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Self-storage
Montgomery Self-Storage
Montgomery, NY
INVESTMENT STRATEGY
Development
INVESTMENT TYPE
Equity
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Offered By Diversified Properties, LLC
20.2%* TARGET IRR 19.2%-21.2%
2.06X* TARGET EQUITY MULTIPLE
Estimated Hold Period 4 Years
Estimated First Distribution 11/2024
Minimum Investment 35000
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Explore this project
Overview
Diversified Properties, LLC is developing a 7-building storage facility in the town of Montgomery, Orange County, NY, located 60 miles Northwest of New York City.
Cash Flow

The investment offers platform investors an attractive target internal rate of return of 20.2% and an equity multiple of 2.06x. Self-Storage has historically outperformed other real estate asset classes due to the business model of short-term, month-to-month leases. These short-term leases allow the property manager to increase rents for new prospective tenants.

New Construction

Due to the lack of supply and overall development regarding new self-storage facilities in Montgomery, NY, and the surrounding area, this development would deliver a brand new Class A climate-controlled self-storage facility to the market. In the market, there is currently 2.97 sqft/capita supply which proves that the market is undersupplied. The US national average is 7.46 sqft/capita, and the New York state average is 3.83 sqft/capita.

High Barriers to Entry

The site is located at 674 Route 17k in the Town of Montgomery and is readily accessible via Interstate 84, Interstate 87, State Route 17, and Palisades Parkway, as well as local roads US Routes 6, 9W, and 209.  In addition to its ideal location, there are significant barriers to entry in this market due to the strict land use laws. As a result, demand for self-storage remains high while supply remains low due to the barriers to entry. Diversified Properties, LLC has built a track record over the past 10 years in the Upper Hudson Valley area building multiple multi-family communities.  Due to several factors, there has been a large migration of individuals living in New York City moving to nearby suburban areas. 

Property at a glance
# of Storage Units 495
Square Feet 80,400
Land Acquisition Price $1,270,000
Construction Completion Date Q4 2023
Target Return on Cost 6.8%
Exit Cap Rate

5.0%

Investment Highlights
The Sponsor has closed on the acquisition of the land and has started the site work for the project.
The exit strategy is to sell the property in 4 years at 5% cap rate.
The facility is a prime location and offers access to Interstate 84 and 87 with traffic counts over 50,000 vehicles per day.
Self-Storage is a great inflationary hedge due to short-term month-to-month leases that will allow the property manager to maximize gross potential income.
Construction will be directly managed by the sponsor's hands-on executive team and its in-house construction management firm, Morris Construction Management, LLC.
The Sponsor has extensive experience developing and constructing multifamily projects in the Tri-State area. The Sponsor has developed over 10,000 multifamily units across New Jersey, New York, Pennsylvania, Connecticut, and Maryland. Diversified Properties, LLC, recently named by NJBIZ as one of New Jersey's top 2021 developers, currently manages an existing and development pipeline totaling 4,000 residential units across 10 diverse communities. The Sponsor has recently completed the construction of a 98,000 square foot self-storage facility that is currently in lease up and 60% occupied.
Management
Cumulative Distributions

Diversified Properties, LLC

Diversified Properties, LLC (the "Sponsor") is a Montville, N.J.-based residential and commercial development and management company founded in 2000, specializing in value creation through the successful execution of multifamily, office, self-storage, retail, and industrial ground-up development and redevelopment projects throughout the northeastern United States. The Sponsor utilizes its substantial in-house expertise in acquisitions, architectural and engineering design, land use, entitlements, construction, leasing, sales, and property management, within an agile and scalable operational structure to capitalize on opportunities in key growth markets. Diversified Properties, LLC currently has developed real estate valued at more than $1.5 billion and boasts a portfolio valued in excess of $500 million.

With deep experience in multifamily development and management, Diversified Properties, LLC has successfully created dozens of multifamily communities comprising over 10,000 units across N.J., N.Y., PA, MD and CT and, today, manages an existing and development pipeline spanning 4,000 residential units across 10 diverse communities.

