Birge & Held Asset Management
Birge & Held is a national apartment real estate, private equity and investment firm located in Carmel, Indiana. In an effort to take advantage of strategic real estate acquisition opportunities in the distressed real estate marketplace, J. Taggart Birge and Andrew J. Held started what is now Birge & Held in 2008. Birge & Held has acquired and managed over $400,000,000 in multi-family assets across the country and currently employs over 80 professionals, per the Sponsor. Through private equity and creative debt structures, Birge & Held continues to grow its portfolio of assets. For capital investors who seek to identify and pursue apartment real estate opportunities, Birge & Held provides an experienced operating partner.http://www.birgeandheld.com/
Mr. Birge has been involved in commercial development and financing since 1997. He graduated cum laude from Indiana University in 1993 (BA – Political Science). In 1997, he received his JD from the University of Virginia and joined Bose McKinney & Evans, LLP, Indianapolis, Indiana, as an associate, becoming a partner in the real estate group in 2004. His legal practice focused on office and industrial development representing Duke Realty Corporation on numerous transactions around the United States. As an attorney, Mr. Birge was ranked by his peers as one the best real estate attorneys in the State of Indiana.
In 2004, Mr. Birge withdrew from the partnership of Bose McKinney & Evans and joined Lauth Property Group. While at Lauth Property Group, Mr. Birge developed approximately $200 million worth of office and health care buildings around the country. Initially, Mr. Birge ran the Midwest office and health care development for Lauth Property Group and in 2007 assumed responsibility for all of Lauth’s medical development in the United States. During his tenure at Lauth, they were named a top ten developer of medical office buildings as tracked by Modern Healthcare.
Since 2008, Mr. Birge has overseen the acquisition, financing and management of BH's $230 million in multifamily assets. Mr. Birge currently serves on the Board of Directors of Bowen Engineering, the Sports Corporation Board, Heart of Gold Charity Board, and the Orchard School Board of Trustees.
Mr. Held has been involved in commercial and residential development and financing since 2003. He graduated from Indiana University in 1999 (BA – History) where he was a student-athlete and received academic All-American honors. In 2002, he received his JD from the Indiana University School of Law and practiced with the law firms of Hackman Hullet & Cracraft and Bose McKinney & Evans. His practice areas focused on commercial and residential real estate development, handling acquisitions, leasing, financing and dispositions for many of the largest commercial development and construction companies in the United States.
In 2007, Mr. Held received his MBA with a finance focus from Butler University. Since 2008, Mr. Held has overseen BH’s acquisition, financing and management of the company’s $230 million in multifamily assets. Mr. Held currently serves as the President of the Penrod Society focused on raising millions of dollars to serve the Indiana cultural and arts community. He was recently named to the Indianapolis Business Journal’s 2013 “Forty Under Forty” Class.
