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Funded
Multifamily
Bluerock Riverside DST
Jacksonville, FL
INVESTMENT STRATEGY
INVESTMENT TYPE
Equity
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100% funded
Offered By Bluerock Exchange, LLC
%* TARGET IRR %-%
5.8%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 7-10 years
Estimated First Distribution 10/2016
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Explore this Project
Overview
1031 eligible DST offering featuring a 94% leased Class A multifamily property with modern amenities. Strong institutional Sponsor with significant multifamily experience.
Property At A Glance
Year Built 2015
Number of Units 310
Current Occupancy 94%
Leverage 58.8% Loan-to-Cost/63.7% Loan-to-Value
Acquisition Price

$57,970,000

Investment Highlights
Newly Constructed Class A Multifamily
94% Occupancy and Located near Downtown of Major Metropolitan City
Experienced Sponsor with Multiple 1031 Eligible Multifamily Properties
Low Leveraged Property (58.8% LTC) with 2.2x Debt Service Coverage Ratio based on the Year 1 Proforma
Management
Cumulative Distributions

Bluerock Exchange, LLC

Bluerock Exchange, LLC, a Delaware limited liability company, is an affiliate of Bluerock Real Estate, LLC (“Bluerock”), a private equity real estate investment firm having sponsored a portfolio currently exceeding 16 million square feet of primarily apartment and office real estate. Bluerock's senior management team has an average of over 25 years investing experience, has been involved with acquiring over 35 million square feet of real estate worth approximately $10 billion, and has helped launch leading real estate private and public company platforms. The Trust is to be managed by BR Riverside DST Manager, LLC, a Delaware limited liability company (the “Manager”), an affiliate of Bluerock.

Bluerock Property Management, LLC (the "Property Manager") has subcontracted all day-to-day, on-site management, leasing and related functions for the Property to Matrix Residential, LLC (the "Property Sub-Manager" or "Matrix").  Matrix is a leading multifamily property management company in the United States. Headquartered in Atlanta, Matrix manages a portfolio of more than 67 properties, including approximately 16,000 apartment units under management, for a portfolio value exceeding $1 billion.*

*Per the Sponsor 

http://www.bluerockre.com/
  • R. Ramin Kamfar
    Founder and Chief Executive Officer
  • James G. Babb III
    Managing Director and Chief Investment Officer
  • Jordan B. Ruddy
    President and Chief Operating Officer
  • Jerold E. Novack
    Senior Vice President – Asset Management and Chief Financial Officer
  • Simon Brower
    Managing Director
R. Ramin Kamfar
Founder and Chief Executive Officer

Mr. Kamfar has served as the Chairman and Chief Executive Officer of Bluerock since its inception in October 2002. Mr. Kamfar has approximately 20 years of experience in building operating companies, and in various aspects of real estate, mergers and acquisitions, private equity investing, investment banking, public and private financings, and retail operations. From 1988 to 1993, Mr. Kamfar worked as an investment banker at Lehman Brothers Inc., New York, New York, where he specialized in mergers and acquisitions, corporate finance and private placements. From 1993 to 2002, Mr. Kamfar was the CEO and Chairman of New World Restaurant Group, Inc. (now known as Einstein Noah Restaurant Group, Inc (NASDAQ: BAGL)), a company he founded and grew through a consolidation and turnaround of several companies to approximately 800 locations and $400 million in gross revenues and a portfolio of brands which included Einstein Bros.® and Noah’s NY Bagels®. From 1999 to 2002, Mr. Kamfar served as an active investor, advisor and member of the Board of Directors of Vsource, Inc., a technology company subsequently sold to Symphony House (KL: SYMPHNY), a leading business process outsourcing company focused on the Fortune 500 and Global 500. Mr. Kamfar received an M.B.A. degree with distinction in Finance in 1988 from The Wharton School of the University of Pennsylvania, located in Philadelphia, Pennsylvania, and a B.S. degree with distinction in Finance in 1985 from the University of Maryland located in College Park, Maryland.