Highlighting their leadership position in N.J.’s real estate community, the sponsor was recently recognized as one of the state’s Leaders in Real Estate, Construction and Design by NJBIZ. Founder Nicholas Minoia was also recently named to NJBIZ's 2021 Power 50 in Real Estate list and was selected as a GlobeSt. Real Estate Forum Multifamily Influencer in 2021.

https://diversifiedproperties.com/
  • Nicholas W. Minoia
    Managing and Founding Partner
Nicholas W. Minoia
Managing and Founding Partner

Founding Diversified Properties in 2000, Minoia has led the firm in its development of real estate valued at more than $1.5-billion and today boasts a portfolio valued at more than $500 million. Under Minoia’s leadership, the company has become one of the region’s most experienced and trusted commercial real estate builders and owners with expertise across asset classes and markets. A key piece of Diversified Properties' success is its deep history in developing and managing multifamily communities across N.J., N.Y., Pa., Md., and Conn. Over the firm’s two-plus decades of experience, it has developed over 10,000 units and manages a development pipeline spanning 4,000 residential units across 10 diverse communities. Powered by Minoia's 35 years of brokerage, construction, construction management, finance, and property management experience, Diversified Properties is uniquely able to recognize nontraditional geographic and demographic opportunities that are currently underserved by multifamily housing and bring in-demand communities to life. Minoia's work earned him a spot on NJBIZ's 2021 Power 50 in Real Estate list and he was also selected as a GlobeSt. Real Estate Forum Multifamily Influencer in 2021.

Track Record

  Property City, State Asset Type Project Status Units or SF Current Cost/Stabilized Value NOI Yield on Cost/Stab Cap Rate Net Cash Flow
Built & under current management
1 21 Summit Summit, NJ Retail Operating 7,000 sq ft retail  $1,809,673 $117,629 6.50% $45,986
2 Summit Lane Newburgh, NY Multifamily Operating 188  $44,600,000 $1,805,836 4.05% $458,296
3 Summit Terrace New Windsor, NY Multifamily Operating 270  $61,700,000 $3,201,460 5.19% $1,291,864
4 Summit Court Phase 1 Union, NJ Multifamily Operating 130  $58,500,000 $2,297,777 3.93% $665,538
7 Meadow Ridge Newburgh, NY Multifamily Operating 185  $10,000,000 $2,642,106 26.42% $546,678
8 30 Court Morristown, NJ Multifamily Operating 58  $35,000,000 confidential confidential confidential
9 The Promenade Summit, NJ Mixed Use Operating 22 Residential 16,000 sq ft retail  $17,990,000 $854,525 4.75% $427,263
10 47 River Road Summit, NJ Office Operating 6,000 sq ft office  $2,784,283 $167,057 6.00% $33,411
11 45 River Road Summit, NJ Office Operating 6,000 sq ft office  $729,433 $43,766 6.00% $8,753
12 350 Main Road Montville, NJ Office Operating 34,000 sq ft existing
commercial
 $5,628,000 $256,698 4.56% $55,282
13 Cubesmart Self-Storage Montville, NJ Self-Storage Operating 98,000 sq ft Self-Storage  $23,500,000 $1,104,266 4.70% $1,104,266
14 1,2,3,6,9 Mars Court Montville, NJ Industrial Operating 105,000 sq ft industrial  $25,000,000 $758,093 3.03% $379,047
15 Bergenfield Industrial Bergenfield, NJ Industrial Operating 49,961 sq ft industrial  $3,100,000 $233,626 7.54% $116,813
Subtotal         $290,341,389 $13,482,838 4.64% $5,133,195
                   