|Property Name||Location||Number of Units||Date Acquired||Total Cost Basis|
|Beacon Hill Apartments||Indianapolis, IN||14||4/1/13||$1,000,000|
|Clinton Estates||Indianapolis, IN||184||7/1/13||$13,553,680|
|College Court Condominiums||Frankfort, IN||48||11/25/13||$1,800,000|
|Cypress Square Apartments||Indianapolis, IN||188||3/27/14||$12,350,000|
|Eagle Creek Apartments||Muncie, IN||67||4/25/14||$5,279,925|
|Echo Ridge Apartments||Muncie, IN||36||4/25/14||$2,376,609|
|Elston Point Apartments||Elkhart, IN||76||10/16/14||$3,550,000|
|English Village Apartments||Elkhart, IN||95||10/16/14||$3,300,000|
|Greenleaf Hunter's Pond Apartments||Indianapolis, IN||208||10/22/14||$8,600,000|
|Kensington/Chesterfield||South Bend, IN||60||11/7/14||$6,000,000|
|Parc Bordeaux Apartments||Bloomington, IN||62||11/7/14||$4,000,000|
|Pheasant Run Apartments||Indianapolis, IN||208||12/9/14||$8,700,000|
|Railway Manor||Bloomington, IN||32||8/31/15||$3,575,000|
|Regency Park||Indianapolis, IN||632||9/18/15||$45,000,000|
|The Arbors||Bloomington, IN||24||10/6/15||$2,732,000|
|The Oaks of Eagle Creek Apartments||Indianapolis, IN||304||12/22/15||$15,322,000|
|Walnut Springs Apartments||Lafayette, IN||62||1/19/16||$3,882,000|
|Woodwind Apartments||Lafayette, IN||44||1/28/16||$2,220,000|
|The Villager||Centerville, OH||276||2/19/16||$22,900,000|
|Chesapeake Landing||Centerville, OH||256||4/28/16||$22,110,000|
|Beechmill Apartments||Indianapolis, IN||256||5/6/16||$19,175,000|
|Trails at Lakeside Apartments||Indianapolis, IN||208||9/8/16||$18,100,000|
|Lakeshore Apartments||Indianapolis, IN||740||9/15/16||$84,900,000|
|Cross Creek Apartments||Indianapolis, IN||208||1/9/17||$14,725,000|
|Property Name||Location||Number of Units||Date Acquired||Total Cost Basis||Sale Price|
|Harborview Condominiums||San Diego, CA||81||3/1/09||$20,406,491||$22,000,000|
|Bear Valley Apartments||San Diego, CA||24||11/8/10||$4,200,000||$4,900,000|
|Walnut Manor Apartments||Muncie, IN||120||11/30/11||$2,471,700||$4,850,000|
|Centro Apartments||San Diego, CA||60||12/19/11||$11,213,764||$15,800,000|
|Palm Valley Apartments||Goodyear, AZ||264||4/1/12||$22,925,000||$27,200,000|
|Fox Brook Apartments||Muncie, IN||41||4/2/12||$1,275,000||$1,900,000|
|Total Currently Owned and Sold||5,086||$401,583,763||$76,650,000|
*Performance information provided by the Sponsor
In this transaction, RealtyMogul.com investors will invest in Realty Mogul 34, LLC. Realty Mogul 34, LLC is to subsequently invest in BH Trails at Lakeside, LLC, a limited liability company that is to (through another wholly-owned entity) hold title to the Property.
Birge & Held Asset Management (the "Sponsor") believes that rents at the Property are currently below market, and plans to implement approximately $2,100,000 ($10.1K per unit) of interior and exterior renovations to achieve rental increases averaging $112/unit, a 14% increase. Renovated units at the property are currently achieving rental premiums of $127 - $171 per unit. To date, only 14 units at the Property have been renovated, while 23 have been mildly updated under the previous ownership. The Sponsor intends to renovate an additional 180 units over a 30 month time frame. $8K/unit has been budgeted for interior renovations which will include new kitchen and bathroom cabinets, counters, sinks, LVT wood flooring in the kitchen, bathrooms and common areas, new kitchen appliances, doors, and fixtures, along with new paint and trim. Exterior renovations of $660K have been budgeted and will include a fitness center expansion, clubhouse remodel, siding replacement, new signage, and grounds landscaping.
The Sponsor also intends to enhance the overall operations of the Property through improved management and marketing efforts, drawing from their ownership experience of 3,900 multifamily units to date (see Management Track Record). Upon completion of the business plan, the Sponsor intends on selling the Property within seven years.
RealtyMogul.com, along with Birge & Held Asset Management, LLC (the "Sponsor"), is providing the opportunity to invest in the acquisition and renovation of a 208-unit multifamily property located in Indianapolis, IN (the "Property").
The primary objective of this investment is to acquire the Property, perform interior renovations on 180 of the units along with exterior and common area renovations, bring rents up to market, and sell the Property within approximately seven (7) years.
The Sponsor sees this investment as an opportunity to capitalize on a well-located asset that has achieved rental premiums in excess of the Sponsor's projected rents on renovated units.
