). The Sponsor contemplates a 4 year investment period. Bank financing has been secured (eliminating risk of re-trade) requiring interest-only payments over a five-year term at a rate of Term SOFR + 200bps with a 200bps cap.
Baypoint has long held the mantle as the premier bayfront community in Corpus, providing unmatched views and a large waterfront greenbelt. Previous ownership completed over $6 million of capital projects, including an extraordinary clubhouse renovation that grabs the attention of potential renters. Additionally, there is currently a unit enhancement program in place on 46 percent of the units, leaving significant upside for a new investor with proven renovation premiums. The current demographics at the Property have average incomes that can more than support the increased rents from the renovation premium. The Property is being sold because the current owner needs to free up liquidity to expand their hotel portfolio.
|Unit Type||# Units||Avg SF||Total SF||In-Place Rent||Market Rent||% Increase|
|Bella Palmera R||18||1385||24,930||$1,841||$2,112||14.7%|
*Units Designated with "R" are recently renovated units.
|Lighthouse Pointe||Breakers||The Villas of Ocean Drive||Bay Vista Apartments||Azalia at 7510||Averages||Subject|
|Building NRSF||145,803 SF||249,984 SF||174,001 SF||164,775 SF||387,136 SF||224,340 SF||338,450 SF|
|Address||4933 W Causeway Blvd||4901 Saratoga Blvd||4657 Ocean Drive||522 Hancock Ave||7510 Wooldridge Rd||1802 Ennis Joslin Rd|
|Distance from subject||12.5 mi||4.1 mi||3.4 mi||7.6 mi||1.4 mi||5.8 mi||0.0 mi|
*Please see investment deck for additional details
|Azure||Retreat by Watermark||Encore Crossings||Pearl Point||Cosmopolitan||Averages||Subject (Going-in)|
|Date Sold||June 22||June 22||July 22||July 22||December 21|
|NRSF||192,004 SF||302,455 SF||308,507 SF||195,695 SF||135,630 SF||226,858 SF||338,350 SF|
|Address||7221 S Staples St||5721 Timergate Dr||2133 Nodding Pines Dr||2400 FM 2165||2400 FM 2165|
|Distance from subject||5.9 mi||5.7 mi||3.2 mi||39.8 mi||9.7 mi||12.9 mi|
*Please see investment deck for additional details
The Corpus Christi, TX, Metropolitan Statistical Area (MSA) is located on the Gulf Coast approximately 200 miles southwest of Houston and has a population that exceeds 456,800 people. Residents in the Coastal Bend enjoy 113 miles of beach along the Gulf Coast, mild winters, and an average of 233 sunny days per year, well above the national average. Corpus Christi is a family-friendly city with an exceptional quality of life and a cost of living 20% lower than the national average.
Corpus Christi is a high-growth, coastal city with a skilled workforce and strong industrial base. The city has seen a recent surge of Millennials and was recently ranked #14 for Cities Where Millennials are Buying Homes (SmartAsset 2020). Corpus Christi’s strong employment drivers and numerous entertainment and recreational amenities make it a desirable place to live which is proven by strong demand and exceptional multifamily fundamentals.
- Approximately 11,265 residents live within a three-mile radius of the Property.
- Population within the TMA has an average age of 34.4 years which is younger than both the city and country's average age.
- The median household income within the Total Market Area (TMA) is $73,212 higher than the city and country's median household income.
- 44% of households within a three-mile radius of the TMA are renter-occupied, outpacing the city's average of 41%.
- Corpus Christi realized a 3.9% growth in rental income through Q2 2021 and market-wide occupancy was 94.6%.
- The TMA boasts a median home value that is 36% higher than the city's median home value.
|Sources of Funds||$ Amount||$/Unit|
|GP Investor Equity(1)||$3,016,454||$8,618|
|LP Investor Equity||$25,350,874||$72,431|
|Total Sources of Funds||$71,867,328||$205,335|
|Uses of Funds||$ Amount||$/Unit|
|Total Uses of Funds||$71,867,328||$205,335|
(1) The Sponsor’s equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor.
(2) Includes purchase of Interest Rate Cap ($1.6 Million)
The expected terms of the debt financing are as follows:
- Lender: Bank of Hope
- Term: 5 Years
- Loan-to-Cost: Initially 57% with Earnout 60.5%
- Loan-to-Value: Initially 62.6% with Earnout 66.4%
- Estimated Proceeds: $43,500,000 ($41,000,000 + $2,500,000 Earnout)
- Interest Type: Floating
- Spread Above SOFR: 2.00% with 200bps cap
- Interest-Only Period: Full term
- Amortization: N/A
- Prepayment Terms: 3-2-1-0-0
- Extension Requirements: N/A
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 Sponsors use of debt.