Under Current Construction
16 Clermont Fidelco Urban Renewal Union, NJ Multifamily Development 266  $26,000,000 $5,242,111 20.16% $1,071,785
17 Lighthouse Landing Ventures LLC Sleepy Hollow, NY Mixed Use Development 1,177 Residential, 135,000 Sq ft retail, and 35,000 sq ft office  $86,900,000 $0 n/a $0
18 Farms at Stony Hill LLC Bethel, CT Multifamily Development 117  $5,500,000 $0 n/a $0
19 Irondale @ Wharton Wharton, NJ Multifamily Development 60  $17,272,468 $0 n/a $0
Subtotal         $135,672,468 $13,482,838   $5,133,195
                   
Built and Sold
20 480 Flatz East Rutherford, NJ Multifamily Sold 35 Residential Units  $11,600,000 - 4.97%  
21 Summerhill Road East Brunswick, NJ Mixed Use Sold 120 Residential Units &
Pharmacy and Bank Pad
 $18,000,000 - - -
22 Hackensack Self-Storage Hackensack, NJ Self-Storage Sold 67,000 sq ft Self-Storage  $10,000,000 - - -
23 Summit Place Apartments Lindenwold, NJ Multifamily Sold 148 Residential Units  $7,500,000 - - -
24 Summit Ridge Allentown, PA Multifamily Sold 204 Residential Units  $45,000,000 - - -
25 High Ridge Montville, NJ For Sale Townhomes Sold 100 Town Homes  $60,000,000 - - -
26 Longview Townhome Community Montville, NJ For Sale Townhomes Sold 400 Town Homes  $190,000,000 - - -
27 Bear's Nest Park Ridge, NJ For Sale Townhomes Sold 150 Town Homes  $95,000,000 - - -
Subtotal         $437,100,000      
                   
Total           $863,113,857 $26,965,675   $10,266,390

The above biography and track record were provided by the Sponsor and have not been independently verified by RM Technologies, LLC or its affiliates. Past performance is not indicative of future results. Please carefully review the Disclaimers section below.

Business Plan

Diversified Properties, LLC ("Sponsor") is developing a 7-building self-storage facility in the Town of Montgomery, Orange County, NY, located 60 miles northwest of New York City. Sponsor plans to build, stabilize and sell the asset. Sponsor currently owns the land and the site work is under construction.

Total development cost is approximately $14,589,216 ($181.50 per GSF). The development will be funded by a $10,850,000 construction loan (74.4% LTC) and $3,739,216 of equity (LP equity $3,200,00 or 85.6%; Sponsor equity $539,216, or 14.4%).   

Construction started in March 2022 and is planned to be finished by October 2023. Project stabilization is estimated to be August 2026. The asset is anticipated to be sold at stabilization in September 2026 at a 5% exit cap rate generating gross sale proceeds of $19,904,135 (or $247.60 per GSF).

Development Budget

Acquisition Cost $ Amount Per Unit Per SF
Purchase Price $1,270,000 $2,566 $15.80
Total Acquisition Costs $1,270,000 $2,566 $15.80
       
Development $ Amount Per Unit Per SF
Hard Costs (GC) $9,789,000 $19,776 $121.75
Soft Costs $1,816,690 $3,670 $22.60
Total Development Costs $11,605,690 $23,446 $143.65
       
Carry Costs $ Amount Per Unit Per SF
Interest and OpEx Reserve $1,658,526 $3,351 $20.63
Financing Fees $55,000 $111 $0.68
Total Other $1,713,526 $3,462 $21.31
Grand Total $14,589,216 $29,473 $181.46
Property

Aerial View of Current Construction

Property Details

The site has been approved for the development of 495 units of self-storage in seven (7) buildings. There will be one 2-story climate-controlled building consisting of 39,000 GSF and six 1-story buildings consisting of 6,900 GSF each (41,400 GSF total).

The unit mix is as follows: 111 1st Floor units (22% of the mix), 131 2nd Floor units (28%), and 253 Ambient Drive-Up units (50%).  The average unit size is 115 square feet (net) and individual units will be 10 feet by 10 feet.  All buildings will be fully sprinklered.  Per the zoning code, there are no standard parking requirements for self-storage units, but the project will have six (6) parking spaces (based on the portion of the building dedicated to office space).