Trails at Lakeside is a 208‐unit apartment community located on Indianapolis' affluent north side. The 1989‐built Property consists of one bedroom/one bathroom, two bedroom/one bathroom, two bedroom/two bathroom and three bedroom/ two bathroom garden‐style units. Units range in size from 594 square feet for a one bedroom to 1,246 square feet for a three bedroom. The exterior finish is oriented strand board (a wood product), and the roofs are pitched with asphalt shingles.
Community amenities include a fitness center, outdoor pool and sundeck, carports, dog park, package acceptance, and 24‐hour emergency maintenance. The property features 364 parking spaces (1.75 spaces per unit), including 52 carports, and is currently 93% occupied.
|Unit Type||# of Units||% of Total||Unit SF||Avg. In-Place Rent||Avg. In-Place Rent/ SF|
|1 Bed / 1 Bath (A1)||48||23.1%||594||$626||$1.05|
|1 Bed / 1 Bath (A2)||56||26.9%||752||$743||$0.99|
|2 Bed / 1 Bath||16||7.7%||910||$793||$0.87|
|2 Bed / 2 Bath||72||34.6%||1,056||$907||$0.86|
|3 Bed / 2 Bath||16||7.7%||1,246||$1,034||$0.83|
|1 Bed / 1 Bath||2 Bed / 1 Bath||2 Bed / 2 Bath||3 Bed / 2 Bath|
|Property||Miles from Subject||Built||Renovated||Occ.||Avg. Size||Avg. Rent||Avg. Size||Avg. Rent||Avg. Size||Avg. Rent||Avg. Size||Avg. Rent|
|Brockton||0.5||1964||Partial - 2013||95%||734||$794||844||$811||1,119||$994||1,340||$1,129|
|Ashford at Keystone||2.7||1967||Partial - 2013||94%||700||$720||900||$795||-||-||1,056||$1,145|
|Monon Place - Phase I||3||1966||2013||96%||-||-||860||$913||1,088||$1,160||1,320||$1,732|
|Chateau De Ville||0.1||1965||-||95%||700||$666||991||$768||1,350||$868||1,550||$990|
|Chateau in the Woods||0.3||1973||-||97%||712||$679||1,182||$799||1,144||$774||1,590||$1,009|
|Subject - In-Place||1989||Partial - 2015||93%||679||$676||910||$793||1,056||$907||1,246||$1,034|
|Discount to Comp Set||$54||$24||$13||$159|
*Sources: Axiometrics, Costar, Tikijian Associates
|Property Name||Miles from Subject||Date Sold||Class||Year Built||Number of Units||Sales Price||Price/Unit||Cap Rate|
|Woods of Castleton||5.6||May-16||B||1982||260||$16,500,000||$63,462||5.9%|
|Park at Eagle Creek||10.5||Mar-16||A-||1997||240||$24,300,000||$101,250||5.9%|
|Oaks of Eagle Creek||10.7||Sep-15||B||1987||632||$44,500,000||$70,411||6.2%|
|Eagle Lake Landing||12.3||Mar-15||B+||1976||277||$13,200,000||$47,653||7.0%|
|Village on Spring Mill||15.5||Oct-15||A-||1997||400||$50,000,000||$125,000||5.3%|
Sources: Real Capital Analytics, Costar, Tikijian Associates
Trails at Lakeside is located in a convenient location on the affluent North side of Indianapolis. The Property is two miles East of the very popular Broad Ripple Village, one of the city’s six official Cultural Districts. Broad Ripple Village offers a high concentration of unique restaurants, bars, shops and live entertainment clubs and is one of the most popular entertainment districts in Indianapolis for college students and young adults. The Property is just a few miles south of the Keystone at the Crossing / Castleton area which is one of Indianapolis’ most affluent and desirable areas from a commercial and residential perspective. Keystone at the Crossing is home to a variety of high-end retail amenities including The Fashion Mall, an upscale shopping mall owned and operated by Simon Property Group, the largest owner of retail shopping malls in the United States with headquarters in Indianapolis. Downtown Indianapolis is a short 12 to 15‐minute drive South of the Property, offering an employment base of over 130,000 jobs and an abundance of entertainment opportunities.