James G. Babb III
Managing Director and Chief Investment Officer

Mr. Babb serves as Managing Director and Chief Investment Officer of Bluerock, which he joined in July 2007. He oversees all real estate sourcing, diligence, structuring and acquisitions for Bluerock. He has been involved exclusively in real estate acquisition, management, financing and disposition for more than 20 years, primarily on behalf of investment funds since 1992. From 1992 to August 2003, Mr. Babb helped lead the residential and office acquisitions initiatives for Starwood Capital Group, or Starwood Capital, most recently as a Senior Vice President. Starwood Capital was formed in 1992 and during his tenure raised and invested funds on behalf of institutional investors through seven private real state funds, each of which had investment objectives similar to ours (but not limited to multifamily investments), and which in the aggregate ultimately invested approximately $8 billion in approximately 250 separate transactions. During such period, Mr. Babb led or shared investment responsibility for over 75 investment transactions totaling approximately $2.5 billion of asset value in more than 20 million square feet of residential, office and industrial properties located in 25 states and seven foreign countries, including a significant number of transactions that were contributed to the initial public offering of Equity Residential Properties Trust (NYSE: EQR), and to create iStar Financial
Inc. (NYSE: SFI). Mr. Babb was also active in Starwood Capital’s efforts to expand its platform to invest in Europe. From August 2003 to July 2007, Mr. Babb founded his own principal investment company, Bluepoint Capital, LLC. Bluepoint was a private real estate investment company focused on the acquisition, development and/or redevelopment of residential and commercial properties in the Northeast United States and Western Europe. Mr. Babb received a B.A. degree in Economics in 1987 from the University of North Carolina at Chapel Hill.

Jordan B. Ruddy
President and Chief Operating Officer

Jordan Ruddy serves as President and Chief Operating Officer for Bluerock, which he joined in 2002. Mr. Ruddy has 20 years of experience in real estate acquisitions, financings, management and dispositions. From 2000 to 2001, Mr. Ruddy served as an investment banker at Banc of America Securities LLC, where he was responsible for various types of real estate investment banking transactions including equity offerings, debt placements and asset sales. From 1997 to 2000, Mr. Ruddy served as Vice President of Amerimar Enterprises, a real estate company specializing in value-added investments nationwide, where he managed acquisitions, financings, leasing, asset management and dispositions involving over 1,500,000 square feet of commercial and multifamily real estate. From 1995 to 1997, Mr. Ruddy served as an investment banker at Smith Barney Inc., where he was responsible for various types of real estate investment banking transactions including equity offerings, debt placements and asset sales. From 1988 to 1993, Mr. Ruddy served in the real estate department of The Chase Manhattan Bank, most recently as a Second Vice President. Mr. Ruddy received an M.B.A. degree in Finance and Real Estate in 1995 from The Wharton School of the University of Pennsylvania, located in Philadelphia, Pennsylvania, and a B.S. degree with high honors in Economics in 1986 from the London School of Economics, located in London, England.

Jerold E. Novack
Senior Vice President – Asset Management and Chief Financial Officer

Mr. Novack serves Senior Vice President — Chief Financial Officer of Bluerock since October 2004. Mr. Novack has over 25 years of experience in public and private financings, operations and management. From June 1994 to April 2002, Mr. Novack served in senior financial positions of New World Restaurant Group, Inc. (now known as Einstein Noah Restaurant Group, Inc. (NASDAQ: BAGL)), including as its Executive Vice President and Chief Financial Officer. From 1982 to 1993, Mr. Novack held various senior financial positions at several specialty retail chains, including Mercantile Department Stores and Brooks Fashion Stores. Mr. Novack received a B.S. degree in Accounting in 1976 from Brooklyn College, City University of New York.

Simon Brower
Managing Director

Simon has been the Managing Director of Bluerock Exchange since June of 2016, and in his role, manages the marketing and distribution of Bluerock's 1031/DST products.

His experience in the securitized 1031 exchange business began in 2004, when he worked for TripleNet Properties, which later merged with Grubb & Ellis. Over a 6 year period, he held both sales and management positions and helped investors complete over $300,000,000 in 1031 exchanges. 

Immediately prior to joining Bluerock, Simon worked for KBS Capital Markets Group in Newport Beach, California. There, he served as Regional Vice President and was responsible for raising investor capital from financial advisors throughout Southern California.

Simon graduated from University of California, Irvine with a bachelor's degree in Economics. He lives in San Clemente with his wife and two daughters.