Unit Type Type # of Units Avg SF/Unit Rent/Unit/Mo Rent/SF/Mo Total Rent/YR
4x5 1st Floor 2 20 $84.96 $4.25 $2,039
5x10 1st Floor 5 50 $180.65 $3.61 $10,839
5x9 1st Floor 5 45 $171.86 $3.82 $10,312
10x10 1st Floor 21 100 $225.06 $2.25 $56,715
10x9 1st Floor 21 90 $212.97 $2.37 $53,668
10x12 1st Floor 2 120 $243.15 $2.03 $5,836
10x14 1st Floor 28 140 $259.75 $1.86 $87,276
10x18 1st Floor 2 180 $312.48 $1.74 $7,500
10x20 1st Floor 19 200 $331.08 $1.66 $75,486
13x20 1st Floor 1 260 $415.99 $1.60 $4,992
12x9 1st Floor 1 108 $230.45 $2.13 $2,765
10x8 1st Floor 4 80 $199.21 $2.49 $9,562
5x5 2nd Floor 4 25 $81.26 $3.25 $3,900
4x5 2nd Floor 1 20 $67.96 $3.40 $816
5x10 2nd Floor 19 50 $144.52 $2.89 $32,951
5x9 2nd Floor 12 45 $137.49 $3.06 $19,799
10x10 2nd Floor 17 100 $180.05 $1.80 $36,730
10x9 2nd Floor 25 90 $170.38 $1.89 $51,113
10x13 2nd Floor 9 130 $194.89 $1.50 $21,048
10x12 2nd Floor 4 120 $194.52 $1.62 $9,337
10x14 2nd Floor 4 140 $207.80 $1.48 $9,974
10x18 2nd Floor 4 180 $249.98 $1.39 $11,999
10x20 2nd Floor 22 200 $264.86 $1.32 $69,924
13x20 2nd Floor 1 260 $332.79 $1.28 $3,993
12x13 2nd Floor 1 156 $216.76 $1.39 $2,601
12x9 2nd Floor 2 108 $184.36 $1.71 $4,425
5x13 2nd Floor 3 65 $145.68 $2.24 $5,244
10x8 2nd Floor 3 80 $151.92 $1.90 $5,469
10x30 Drive up 23 300 $523.87 $1.75 $144,588
10x10 Drive up 23 100 $257.89 $2.58 $71,177
10x20 Drive up 23 200 $370.65 $1.85 $102,300
10x15 Drive up 46 150 $287.56 $1.92 $158,731
10x10 Drive up 23 100 $211.39 $2.11 $58,343
10x20 Drive up 23 200 $370.65 $1.85 $102,300
10x10 Drive up 23 100 $211.39 $2.11 $58,343
10x20 Drive up 23 200 $370.65 $1.85 $102,300
10x10 Drive up 23 100 $211.39 $2.11 $58,343
10x20 Drive up 23 200 $370.65 $1.85 $102,300
Total/Averages   495 139 $265.16 $1.91 $1,575,039
Comparables

Lease Comparables

  Beehive Self-Storage
155 Bracken Road, Montgomery, NY
StorageTown Rental Spaces
130 Neelytown Road,
 Montgomery, NY
StorQuest
765 South St,
 Newburgh, NY
Montgomery Self-Storage
9 Factory Street,
 Montgomery, NY
Albany Post Self-Storage
2377 Albany Post Road,
 Walden, NY
Averages Subject
Year Built 1981 1985 1985 2005 2001 1991 2023
SF 49,918 80,433 66,846 55,296 12,300 52,959 80,400
# Units 400           495
Estimated Occupancy 90% 90% 90% 90% 90% 90%  
Average Rent/Mo (CC)     $216     $216 $130
Average Rent/SF (CC)     $2.28     $2.28 $1.88
Average Rent/Mo (NC) $143 $129 $225 $155 $158 $162 $208
Average Rent/SF (NC) $1.51 $1.35 $2.46 $1.61 $1.67 $1.72 $1.67
               