Indianapolis ranked as the nation's 14th largest city in 2015, according to estimates from the U.S. Census Bureau. Population of the Indianapolis Metropolitan Statistical Area (MSA), which includes Marion County, as well as Boone, Hamilton, Hancock, Hendricks, Johnson, Madison, Morgan, and Shelby counties, totaled 1,971,274 residents in 2014, making it the 33rd largest MSA in the country according to the Bureau of Economic Analysis (bea.gov).
Several national and multi-national companies have world, national or regional headquarters in Indianapolis. The national headquarters of pharmaceutical giant Eli Lilly, as well as many of the company's manufacturing facilities, are located in the city. Lilly employs approximately 12,000 people in greater Indianapolis. Simon Property Group, the country's largest shopping center developer, is based in Indianapolis and recently completed construction of a 15-story office building across from the Indiana Statehouse. Adjacent to the Property is Community Hospital South, one of Community Health Network’s hospitals which received a $130 million expansion in 2010, a new world-class cancer center in 2014, and a two-story heart center in 2015.
No less than five traditional colleges and universities are located in Indianapolis. The largest, Indiana University-Purdue University at Indianapolis (IUPUI), is the state's third largest university, with a student body in excess of 30,000 and staff of over 6,800. Ivy Tech, a state-wide community college, has over 12,000 students studying in Indianapolis. Private schools Butler University, Marian University, and the University of Indianapolis have student populations which, taken together, total almost 12,000.
According to Axiometrics, the Castleton submarket has the fourth highest occupancy in the market (out of 12 submarkets), with a 2Q2016 average occupancy of 94.8%. Axiometrics predicts a 5.5% average vacancy rate over the next five years for the submarket, along with an effective annual rent growth of 3.3% over the same period.
|Average Rent Growth||2.8%||3.4%||3.6%||3.8%||3.0%||2.6%|
|Distance from Property||1 Mile||3 Miles||5 Miles|
|Median Household Income (2015)||$51,176||$46,481||$40,457|
Demographic information above was obtained from CoStar and Census.gov
|Sources of Funds||Cost|
|Total Sources of Funds||$17,804,773|
|Uses of Funds||Cost|
|Bridge Loan Escrows & Other Costs||$100,000|
|Sponsor Acquisition/ Guarantor Fee||$240,000|
|HUD Financing Costs||$18,110|
|Working Capital/ PCNA Contingency||$102,500|
|Bridge Loan Financing Costs||$94,163|
|Due Diligence, Legal & Closing Costs||$50,000|
|Broker-Dealer Placement Fee||$60,000|
|Capital Reserves (Pre-HUD)||$1,140,000|
|Total Uses of Funds||$17,804,773|
The projected terms of the debt financing are as follows:
- Lender: Merchants Bank of Indiana
- Total Proceeds: $13,695,000
- Term: 12 Months
- Rate: 30 Day LIBOR + 275 bps
- Amortization: Interest Only
- Loan to Cost: 76.9%
- Loan to Purchase Price: 85.6%
- Lender: HUD
- Principal Balance: $15,420,000
- Term: 35 Years
- Rate: 3.50%
- Amortization: 35 Years
- Loan to Value: 85% of Purchase Price + Repair Reserves
There can be no assurance that a lender will provide debt on the rates and terms noted above, or at all. All rates and terms of the debt financing are subject to lender approval, including but not limited to possible increases in capital reserve requirements for funds to be held in a lender controlled capital reserve account.