Track Record

Bluerock Portfolio

Currently Owned Properties
Property Name Location Property Type Date
Acquired
# of Apartment
Units
Purchase Price
Park at Chapel Hill Chapel Hill, NC MF 2/2011 198 $8,400,000
Springhouse Newport News, VA MF 12/2009 432 $29,250,000
Village Green Ann Arbor, MI MF 9/2012 520 $58,000,000
Enders Place Orlando, FL MF 10/2012 220 $25,100,000
MDA City Apartments Chicago, IL MF 12/2012 190 $54,870,000
Lansbrook Village Palm Harbor, FL MF 3/2014 607 $58,500,000
Arium Grandewood Orlando, FL MF 11/2014 306 $44,400,000
Park & Kingston Charlotte, NC MF 3/2015 168 $31,250,000
Fox Hill Austin, TX MF 3/2015 288 $38,150,000
Whetstone Apartments Durham, NC MF 5/2015 204 $35,600,000
Ashton Reserve Charlotte, NC MF 5/2015 473 $66,550,000
Arium Palms at World Gateway Orlando, FL MF 8/2015 252 $37,000,000
Sorrel Phillips Creek Rach Apartments Frisco, TX MF 12/2015 352 $52,050,000
Sovereign Apartments Fort Worth, TX MF 12/2015 322 $47,650,000
Citation Club Sarasota, FL MF 1/2016 320 $40,300,000
Summer Wind Apartments Naples, FL MF 1/2016 368 $46,000,000
Preserve at Henderson Beach Destin, FL MF 3/2016 340 $53,700,000
Villages at Lake Boone Raleigh, NC MF 1/2016 245 $39,600,000
Flagler Village Ft. Lauderdale, FL MF 1/2016 384 $126,580,000
Cheshire Bridge Apartments Atlanta, GA MF 5/2015 285 $48,200,000
West Morehead Charlotte, NC MF 1/2016 287 $57,290,000
CoHo House Atlanta, GA MF 7/2014 128 $20,756,000
Alexan Southside Houston, TX MF 1/2015 270 $48,550,000
Alexan City Centre Houston, TX MF 6/2014 340 $81,800,000
Domain Phase I Garland, TX MF 12/2015 301 $47,158,000
EOS Orlanda, FL MF 12/2013 296 $36,960,000
Beach House Jacksonville, FL MF 4/2016 228 $51,576,436
Landings at Four Corners Orlando, FL MF 2/2016 270 $38,846,134
Clearwater Clearwater, FL MF 9/2015 240 $46,250,038
Ansley Village Macon, GA MF 6/2014 294 $30,761,121
Alamance Reserve Burlington, NC MF 1/2014 240 $23,787,227
Chace Lake Villas Birmingham, AL MF 6/2012 264 $26,336,797
Mesa Ridge San Antonio, TX MF 3/2011 200 $10,941,471
Plaza Gardens Overland Park, KS MF 8/2008 200 $25,500,783
Stonebrook Nashville, TN MF 9/2011 320 $18,254,359
Valley Townhomes Puyallup, WA MF 7/2008 220 $42,578,189
1355 First Ave New York, NY Condo 1/2008 29 $64,282,064
Cummings Research Park I Huntsville, AL Office 11/2007 - $58,460,000
Cummings Research Park II Huntsville, AL Office 11/2007 - $63,990,000
Cummings Research Park III Huntsville, AL Office 11/2007 - $57,210,000
Summit at Southpoint Jacksonville, FL Office 12/2006 - $37,400,000
Town & Country St. Louis, MO Office 6/2008 - $51,790,000
Diversified Net Lease Portfolio Multiple Net Lease 4/2013 - $21,671,490
Total       10,601 $1,903,300,109
Sold Properties
Property Name Location Property Type Acquisition Date / Sale Date # of
Units
Acquisition
Price
Sale Price Gain/Loss*
Woodland Office Park Hauppauge, NY Office 4/2003 - 5/2006 - $16,900,000 $20,225,000 $3,325,000
Mesa Ridge San Antonio, TX MF 12/2008 - 3/2011 200 $6,550,000 $8,900,000 $2,350,000
The Ashford Atlanta, GA MF 11/2009 - 9/2011 221 $19,750,000 $24,500,000 $4,750,000
The Meadows Austin, TX MF 12/2008 - 10/2011 100 $3,450,000 $5,500,000 $2,050,000
Tech Ridge Austin, TX MF 2/2010 - 8/2012 256 $17,190,000 $26,000,000 $8,810,000
Stratford San Antonio, TX MF 12/2008 - 10/2012 269 $11,900,000 $15,000,000 $3,100,000
Note16 Nashville, TN MF 2/2012 - 6/2013 86 $11,300,000 $15,600,000 $4,300,000
Hillsboro Nashville, TN MF 9/2010 - 9/2013 201 $31,600,000 $44,000,000 $12,400,000
Meadowmont Chapel Hill, NC MF 4/2010 - 10/2013 258 $37,000,000 $49,000,000 $12,000,000
The Stratford Cary, NC MF 6/2012 - 12/2013 247 $20,300,000 $27,100,000 $6,800,000
Arbor Terrace of East Cobb Marietta, GA MF 5/2011 - 3/2014 89 $15,500,000 $21,250,000 $5,750,000
Creekside Village Chattanooga, TN MF 3/2010 - 3/2014 192 $14,250,000 $18,875,000 $4,625,000
Landmark St. Louis, MO Office 3/2007 - 7/2014 - $26,030,000 $18,500,000 ($7,530,000)
Estates at Perimeter Augusta, GA MF 9/2010 - 11/2014 240 $24,950,000 $26,000,000 $1,050,000
Grove at Waterford Hendersonville, TN MF 4/2012 - 11/2014 252 $27,875,000 $37,670,000 $9,795,000
23 Hundred Berry Hill Nashville, TN MF 10/2012 - 1/2015 266 $33,670,000 $61,200,000 $27,530,000
Villas at Oak Crest Chattanooga, TN MF 1/2012 - 9/2015 209 $15,520,000 $18,500,000 $2,980,000
North Park Towers Southfield, MI MF 12/2005 - 10/2015 313 $36,900,000 $18,200,000 ($18,700,000)
Artisan on 18th Nashville, TN MF 6/2013 - 10/2015 153 $22,300,000 $35,200,000 $12,900,000
Indian Springs El Paso, TX MF 9/2011 - 10/2015 232 $12,350,000 $12,800,000 $450,000
Realized Total       3,784 $405,285,000 $504,020,000 $98,735,000
Combined Portfolio Total       14,385 $2,308,585,109 $504,020,000 $98,735,000