Pegasus Real Estate intends to make distributions as follows:
- To the Investors, pari passu, all operating cash flows to an 8.0% Preferred Return;
- Return of Capital to all Partners;
- 70% / 30% (70% to Investors / 30% to Promoted/Carried Interest) of excess cash flow thereafter.
Pegasus Real Estate intends to make distributions to investors after the payment of the company's liabilities (loan payments, operating expenses, and other fees as more specifically set forth in the LLC agreements, in addition to any member loans or returns due on member loan).
Distributions are expected to start in February 2023 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Pegasus Real Estate, who may decide to delay distributions for any reason, including maintenance or capital reserves.
Pegasus Real Estate will receive a promoted/carried interest as indicated above.
|Cash Flow Summary|
|Year 1||Year 2||Year 3||Year 4|
|Effective Gross Revenue||$6,962,666||$7,479,883||$8,047,011||$8,307,327|
|Total Operating Expenses||$3,126,705||$3,226,673||$3,322,635||$3,414,788|
|Net Operating Income||$3,835,961||$4,253,210||$4,724,376||$4,892,539|
|Project-Level Cash Flows|
|Year 0||Year 1||Year 2||Year 3||Year 4|
|Net Cash Flow||($28,367,328)||$1,428,834||$3,093,559||$2,581,406||$54,696,966|
|Investor-Level Cash Flows(1)|
|Year 0||Year 1||Year 2||Year 3||Year 4|
|Net Cash Flow||($4,000,000)||$161,476||$396,214||$323,997||$6,644,741|
|Investor-Level Cash Flows - Hypothetical $50,000 Investment(1)|
|Year 0||Year 1||Year 2||Year 3||Year 4|
|Net Cash Flow||($50,000)||$2,018||$4,953||$4,050||$83,059|
(1) 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.
Certain fees and compensation will be paid over the life of the transaction; please refer to Pegasus Real Estate's materials for details. The following fees and compensation will be paid(1)(2)(3)(4):
|Type of Fee||Amount of Fee||Received By||Paid From|
|Acquisition Fee||1.0% of Purchase Price||Pegasus Real Estate||Closing|
|Construction Oversight Fee||5.0% of Renovation Budget||Pegasus Real Estate||Cash Flow|
|Technology Solution Licensing Fee(1)||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||
Capitalization (at Sponsor’s discretion)
|Type of Fee||Amount of Fee||Received By||Paid From|
|Asset Management Fee||1.0% of Gross Receipts||Pegasus Real Estate||Cash Flow|
|Property Management Fee||2.0% of Gross Receipts||Third Party||Cash Flow|
|Administration Solution Licensing Fee(1)||Flat quarterly licensing fee of $125 per investor serviced by Sponsor through the license and use of RM Technologies’ Administration Solution||RM Technologies, LLC||Cash Flow|
(1) Please see the Fees and Disclaimers sections below for additional information concerning fees paid to RM Technologies, LLC.
(2) Fees may be deferred to reduce impact to investor distributions.
Sponsor’s Projects and Targets
*Assumptions and projections included in the information on this Page, including pro forma projections (collectively “Projections”) were provided by the Sponsor or an affiliate thereof and are not reflective of the position or opinions of, nor are they endorsed by, RM Technologies, LLC or its affiliates, or any other person or entity other than the Sponsor or its affiliates. RM Technologies, LLC and its affiliates do not provide any assurance of returns or the accuracy or reasonableness of the Projections provided by the Sponsor or its affiliates. There can be no assurance that the Sponsor’s methodology used for calculating any Projections, including Target IRR, Target Annualized Cash-on-Cash Return, and Target Equity Multiple (“Targets”), are appropriate or adequate. The Sponsor’s Projections and Targets are hypothetical, are not based on actual investment results, and are presented solely for the purpose of providing insight into the Sponsor’s investment objectives, detailing its anticipated risk and reward characteristics and for establishing a benchmark for future evaluation of the Sponsor’s performance. The Sponsor’s Projections and Targets are not a predictor, projection or guarantee of future performance. There can be no assurance that the Sponsor’s Projections or Targets will be met or that the Sponsor will be successful in meeting these Projections and Targets. Projections and Target returns should not be used as a primary basis for an investor’s decision to invest.
No Approval, Opinion or Representation, or Warranty by RM Technologies, LLC or it Affiliates
The information on this Page, including the 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”) was provided by the Sponsor or an affiliate thereof. RM Technologies, LLC makes no representations or warranties as to the accuracy of such information and accepts no liability therefor. No part of the information on this Page is intended to be binding on RM Technologies, LLC or its affiliates, or to supersede any of the Sponsor’s Investment Documents. The opinions expressed on this page are solely the opinions of the Sponsor and its affiliates and none of the opinions expressed on this Page are the opinions of, nor are they endorsed by, RM Technologies, LLC or its affiliates.
