Durable cash flow from day one by the strength of the exceptional basis ($156k/unit), fixed-rate financing at 4.95%, and below market in-place rents allowing for a projected Year 1 cap rate (5.65%) without the need to be overly aggressive on rent growth.
Superior proforma returns as the Sponsor is purchasing the Property at a very favorable price per unit. The average sales price is over $200,000/unit in the area, and Sponsor is purchasing the Property at $156,000/unit.
The Property provides relatively low-cost value-add opportunities, such as burning off concessions, increasing occupancy, and catching up rents to past 60-day numbers.
Prism Multi Family Group
Prism Multi Family Group is a Canadian-based real estate investment and asset management company specializing in acquiring value-add multifamily residences in the United States. The goal of the Company is to bring these properties up to par operationally for tenants while maximizing the NOI of the Property, thereby increasing value for investors. They do this by hiring best-in-class management companies, eliminating unnecessary expenses, and maximizing potential market rent. The Company currently has ~$268M in AUM with properties spanning the southern United States, in Florida, Arizona, Texas, Nevada, and California.https://prismmf.com/
Mark Zolty has extensive residential real estate experience, having been in the industry for over 15 years. Prior to founding Prism, Mark held the title of Principal and Managing Director at Brass Enterprises Inc., a real estate investment company focused exclusively on multifamily properties. He was responsible for overseeing all of Brass’s asset management, acquisitions, and financing functions totaling $450,000,000 in AUM. Prior to joining Brass in 2009, Mark served as a Property Manager at MetCap Living Management, one of Canada’s largest private property management firms.
Since co-founding Prism 4 years ago Mitch has been instrumental in the acquisition of over $250 million in properties. Mitch harnesses his keen business acumen and operational knowledge, overseeing the company’s asset management, acquisition closings, and the implementation of Prism’s signature value-add strategy across the portfolio. A third-generation property operator, Mitch has spent much of his life learning from his family’s 65 years in the multifamily industry.
Bernard is a seasoned businessman with global experience. He founded Cambridge Global Payments in 1992 and turned it into the largest private foreign exchange house in North America. With his business acumen, he grew Cambridge from a 4-person office to a 400-person company with offices in North and South America, Europe, Asia, and Australia. He expanded the company from its roots in forex to a global payment service. In 2017 he sold the company for $900M. At Prism, Bernard is focused on growing the portfolio by enabling strategic partnerships.
Prism Multi Family Group Track Record
|Property||City, State||Asset Type||Acq Date||Units||Purchase Price||Sale Price|
|Las Vegas Portfolio (3 properties)||Las Vegas, NV||Multifamily||12/1/2018||390||$43,000,000||$72,000,000|
|Spectra at Reno||Las Vegas, NV||Multifamily||12/2/2018||90||$9,000,000||$12,250,000|
|Latitude 33||Palm Springs, CA||Multifamily||1/1/2018||121||$16,625,000||N/A|
|72 West||Tamarac, FL||Multifamily||10/1/2019||291||$47,000,000||N/A|
|Hamlet & Continental||Plantation and Lauderhill, FL||Multifamily||5/1/2020||399||$53,500,000||N/A|
|Lakehouse Apartments||Lake Elsinore, CA||Multifamily||12/1/2020||128||$23,500,000||N/A|
|Ridgeway Village||Glendale, AZ||Multifamily||8/1/2021||200||$28,500,000||N/A|
|Spectra Parks (formally Citizen House Decker)||Austin, TX||Multifamily||12/8/2021||324||$77,100,000||N/A|
|Spectra Paradise||Las Vegas, NV||Multifamily||3/1/2022||205||$22,500,000||N/A|
The above bios and track record were provided by Prism Multi Family Group and have not been independently verified by RealtyMogul.
Flats at 2030 is a value-add property totaling 237 units located in the West submarket of Phoenix. The Property experienced a fire and roof collapse in the last year and a half, and ownership has had to offer significant discounts and concessions to get occupancy into the mid-80 % range. The rental rates achieved at the asset over the past 60-days have been 10.16% over the current in-place rents (without factoring in new rents receiving 1 month free as a move-in concession), so there is room for natural rent growth.