 

*Figures do not reflect any fees that may have been associated with the transaction.

Business Plan

On June 13, 2016 the Sponsor acquired the Property from the original developer, Pollack Shores. Concurrently with the acquisition of the Property, the Trust obtained a loan from KeyBank under the Fannie Mae DUS program. The Property is master leased by the Trust to BR Riverside Leaseco, LLC ("Master Lessee" or "Master Tenant") an affiliate of the Sponsor. The Master Tenant sub-leases the apartment units to the end-user tenants pursuant to residential leases. The Trust is a passive owner of the Property and will not be involved in any manner in the active management of the Property. BR Riverside DST Manager, LLC (the "Manager") has been appointed to manage the Trust pursuant to the Trust Agreement.

The Trust expects to provide the Beneficial Owners a return on their investment in two primary ways: (i) in the form of monthly cash distributions to the Beneficial Owners; and (ii) upon any disposition of the Property. The Trust intends to dispose of all of the assets in the Trust in a single sale of the Property. This strategy is anticipated to provide investors with the opportunity to perform a 1031 exchange following the disposition.

Property

Investors are being offered the opportunity to invest in the acquisition of a Class A, urban-style 310-unit multifamily property located near Downtown Jacksonville, FL (the "Property"). The Property was constructed in 2015 and is currently 94% occupied.

BR Riverside, DST, a Delaware Statutory Trust ("DST" or "Trust"), purchased the Property in June 2016 and Bluerock Real Estate, LLC ("Bluerock") is offering beneficial interests in the Trust to investors. Bluerock Exchange, LLC (the "Sponsor") is retaining at least a 1% ownership interest in the Property and is offering up to 99% of the beneficial interests in the Trust to accredited investors ("Beneficial Owners"). The Trust expects to provide the Beneficial Owners a return on their investment in two primary ways: (i) in the form of monthly cash distributions to the Beneficial Owners; and (ii) upon any disposition of the Property.

The total offering amount is $64,134,298, of which $26,454,298 is equity and $37,680,000 is long-term fixed-rate financing. 

This offering is designed for two types of investors. "Existing 1031 Investors" who have already sold or are planning to sell an existing property that is 1031 eligible and want to invest in this offering to complete their 1031 exchange.  As well as "Cash Investors" who are investing with funds that are not part of an existing 1031 exchange but want the option for future sales to be 1031 exchange eligible. Existing 1031 Investors may invest for a minimum of $100,000; Cash Investors may invest for a minimum of $25,000.

Property Details

The Property is a 310-unit urban-style apartment community located at 100 Magnolia Street in the Riverside District near Downtown Jacksonville, FL. The Property was built in 2015 and is currently 94% occupied. The unit mix consists of 188 one-bedroom units and 122 two-bedroom units. Average in-place monthly rents are $1,296 per unit ranging from $1,060 to $1,900. In-place rents are significantly higher than market averages but on-par with the two other Class A multifamily buildings that are comparable to the Property.

The Property currently offers numerous amenities including a modern pool with dual aqua decks, fire pit & gas grilling stations, outdoor living room and gathering area, regulation-sized bocce court, clubhouse with full-service kitchen, TV and billiards bar lounge, two-story fitness center with cardio, cross-fit, and yoga space, private conference room and business center/Wi-Fi area, on-site event stylist with monthly socials, private study lounge, valet trash service, on-site dry cleaning, private garages and surface parking, dog park, trash compactor and bike racks.