10x5 Rent/Mo (CC)     $136.00     $136.00 $173.00
10x5 Rent/SF (CC)     $2.72     $2.72 $3.46
10x5 Rent/Mo (NC) $85.00 $77.00 $155.00 $90.00 $100.00 $101.40  
10x5 Rent/SF (NC) $1.70 $1.54 $3.10 $1.80 $2.00 $2.03  
               
10x10 Rent/Mo (CC)     $214.00     $214.00 $217.00
10x10 Rent/SF (CC)     $2.14     $2.14 $2.17
10x10 Rent/Mo (NC) $155.00 $137.00 $239.00 $160.00 $150.00 $168.20 $167.00
10x10 Rent/SF (NC) $1.55 $1.37 $2.39 $1.60 $1.50 $1.68 $1.67
               
10x15 Rent/Mo (CC)     $299.00     $299.00 $0.00
10x15 Rent/SF (CC)     $1.99     $1.99 $0.00
10x15 Rent/Mo (NC) $190.00 $173.00 $281.81 $215.00 $225.00 $216.96 $249.00
10x15 Rent/SF (NC) $1.27 $1.15 $1.88 $1.43 $1.50 $1.45 $1.66
               
Distance from subject 1.5 Miles 3.2 Miles 6.33 Miles 3.37 Miles 4.74 Miles 3.83 Miles  

*(CC) - Climate Controlled Units

*(NC) - Non Climate Controlled Units

Sales Comparables

  StorQuest
Self-Storage
US Storage Center Mohegan Lake Storage Westchester
Self-Storage
X-Tra Space Center Averages Subject Property
Date Sold 3/22/2022 11/29/2021 11/17/2021 11/17/2022 5/18/2021    
Year Built 1960 1982 1970   1973 1971 2026
Building Size (SF) 66,846 SF 29,592 SF 63,681 SF 25,000 SF 12,727 SF 39,569 SF 80,400 SF
Sale Price $19,510,000 $10,500,000 $30,806,000 $12,090,000 $7,200,000 $16,021,200 $19,904,135
$/SF $292/SF $355/SF $484/SF $484/SF $566/SF $436/SF $248/SF
Location

Market Overview

The site is located in the Town of Montgomery, Orange County, NY, approximately 60 miles northwest of New York City, directly north of the New Jersey – New York border and west of the Hudson River. The site is readily accessible to Interstate 84, Interstate 87, and Palisades Parkway, as well as local roads US Routes 6, 9W, and 209.

According to the United States Census Bureau, Orange County's total 2020 population was 401,310 (a 7.6% increase over 2010) and has been among the fastest-growing regions in the NYC metropolitan area.  The Town of Montgomery's 2020 population was 23,322 (a 3.2% increase over 2010).

According to the Orange County Partnership Center of Economic Development, the site is also easily accessible to many of Orange County's largest employers, including US Military Academy (West Point), Orange County Regional Medical Center, Crystal Run Health, Access: Supports for Living, St. Luke's Cornwall Hospital, Elant, C&S Wholesale Grocers, Amscan and Empire Blue Cross/Blue Shield.

Submarket Overview

The Town of Montgomery, which has a total area of 51.1 square miles, is bordered on the east by the town of Newburgh and on the north by Shawangunk in Ulster County.  The Property is proximate to several large retailers, including Costco, Walmart, Home Depot, and Target.  

The site is located at 674 Route 17k in the Town of Montgomery and is readily accessible via Interstate 84, Interstate 87, and Palisades Parkway, as well as local roads US Routes 6, 9W, and 209.  The town also benefits from extensive mass transit options, including Stewart International Airport/Air Force Base, the Metro-North Railroad, and numerous bus lines.   

Square foot per capita in the 10-mile radius is 2.97 square feet/capita. This compares with 8.33 sqft/capita within a 3 miles radius and 10.92 sqft/capita within a 5 miles radius. For other comparison purposes, the US national average is 7.46 sqft/capita. 