The plan is to burn off the existing loss-to-lease, taper off the move-in concessions, and increase the occupancy from the current 81.4%. The Sponsor also plans on renovating 50% of the remaining unrenovated units (59 units to be renovated) at an average of $7,700/unit. The Sponsor will also have a $1,000,000 common area CapEx budget for projected roof section replacements, as well as any contingencies required throughout the Property. The Sponsor expects to achieve market rent growth of 3% annually throughout. The deal is a 5-year projected hold.
|Acquisition Cost||Total Amount||Per Unit|
|Mortgage Brokerage Fee||$222,000||$937|
|Total Acquisition Costs||$37,539,500||$158,395|
|Unit Renovations (59 units)||$453,760||$1,915|
|Total Capital Expenditures||$1,453,760|
The Sponsor is acquiring the asset at an exceptional basis ($156k/unit) due to the Property's significantly below market rents. Two years ago, the Property experienced a fire and roof collapse in one of the buildings. While the Property has been fully repaired, the fire led to a distressing situation where the current owner was forced to offer significant pricing discounts and concessions, and occupancy dipped to 81%. Prism will institute a strategic multi-pronged value-add plan to increase occupancy, end concessions, and bring rents in line with the current market.
|# of Units||Avg SF/Unit||Avg Rent||Rent PSF||Stab Rent||Rent PSF|
|1 Bed/1 Bath||128||575||$1,151||$2.00||$1,238||$2.15|
|2 Bed/1 Bath||2||700||$1,500||$2.14||$1,500||$2.14|
|Sandpainter Apartments||Urban 188||GC Square||The Villages at Metro Center||2025 West Apartments||U at 19th Apartments||Comp Averages||Flats at 2030|
|Address||2225 West Indian School Rd, Pheonix, AZ, 85015||1601 West Camelback Rd, Phoenix, AZ, 85015||3535 West Camelback Rd, Phoenix, AZ, 85019||3106 West Vogel Ave, Phoenix, AZ, 85051||2025 W Indian School Road, Phoenix, AZ 85015||4802 N 19th Avenue, Phoenix, AZ 85015||2030 West Indian School Rd, Phoenix, AZ 85015|
|Average Rental Rate||$1,340||$1,092||$1,078||$1,116||$1,149||$1,547||$1,244||$1,070|
|# Units (Studio)||24||92||112||24||128||N/A||76||107|
|# Units (1x1)||64||96||52||121||144||20||83||128|
|# Units (2x1)||20||N/A||N/A||96||4||30||38||2|
|Distance to Subject||0.2 miles||1.6 miles||2.7 miles||6.5 miles||0.1 miles||1.3 miles||2.1 miles|
|Sandpainter Apartments||Urban 188||GC Square||The Villages at Metro Center||Total/Averages||Flats at 2030|
|Date||Apr '22||Jan '22||Mar '22||Apr '22||Oct '22|
|Year Built||1978||1970||1976||1979||1976||1971, Renov 2018|
|Distance from Subject||0.2 miles||1.6 miles||2.7 miles||6.6 miles||2.2 miles|
Population growth, a diversifying economy, relative affordability, and business-friendly regulation have strengthened the Phoenix value proposition. Corporate taxes are minimal, local infrastructure provides access to national and international markets, and the city’s numerous colleges and universities provide companies with an educated talent pool. As a result, dozens of businesses have moved to Phoenix. Digital technology, financial services, aerospace, defense, electronics ‒ the city’s capital investment is staggering, and its job opportunities have skyrocketed, drawing in hundreds of workers eager to grow their careers.
Despite the robust population growth over the past several years, single-family development has not kept pace, and pricing has soared. Phoenix has been a top market for home price appreciation for the past few years. This low inventory and unwavering price escalation continues to force some would-be homeowners into the renter pool, leading to record-low vacancy rates and accelerated rent growth, even as the market receives a record level of new supply. Less than 10% of communities are offering concessions, down from 25% one year ago.
Investors are taking notice; Phoenix has become one of the top markets in the nation for investment volume, ahead of core markets including New York and Los Angeles (CoStar). About $17.8 billion worth of apartments has traded in Phoenix in the past 12 months. Sales volume in 2021 hit an all-time annual high and ranked second in the U.S. behind Atlanta. Key economic drivers, capital investments, and a growing amenity base will continue to generate housing demand in the submarket.