Unit amenities include granite or quartz countertops, kitchen islands in select units, high-gloss cabinetry, imported Italian cabinets, tile backsplash in kitchens, stainless steel appliances, walk-in closets, private balconies, downtown skyline and river views in select units, and washers and dryers in all units.

Unit Mix
Unit Type # of Units Avg SF/Unit Avg Rent/Unit Avg Rent/SF
1/1 188 680 $1,089 $1.60
2/2 122 1,082 $1,616 $1.49
Total 310 838 $1,296 $1.55
Comparables

Rental Comparables*
  Subject 220 Riverside Bell Riverside The Strand** Total / Averages
# of Units 310 294 257 295 289
Year Built 2015 2015 2001 2007 2010
Average SF (Per Unit) 838 956 1,020 1,190 1,001
Average Rental Rate (Per Unit) $1,296 $1,572 $1,451 $1,777 $1,524
Average Rent PSF $1.55 $1.64 $1.42 $1.49 $1.53
Distance from Subject (miles) - 0.10 1.20 1.50 0.93

Source: Axiometrics/CoStar

*Minimal Class A product in the submarket

**This comparable property is a High-Rise Apartment

Sales Comparables
  Subject Broadstone Beach House Terrace at Town Center Hawthorne Apartments Uptown at St. Johns Total / Averages
Date May-16 April-16 January-16 May-15 October-14 -
# of Units 310 228 240 239 220 247
Year Built 2015 2009 2013 2013 2013 2013
Average SF (per Unit) 838 1,168 956 1,091 981 1,007
Purchase Price $57,970,000 $46,512,000 $39,000,000 $35,200,000 $37,700,000 $43,276,400
$/Unit $187,000 $204,000 $162,500 $147,280 $171,364 $174,429
Cap Rate 5.47% 5.29% 4.99% 5.40% 4.70% 5.17%
Distance(mi.) - 17.30 11.50 14.90 11.70 13.85

Source: Appraisal/CoStar

Property Appraisal available upon request. Please email investor-help@realtymogul.com.

Location

The Property is located along Magnolia Street in the Riverside District, less than one-mile from Downtown Jacksonville and a few blocks from the St. Johns River. ​The Riverside District is gentrifying into a revitalized and walkable mixed-use community with a Fresh Market Supermarket and many casual dining restaurants located in the area, adjacent to the Property. Properties in this location attract residents who are seeking a live/work/play environment with easy access to the job centers and amenities offered by Downtown Jacksonville.​​ 

There is easy access to I-95, I-10, and the Acosta Bridge which provides access to the Southside area of Jacksonville. Downtown Jacksonville also offers attractions such as the Convention Center, Baseball GroundsEverBank Field, and the Veterans Memorial Arena.

 

Market Overview

The Property is located in Duval County within the Jacksonville MSA. Jacksonville is the largest city by population in the state of Florida, and the Jacksonville MSA has a total population of approximately 1,573,606. Jacksonville is located in the northeast region of Florida and is centered on the banks of the St. Johns River, approximately 25 miles south of the Georgia state line. Jacksonville has seen a recovery since the recession, with strong rent growth and lower vacancies. Over the past 12 months ending in the first quarter of 2016, rents have grown approximately 6.1%, and are expected to outperform the historical average per Costar. Overall, Jacksonville has benefited from employment growth, rising median household income and increases in population.  

Per the 2010 census, Duval County had a population of 864,263 people. Approximately 87.1% of the population is under 65 years of age and the median age is 36.6 years old, which is lower compared to other major cities in Florida. Unemployment within the County is 4.7%, which is the same as the State of Florida and below the national average of 5.1%. The top regionally headquartered companies in Duval County include Bank of America (8,000 employees), Florida Blue (6,500), Citi (4,200), JPMorgan Chase (4,200), CSX (4,000) and Wells Fargo (3,500).  ​

Submarket Overview

Per Axiometrics, Northwest Jacksonville is not expected to deliver any units in 2016. It is forecasted to have 3.6% annual rent growth from 2017-2020, which is above the average of 3.3% for the 11 submarkets. During the last 12 months, 1,111 units were absorbed in lease-up properties across the market with 418 of them in the Northwest Jacksonville submarket. The submarket's average absorption for lease-up properties was 19 units per month, which is above the market average of 17 units per month, but below the Property's lease-up of 25 units per month. The submarket's average asking rent per unit for new lease-up properties was $1,361 per month, or $1.48 PSF, which is above the Property's current rent on a rent per unit basis and below the Property's current rent on a rent PSF basis. 

Market and Submarket Overview information above was obtained from Axiometrics, Costar and the Appraisal.