Order of Distributions to Realty Mogul 34, LLC (Operating Income)
- First, to investors for any accumulated unpaid preferred return
- Second, a cumulative non-compounded 8% annual preferred return
- Then, any excess balance will be split 70% to members pari passu and 30% to Sponsor
Order of Distributions to Realty Mogul 34, LLC (Sales or Refinance Proceeds)
- First, to investors for any accumulated unpaid preferred return
- Second, return of Capital Contribution
- Then, any excess balance will be split 70% to members pari passu and 30% to Sponsor
Realty Mogul 34, LLC is expected to distribute 100% of its share of excess cash flow (after expenses) to the members of Realty Mogul 34, LLC (the RealtyMogul.com investors). The manager of Realty Mogul 34, LLC is to receive a portion (up to 10%) of the Sponsor's promote interest. Depreciation and tax losses will be allocated based on the promote structure, i.e. 70/30 (70% to members, 30% to Sponsor). Solely in connection with the contribution of the Property to a "real estate investment trust" (as defined under IRS Code Section 856), the Sponsor may require that after at least one year of ownership, investors agree to sell any portion of their equity units at a price equal to the greater of fair market value or the amount required to achieve a 20% IRR to the investor.
Distributions are projected to start in March 2017 and are projected to continue on a quarterly basis thereafter, until the Sponsor obtains HUD Financing, after which distributions are projected to be made semi-annually. These distributions are at the discretion of the Sponsor, who may decide to delay distributions for any reason, including maintenance or capital reserves.
|Year 1||Year 2||Year 3||Year 4||Year 5||Year 6||Year 7|
|Effective Gross Revenue||$2,038,383||$2,170,432||$2,313,664||$2,405,191||$2,486,923||$2,571,557||$2,657,128|
|Total Operating Expenses||$927,630||$956,891||$1,013,135||$1,068,827||$1,125,688||$1,184,273||$1,218,734|
|Net Operating Income||$1,110,753||$1,213,541||$1,300,528||$1,336,364||$1,361,235||$1,387,284||$1,438,394|
|Distributions to Realty Mogul 34, LLC Investors||$100,900||$119,144||$159,976||$169,508||$176,251||$183,310||$2,633,993|
Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Acquisition/ Guarantor Fee||$240,000||Sponsor||Capitalized Equity Contribution||1.50% of the Property purchase price|
|Broker-Dealer Fee||4.0%||North Capital (1)||Capitalized Equity Contribution||4.0% based on the amount of equity invested by Realty Mogul 34, LLC|
|Property Management Fee||4.0% of monthly gross revenue, plus $3.00 per unit per month||Sponsor||Operating Cash Flow||4.0% of monthly gross revenue, plus an additional $3.00 per unit per month for the use of the Sponsor's centralized office resources|
|Management and Administrative Fee||1.0% of amount invested in Realty Mogul 34, LLC||RM Manager, LLC||Distributable Cash||RM Manager, LLC is the Manager of Realty Mogul 34, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2)|
(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.
(2) Fees may be deferred to reduce impact to investor distributions
The above presentation is based upon information supplied by the Sponsor or others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 34, LLC, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.
Apartment Complex Competition Risks
Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses. The Property will compete with other residential alternatives to attract tenants, including other apartment units that are available for rent, as well as new and existing apartment residences. If development of apartment complexes by other operators were to increase, due to increases in availability of funds for investment or other reasons, then competition with the Property could intensify. Competitive apartment residences in a particular area could adversely affect the ability of Sponsor to sell the property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.
The Sponsor intends to renovate the Property in order to be able to demand the significantly higher rents it is projecting to receive at the Property following such renovations. Such renovations are expected to cost approximately $10,096 per unit and are projected to take around 30 months to complete. There can be no assurance that such renovations will be consummated on a timely basis or that such work will not materially adversely affect other aspects of the operation of the Property. Any delays or adverse effects of such renovation work could adversely affect the Property’s financial results or business operations and thus the value of the Realty Mogul 34, LLC's investment.