Sponsor’s Information Qualified by Investment Documents
The Information on this Page, including of the principal terms of the Sponsor’s offering, is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete, and each prospective investor should carefully read all of the Investment Documents and any supplements thereto, copies of which are available by clicking the links above or upon request, before deciding whether to make an investment. The information on this page should not be used as a primary basis for an investor’s decision to invest. In the event of an inconsistency between the information on this Page and the Investment Documents, investors should rely on the information contained in the Investment Documents. The information on this Page and the information in the Investment Documents are subject to last minute changes up to the closing date at the sole discretion of the Sponsor and its affiliates.
Risk of Investment
This real estate investment is speculative and involves substantial risk. There can be no assurances that all or any of the assumptions will be true or that actual performance will bear any relation to the hypothetical illustrations herein, and no guarantee or representation is made that investment objectives of the Sponsor will be achieved. In the event that actual performance is below the Sponsor’s Targets, your investment could be materially and adversely affected, and there can be no assurance that investors will not suffer significant losses. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Please see the Sponsor’s Investment Documents for additional information, including the Sponsor’s discussion concerning risk factors.
Risk of Forward-Looking Statements
Forward-looking statements are found here and in the applicable Investment Documents and may include words like “expects,” “intends,” “anticipates,” “estimates” and other similar words. These statements are intended to convey the Project Sponsor’s projections or expectations as of the date made. These statements are inherently subject to a variety of risks and uncertainties. Please see the applicable Investment Documents for disclosure relating to forward-looking statements. All forward-looking statements attributable to the Sponsor or its affiliates apply only as of the date of the offering and are expressly qualified in their entirety by the cautionary statements included elsewhere in the Investment Documents. Any financial projections are preliminary and subject to change; the Sponsor undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.
Sponsor’s use of Debt
A substantial portion of the total acquisition for the Property will be paid with borrowed funds, i.e., debt. There can be no assurance that the Sponsor will secure debt on the rates and terms noted above, or at all. All of the Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, including but not limited to the annual interest rate and possible increases in capital reserve requirements for funds to be held in a lender-controlled capital reserve account. The use of borrowed money to acquire real estate is referred to as leveraging. Leveraging increases the risk of loss. If the Sponsor were unable to pay the payments on the borrowed funds (called a "default"), the lender might foreclose, and the Sponsor could lose its investment in its property.
In addition, unless the debt provides for a fixed rate of interest during the term of the loan and/or any subsequent extensions, the total amount of interest paid over the term of the debt will increase by the same amount as the related index. For example, if the index rate increases by 0.50% (50 basis points) the interest rate on the loan will increase by the same amount. The amount of such interest rate increases may be capped either by its terms or as the result of the Sponsor entering into an arrangement that caps the interest rate with respect to the debt at a particular rate.
Sponsor’s Offering is Not Registered
The interests offered by the Sponsor will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement.”). In addition, the interests will not be registered under any state securities laws in reliance on exemptions from registration. Such interests are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the RealtyMogul Platform are intended solely for “Accredited Investors,” as that term is defined Rule 501(a) of the Securities Act. Prospective investors must certify that they are Accredited Investors and provide either certain supporting documents or third party verification, and must acknowledge that they have received and read all investment materials.
RM Technologies, LLC Fees and Conflicts
RM Technologies, LLC, an affiliate of RealtyMogul, operates the RealtyMogul Platform. RM Technologies, LLC charges a fixed, non-percentage-based licensing fee for real estate companies and their sponsors to license and use the RM Technologies LLC’s proprietary Platform, including one-time flat licensing fees for its Technology Solution and an ongoing quarterly flat licensing fees for its Administration Solution. An estimate of the Technology Solution licensing fee is included in the Closing Costs above and is intended to be capitalized into the transaction at the discretion of the Sponsor. The licensing fees received by RM Technologies, LLC are disclosed in the relevant operating agreement(s). Additionally, from time to time, employees of RM Technologies, LL C and its affiliates invest in Sponsor’s offering. RM Technologies LLC’s receipt of licensing fees and its employee’s investments in Sponsor’s offering creates a conflict of interest between RealtyMogul and its affiliates, and investors or prospective investors.
No Investment Advice
RealtyMogul and RM Technologies, LLC are not a registered broker-dealer, investment adviser or crowdfunding portal. Nothing on this Page should not be regarded as investment advice, either on behalf of a particular security or regarding an overall investment strategy, a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised, and we recommend that you consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any real estate investment.
For additional information on risks and disclosures visit https://www.realtymogul.com/investment-disclosure.
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