Demographic Information

Demographics
Distance from Property 1 Mile 3 Miles 5 Miles
Population 2,783 86,191 190,618
Population Projection (2020) 2,917 90,311 198,453
Average Age 43.9 38.5 38.5
Median Household Income $31,312 $29,064 $33,204
Average Household Size 1.6 2.2 2.3
Median Home Value $139,560 $87,861 $94,676
Owner Occupied Households 328 15,650 40,124
Renter Occupied Households 1,165 19,981 38,456
Population Growth 2015 -2020 4.76% 4.85% 4.11%

Demographic information above was obtained from CoStar and Census.gov

This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Debt $37,680,000
Equity $26,454,298
Total Sources of Funds $64,134,298
Uses of Funds Cost
Purchase Price $57,970,000
Acquisition Fee $1,159,400
Acquisition and Financing Closing Costs $1,415,253
Selling Commissions and Fees $2,447,023
Lender Reserves $1,142,622
Total Uses of Funds $64,134,298
Debt Assumptions

The Property has existing debt: 

  • Loan Origination Date: 6/13/2016
  • Lender: KeyBank Fannie Mae DUS
  • Loan Proceeds: $37,680,000
  • Loan to Cost: 58.8%
  • Interest Rate: 3.83% Fixed
  • Amortization: 30-year amortization
  • Interest Only: 5-year interest-only
  • Recourse: Non-recourse to the Trust, but recourse to the Trust and principals of the Sponsor for certain (i) "bad acts", and (ii) environmental indemnification
  • Term: 10 years
  • Prepayment Penalty: 84-month Yield Maintenance period

*Approximately $22,375,000 of bridge financing from KeyBank, McKenzie and Bluerock affiliates was used to acquire the Property.  The bridge financing has a blended rate of 5.0% and is expected to be repaid within 6 months with proceeds from the sale of the Beneficial Interests.   Realty Mogul is still in the process of reviewing all loan documents. 

Distributions

The Sponsor will make distributions directly to investors who own a beneficial interest in the DST on a pro-rata basis.

Distributions are projected to start for each investor within 60 days of the completion of that investors purchase of beneficial interest in the DST. Distributions are projected to continue on a monthly basis thereafter. These distributions are at the discretion of the Sponsor and made directly by the Sponsor, neither Realty Mogul Co. nor any of its affiliates have any control or discretion on the timing or amount of distributions.

Fees

Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:

One-Time Fees:
Type of Fee Amount of Fee Received By Paid From Notes
Acquisition Fee $1,159,400 Sponsor Capitalized Equity Contribution 2% of purchase price
Broker-Dealer Fee 6.0% Broker Dealers Capitalized Equity Contribution Paid to North Capital(1) or other licensed broker-dealers based on the amount of equity capital raised. Surplus fees retained by Sponsor.
Marketing & Due Diligence Fee 1.25% Broker Dealers Capitalized Equity Contribution 1.25% based on the amount of equity invested by investors through RealtyMogul.com, third-party Broker Dealers (including North Capital(1)) are entitled to additional fees based on equity they originate. Surplus fees retained by Sponsor.
Placement Agent Fee 1.40% Sponsor or Third Parties Capitalized Equity Contribution  
Disposition Fee 3% Sponsor Sale Proceeds 3% of Sales Price 
Recurring Fees:
Type of Fee Amount of Fee Received By Paid From Notes
Asset Management Fee 0.2% of Purchase Price Manager Operating Cash Flow  
Property Management Fee 2.75% of Effective Gross Income Property Manager Operating Cash Flow Property Manager will be Matrix Residential, an unaffiliated third-party.
Master Lease Operating Profit N/A Master Lessee Operating Cash Flow The Master Lessee will retain net operating revenues from the Property that exceed the total rent payable to the Trust under the Master Lease.

Notes:

The financials above assume that RealtyMogul.com investors purchase $1,000,000 of beneficiary interests in BR Riverside DST

(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.

The above presentation is based upon information supplied by the Sponsor or others.  Realty Mogul, Co. along with its 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.

This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.

Disclaimers/FAQs
Disclaimers

Review of PPM

Before making any investment decision, potential investors should carefully review the Private Placement Memorandum prepared by Sponsor (the "PPM"), including but not limited to, the Risk Factor section of the PPM and all exhibits of the PPM. The PPM contains additional risk factors and information regarding the DST that are not contained herein.  


Real Estate Investment Risk

Any investment in real estate carries certain inherent risks, and there is no guaranty as to the future occupancy of the Property or operating results.  Factors which might influence outcome include:

  • Changes in national or local economic conditions
  • Changes in the local market, including the entry of new competitors
  • Changes in the financial condition of the major tenant or tenants
  • The occurrence of casualties or natural disasters
  • The enactment of unfavorable laws

1031 Risk

Although it is intended that interests will be acquired on a tax-deferred basis under Code Section 1031, each investor must satisfy a number of technical requirements to qualify for tax deferral under Section 1031. Also, no assurance can be given that investors will be able to complete a qualifying Section 1031 exchange in the future when the Property is sold.