Following the renovations, the sponsor expects to be able to rent the apartment units at average rates that would represent an approximate 14% increase over the existing average rental rates. Although the Sponsor believes that comparable properties are currently achieving rental rates that are greater than the future rental rates expected from the Property, there can be no assurance that such increased rental rates will be achieved. Failure to realize such increased rental rates could adversely affect the Property’s financial results or business operations and thus the value of the Realty Mogul 34, LLC’s investment.
The Property currently has approximately a 93% occupancy level, and the Sponsor intends to implement a capital improvement plan involving the renovations of certain units and a leasing program in its effort to maintain that occupancy level. There can be no assurance that such renovations will be consummated on a timely basis, that such work will not materially adversely affect other aspects of the operation of the Property, or that the planned lease-up program will result in the Property maintaining its occupancy level at rental rates in line with those projected. Any delays or adverse effects of such renovation work or lease-up efforts could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment.
Although the Sponsor believes that comparable properties are currently achieving rental rates that are in line with those expected from the Property, there can be no assurance that such increased occupancy levels or rental rates will be achieved. Failure to realize such increased rental rates could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment.
Vacancies and Tenant Defaults May Reduce the Property's Revenues
A vacancy or default of a tenant on its rent will cause Sponsor Entity to lose the revenue from that unit and, if enough effective vacancies occur, it could cause Sponsor Entity to have to find an alternative source of revenue to meet any loan payments and other operating expenses for a particular property and it may not be possible to have to find a viable alternative source of revenue. If the company managing the investment property does not employ sufficiently aggressive marketing campaigns and/or lease incentive programs, vacancies may increase and an investment in the Company may be adversely affected.
The loan used to acquire the Property is a bridge loan. The Sponsor is in the process of obtaining HUD refinancing. Financing risk is inherent in the mortgage lending industry, and there can be no assurance that the lender will complete financing on the rates and terms including in the underwriting being presented in the model for this investment opportunity. Should the terms of the debt financing change materially and adversely, investors will be notified.
The bridge loan being used to acquire the Property is expected to have an interest-only period during the first year of the term, which means that there will be no reduction in the principal balance during that interest-only period.
Rising Interest Rates
The Federal Reserve has methodically reduced the amount of stimulus it was earlier injecting into the U.S. economy, and has signaled that increases in the federal funds rate may be forthcoming. This could potentially lead to rising interest rates offered by other lenders and could have an effect on the future value of the Property (since higher loan interest rates might mean that potential buyers would face proportionately higher debt service expenses).
The Company is Subscribing for an Interest in a Pre-Existing Entity
The Company’s investment in the Company will effectively recapitalize that entity, which has been in existence (and held title to the property) for a short period. The Company expects to receive assurances from the Sponsor as to any prior acts or omissions concerning the Property, but there can be no certainty that any such assurances will sufficiently reduce the risk of any pre-existing liabilities connected with the Property.
The manager of the Sponsor Entity (“Sponsor Manager”) is expected to invest certain equity in the Sponsor Entity. However, the principals of the Sponsor Manager may have raised some of this equity from third parties and the principals of the Sponsor Manager may be permitted to sell a portion of their equity interest at a later time. Thus, either at closing or at a later time, the principals of the Sponsor Manager may not have a significant portion of their own personal funds invested in this transaction.
No Operating Agreement Changes
Although the Company may prefer to have certain provisions inserted in the existing operating agreement of the Sponsor Entity, the operating agreement for the Sponsor Entity is likely to remain unchanged (except to reflect a change in ownership). All potential investors should review the operating agreement of the Sponsor Entity to determine if it is acceptable to them.
Sponsor's Agreements with Affiliates
The Company’s operating agreement does not prohibit, nor require member consent for, agreements between the Sponsor and its affiliates. This could result in such agreements having non-market terms, which may negatively impact the investment’s performance and the returns to investors.