The Property is situated between Downtown Phoenix and the burgeoning Grand Canyon University. Significant employers within 11 minutes of the Property include Grand Canyon University, Kenyon Plastering Inc., and Empire Power Systems. Those are in addition to the numerous companies located in Midtown, Downtown, and the Camelback Corridor, including Banner Health, St. Joseph’s Hospital, U-Haul International, Wells Fargo, JP Morgan Chase, and Phoenix Children’s Hospital. The light rail began operation in 2008. With 20 stops in the submarket, residents have easy access to Uptown, Phoenix Sky Harbor Airport, and parts of the East Valley. It has also attracted new businesses.
|Sources of Funds||$ Amount||$/Unit|
|GP Investor Equity(1)||$1,400,000||$5,907|
|LP Investor Equity||$10,600,000||$44,725|
|Total Sources of Funds||$39,750,000||$167,722|
|Uses of Funds||$ Amount||$/Unit|
|Reserves for Prog Capital Exp||$1,453,760||$6,134|
|Loan Closing Costs||$222,000||$937|
|Funding of Reserves||$201,740||$851|
|Total Uses of Funds||$39,750,000||$167,722|
(1) The Sponsor’s equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor.
The expected terms of the debt financing are as follows:
- Lender: New York Community Bank
- Term: 5 years (+5 year extension option)
- LTV: 75.0%
- Estimated Proceeds: $27,750,000
- Interest Type: Fixed
- Annual Interest Rate: 4.95%
- Interest-Only Period: 2 years
- Amortization: 30 years
- Prepayment Terms: 5% year 1, 4% year 2, 2% year 3, 1% thereafter
- Extension Requirements: None
- Modeled Refinance: No
(1) 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.
Prism Multi Family Group intends to make distributions from Prism ISR LP as follows:
- To the Investors, pari passu, all operating cash flows to an 8.0% IRR;
- 80% / 20% (80% to Investors / 20% to Promoted/Carried Interest) of excess cash flow to a 12.0% IRR;
- 70% / 30% (70% to Investors / 30% to Promote/Carried Interest) of excess cash flow thereafter.
Prism Multi Family Group 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 June 2023 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Prism Multi Family Group, who may decide to delay distributions for any reason, including maintenance or capital reserves.
Prism Multi Family Group will receive a promoted/carried interest as indicated above.
|Cash Flow Summary|
|Year 1||Year 2||Year 3||Year 4||Year 5|
|Effective Gross Revenue||$3,380,560||$3,757,522||$3,996,839||$4,111,574||$4,229,648|
|Total Operating Expenses||$1,230,756||$1,287,239||$1,329,654||$1,357,291||$1,385,512|
|Net Operating Income||$2,090,554||$2,408,663||$2,603,716||$2,689,545||$2,778,103|
|Project-Level Cash Flows|
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Cash Flow||($12,000,000)||$802,247||$984,638||$775,862||$861,691||$28,843,518|
|RM Platform Investor-Level Cash Flows(1)|
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Cash Flow||($3,159,629)||$170,562||$216,160||$163,966||$185,423||$6,133,230|
|Investor-Level Cash Flows - Hypothetical $50,000 Investment(1)|
|Year 0||Year 1||Year 2||Year 3||Year 4||Year 5|
|Net Cash Flow||($50,000)||$2,699||$3,421||$2,595||$2,934||$97,056|
(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 Prism Multi Family Group's materials for details. The following fees and compensation will be paid(1)(2):
|Type of Fee||Amount of Fee||Received By||Paid From|
|Acquisition Fee||1.5% of Purchase Price ($555,000)||Prism Multi Family Group||Escrow at Closing|
|Technology Solution Licensing Fee(2)||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||1.5% of Gross Receipts||Prism Multi Family Group||Prism ISR LP|
|Administration Solution Licensing Fee(2)||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) Fees may be deferred to reduce impact to investor distributions.
(2) Please see the Fees and Disclaimers sections below for additional information concerning fees paid to RM Technologies, LLC.
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.
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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.
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