DST Risk

IRS established seven prohibitions over the powers of the DST Trustee, which include the following:

  • Once the offering is closed, there can be no future equity contribution to the DST by either current or new co-investors or beneficiaries
  • The DST Trustee cannot renegotiate the terms of the existing loans, nor can it borrow any new funds from any other lender or party
  • The DST Trustee cannot reinvest the proceeds from the sale of its investment real estate
  • The DST Trustee is limited to making capital expenditures with respect to the property to those for a) normal repair and maintenance, (b) minor non-structural capital improvements, and (c) those required by law
  • Any liquid cash held in the DST between distribution dates can only be invested in short-term debt obligations
  • All cash, other than necessary reserves, must be distributed to the co-investors or beneficiaries on a current basis, and
  • The Trustee cannot enter into new leases or renegotiate the current leases

Risks of Investing in Multifamily Rental Properties; Competition

The rental of multifamily residential space is a highly competitive business. Ownership of the Property could be adversely affected by competitive properties in the real estate market, which could affect the operations of the Property and the ultimate value of the Property. Success in owning the Property, therefore, will depend in part upon the ability of the Master Tenant, the Property Manager and the Property Sub-Manager (i) to retain current tenants at favorable rental rates; (ii) to attract other quality tenants upon the termination of existing leases if the existing tenants fail to renew or as otherwise needed; and (iii) to provide an attractive and convenient living environment for the tenants.


Competition from Apartment Communities in the Surrounding Geographic Area  

A number of apartment communities of similar size and amenities are located in the Property’s immediate apartment sub-market. See “Market and Location Overview – Competitive Properties” in the PPM. The Appraisal has identified at least five comparable apartment communities, each located within close proximity to the Property. There are a number of Class A apartment communities in the surrounding region that may be more attractive to renters. Competing apartment communities may reduce demand for the Property, increase vacancy rates, decrease rental rates and impact the value of the Property itself. There may also be additional real property available in the general vicinity of the Property that could support additional multifamily properties. If newer housing is built, it may siphon demand away from the Property, as newer housing tends to be more attractive to prospective tenants. It is possible that tenants from the Property will move to existing or new apartment communities in the surrounding area, which could adversely affect the financial performance of the Property. Competition from nearby apartment communities could make it more difficult to attract new tenants and ultimately sell the Property on a profitable basis. The Property could also experience competition for 17 real property investments from individuals, corporations and other entities engaged in real estate investment activities. Other properties and real estate investments may be more attractive than the Property. There is no assurance that the Property Manager or the Property Sub-Manager will be able to attract residents to the Property given these facts.tenants.


The Property is Subject to Risks Relating to its Local Real Estate Market 

Weakness or declines in the local economy and real estate market could cause vacancy rates at the Property to increase and could adversely affect the Trust’s ability to sell the Property under favorable terms. The factors which could affect economic conditions in the market generally include business layoffs, industry slowdowns, relocations of businesses, changing demographics, infrastructure quality and any oversupply of or reduced demand for real estate. Declines in the condition of the market could diminish your investment in and value of the Property.


Interest-Only Loan Period

The loan used to acquire the Property is expected to have an interest-only period for the first 60 months of the loan term, which means there will be no reduction in the principal balance during that interest-only period.


Performance of the Master Tenant Under the Master Lease

The ability of the Trust to meet its obligations is dependent upon the performance of the Master Tenant and its payment of Rent and other payments required under the Master Lease. ​


The Master Tenant Has a Limited Right to Defer Rental Payments Under the Master Lease

Under the Master Lease, if the Property’s operating cash flow is insufficient to pay all of the associated expenses of the Property (not including the Asset Management Fee), the full Base Rent, then in such event, the Master Tenant has a limited right to defer and accrue a portion of the Additional Rent and Supplemental Rent payments due under the Master Lease (but not any portion of the Base Rent required to make debt service payments due under the Loan Documents). Because the Master Tenant may accrue a portion of the Additional Rent and Supplemental Rent, it will not be required to call the demand note from Bluerock in order to make up such a shortfall. In such an instance, Purchasers may receive less or more varied distributions than they would have if the Master Tenant were required to call the demand note to fund any such Rent shortfall. Furthermore, if future cash flow from the Property or disposition proceeds are insufficient to pay the accrued Rent and Bluerock is unable to fund the demand note when called, then the Trust may never receive the full amount of any such accrued Rent, which could materially and adversely affect the returns to the Purchasers. Additionally, in the event that the Master Tenant elects to defer payment of a portion of the Rent, although the issue is not completely settled under existing law, under Section 467 of the Code, Beneficial Owners may be required to report and pay tax on rent in accordance with the rent schedule attached to the Master Lease, even though the Master Tenant may have elected to defer the payment of a portion of such rent. As a result, Beneficial Owners may be required to recognize rental income even though rent is not being fully paid, and therefore Beneficial Owners may have to use funds from other sources to pay tax on such income. See “Summary of the Master Lease.”