Indianapolis lies in the central part of the state of Indiana, in an area which can be subject to frequent and sometimes destructive tornadoes. There is no guarantee that the Sponsor Entity will obtain tornado insurance. If no insurance is obtained, a tornado could have a material adverse impact on the Sponsor Entity, and thus the Company. Further, even if tornado insurance is obtained, there can be no assurance that a tornado will not cause significant damage to the Property or otherwise interrupt its operations in a manner not covered by the Property’s insurance, in which case the business and financial condition of the Sponsor Entity.
Percentage of Depreciation and Tax Losses
Depreciation and tax losses are generally passed through to the members of an entity on a pro rata basis. For this transaction, Realty Mogul 34, LLC and the Sponsor have agreed that the depreciation and tax losses shall be allocated on the following basis: (i) seventy (70%) percent to the members, which includes Realty Mogul 34, LLC, and (ii) Thirty (30%) percent to those entities and/or individuals who are entitled to any promote, which currently includes RM Manager, LLC. Any deprecation and/or tax losses that are passed through to RM Manager, LLC will not be passed along to investors.
Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated”, “projected”, “forecasted”, “estimated”, “prospective”, “believes”, “expects”, “plans”, “future”, “intends”, “should”, “can”, “could”, “might”, “potential”, “continue”, “may”, “will” and similar expressions to identify these forward-looking statements
Illiquid Investment - Transfer Restrictions & No Public Market
The transferability of membership interests in Realty Mogul 34, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
Uncertainty Surrounding Future Sales Price
There is risk associated with the Sponsor being unable to sell the Property as projected.
Investors will be relying solely on the Sponsor for the execution of its business plan. The Sponsor may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of BH Trails at Lakeside, LLC (including Realty Mogul 34, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the Sponsor has significant operating experience, BH Trails at Lakeside, LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 34, LLC is pursuing a venture capital strategy through its investment in BH Trails at Lakeside, LLC, and the manager of Realty Mogul 34, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.
Manager of Realty Mogul 34, LLC Will Participate in Sponsors' Promote Interest
The manager of Realty Mogul 34, LLC will be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the Property realized upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 34, LLC. Investors must recognize and agree to waive and bear the risk of this conflict of interest.
The Sponsor cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 34, LLC) from either net cash from operations or proceeds from the sale or refinancing of the asset. Sponsor, in its discretion, may retain any portion of such funds for tenant improvements, tenant refurbishments and other lease-up costs or for working capital reserves. Sponsor has chosen to make distributions semi-annually.
Risk of Interest Charges for Sponsor Capital Calls
The amount of capital that may be required by BH Trails at Lakeside, LLC from Realty Mogul 34, LLC is unknown, and although BH Trails at Lakeside, LLC does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or additional capital. Realty Mogul 34, LLC does not intend to participate in a capital call if one is requested by BH Trails at Lakeside, LLC, and in such event the manager of BH Trails at Lakeside, LLC may accept additional contributions from other members of BH Trails at Lakeside, LLC. Any member may make a loan to BH Trails at Lakeside, LLC under such terms and conditions as may be agreed to by the member and BH Trails at Lakeside, LLC. Such loans will not be considered capital contributions and shall not have an interest rate of higher than 10%. Amounts (other than member loans) that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 34, LLC's interest in BH Trails at Lakeside, LLC will suffer a proportionate amount of dilution.
Uncertain Exit Timing
Although it is anticipated that the Property will be sold at the end of the expected seven (7) year hold period, Realty Mogul 34, LLC will not have full control over the timing of the sale of the Property, and therefore we cannot offer assurances of when the exit will occur. Sponsor’s decision to hold the Property for longer than seven (7) years will require a vote of a majority of the then current members of BH Trails at Lakeside, LLC.
General Economic and Market Risks
While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not rental rates will be achieved or investor sentiment and the capital markets will be favorable to the Property at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the Sponsor.
The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Issuer Document Package for a discussion of additional risks.
The above presentation is based upon information supplied by the Sponsor and others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 34, LLC, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.
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