Conflict of Interest Risk

There are various potential conflicts of interest among the Sponsor, the Trust, the Managers, the Master Tenant, the Property Managers, and others engaged in the management and operation of the Property, one or more of whom may be affiliated with the others. 


Forward-Looking Statements

The PPM has based these forward-looking statements on its current expectations and predictions about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Property, including, among other things, factors discussed below:

  • General economic performance of the local and national economy;
  • Required capital expenditures at the Property
  • Competition from properties similar to and near the Property
  • Adverse changes in local population trends, market conditions, neighborhood values, and local economic and social conditions
  • Supply and demand for property such as the Property
  • Interest rates and real estate tax rates
  • Governmental rules, regulations and fiscal policies
  • The enactment of unfavorable real estate, rent control, environmental, zoning or hazardous material laws
  • Uninsured losses
  • Anticipated market capitalization rates at the time of sale

Limited Transferability of Securities

Each Beneficial Owner will be required to represent that he is acquiring the Interests for investment and not with a view to distribution or resale, that such Beneficial Owner understands the Interests are not freely transferable and, in any event, that such Beneficial Owner must bear the economic risk of investment in the Interests for an indefinite period of time because: (i) the Interests have not been registered under the Act or applicable state “Blue Sky” or securities laws; and (ii) the Interests cannot be sold unless they are subsequently registered or an exemption from such registration is available. There will be no market for the Interests and the Beneficial Owner cannot expect to be able to liquidate their investment in case of an emergency. See “Restrictions on Transferability” in the PPM. Finally, the sale of the Interests may have adverse federal income tax consequences. See “Federal Income Tax Consequences” in the PPM.


Sale of the Property

The proceeds realized from the sale of the Property will be distributed among the Beneficial Owners, but only after satisfaction of the claims of other third-party creditors and Affiliates of the Sponsor. The ability of a Beneficial Owner to recover all or any portion of its investment, accordingly, will depend on the amount of net proceeds realized from such sale and the amount of claims to be satisfied therefrom. There can be no assurance that the Beneficial Owners will realize gains on sale of the Property.


No Representation of Beneficial Owners

Each Beneficial Owner acknowledges and agrees in the Purchase Agreement and Escrow Instructions that legal counsel representing the Trust, the Sponsor, the Manager, the Master Tenant, the Depositor and their Affiliates do not represent, and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing, any or all of the Beneficial Owners.​


The Property is located in a hurricane zone, which could result in damage to the Property 

According to the PCA, the Property is located in a hurricane-susceptible region. Although the Trust is, or will be, required to maintain certain levels of insurance as set forth in the Master Lease and/or Loan Documents, these risks may not continue to be insurable on an economical basis, or current levels of coverage may not continue to be available.


​Environmental Risk 

The Property is situated on a former brownfield site due to the identification of incinerator ash at the site. Based on the completion of the remedial activities on the site by the City of Jacksonville, the site is considered a controlled recognized environmental condition and no further investigation is recommended per the Phase I.


Performance of the Master Tenant Under the Master Lease

The ability of the Trust to meet its obligations is dependent upon the performance of the Master Tenant and its payment of Rent and other payments required under the Master Lease. ​


Trustee and the Manager Have Limited Duties to Beneficial Owners

The Trustee of the Trust and the Manager will not owe any duties to the Beneficial Owners other than those duties set forth in the Trust Agreement. In performing its duties under the Trust Agreement, the Trustee will only be liable to the Beneficial Owners for its own willful misconduct, bad faith, fraud or gross negligence. Similarly, the Manager will only be liable to the Beneficial Owners for its own fraud or gross negligence.


Investor Equity Diluted 1%

The equity that will be utilized for purposes of calculating distributions is stated as $26,721,513, which is $267,215 more than the total equity contribution described in Sources & Uses. 100% of the equity required to close the transaction will be funded by investors, which will be diluted by 1% so that the Sponsor will have a 1% ownership stake for which they will make no cash contribution but will receive cash distributions.

The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Private Placement Memorandum for a discussion of additional risks.

The above presentation is based upon information supplied by the Sponsor and others. Realty Mogul, Co., along with its 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.

This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.

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