The rental rate in this market has trended up in the last 3 months, by a total of 1.43%. This would indicate an increased demand against available supply. In addition to the Subject, within a 3 miles radius, there is one known new development and within a 5 miles radius, there is one known new development. The Property is located on 17K, a well-trafficked road near Route 87 and conveniently accessible to several cities in the area. 

Photos
Financials
Sources & Uses

Total Capitalization

Sources of Funds $ Amount $/GSF
Debt $10,850,000 $134.95
GP Investor Equity(1) $539,216 $6.71
LP Investor Equity $3,200,000 $39.80
Total Sources of Funds $14,589,216 $181.46
     
Uses of Funds $ Amount $/GSF
Purchase Price $1,270,000 $15.80
Hard Cost $9,319,000 $115.91
Hard Cost Contingency $470,000 $5.85
Soft Cost(2) $1,709,325 $21.26
Soft Cost Contingency $107,365 $1.34
Interest and OpEx Reserve $1,713,526 $21.31
Total Uses of Funds $14,589,216 $181.46

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

(2) Includes closing costs and RM Technology Solution Licensing Fee.

Debt Assumptions

The committed terms of the debt financing are as follows:

  • Lender: Salisbury Bank
  • Term: 2 Years (+1 Year extension)
  • Loan-to-Value: 74.4%
  • Estimated Proceeds: $10,850,000
  • Interest Type: Floating
  • Spread Above One-Month PRIME: 0.50%
  • Interest-Only Period: 3 Years
  • Amortization: None
  • Prepayment Terms: If refinanced with a bank other than Salisbury, subject to a prepayment penalty of Year 1: 5%, Year 2: 4%, Year 3&4: 1%
  • Extension Requirements: None

Refinance Information: Salisbury Bank's commitment letter includes a construction loan that converts into a permanent loan upon Property stabilization

  • Lender: Salisbury Bank
  • Term: 5 Years
  • Estimated Proceeds: $10,850,000
  • Interest Type: Fixed
  • Annual Interest Rate: fixed at the prevailing 5-year FHLBB Classic Advance Rate + 1.90% 
  • Interest-Only Period:  The Sponsor assumes an additional interest-only period of 12 months given the Property is not expected to stabilize until the end of the hold period. The lender will not contemplate granting an additional i/o period until such time that the construction loan extension is expiring (Month 36). 
  • Amortization: 25 Years

(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. 

Distributions

Diversified Properties, LLC intends to make distributions as follows:

  1. To the Investors, pari passu, all cash flow available for distribution to an 8% Preferred Return;
  2. 25% Promote Sponsor of cash flow available for distribution up to a 12% IRR - (64.18% to Investors / 35.82% to Sponsor);
  3. 35% Promote Sponsor of cash flow available for distribution up to a 15% IRR - (55.63% to Investors / 44.37% to Sponsor);
  4. 45% Promote Sponsor of cash flow available for distribution thereafter - (47.07% to Investors / 52.93% to Sponsor).

Diversified Properties, LLC 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 November 2024 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Diversified Properties, LLC, who may decide to delay distributions for any reason, including maintenance or capital reserves.

Diversified Properties, LLC will receive a promoted/carried interest as indicated above.

Cash Flow Summary
      Year 0 Year 1 Year 2 Year 3 Year 4
Effective Gross Revenue $0 $0 $256,599 $780,250 $1,324,536
Total Operating Expenses $0 $0 $317,928 $489,871 $557,706
Net Operating Income $0 $0 ($61,328) $290,379 $766,829
               
Project-Level Cash Flows
      Year 0 Year 1 Year 2 Year 3 Year 4
Net Cash Flow   ($3,739,216) $0 $8,987 $159,708 $9,128,977
               
Investor-Level Cash Flows(1)
      Year 0 Year 1 Year 2 Year 3 Year 4
Net Cash Flow   ($3,200,000) $0 $4,916 $103,378 $6,410,754
               
Investor-Level Cash Flows - Hypothetical $50,000 Investment(1)
      Year 0 Year 1 Year 2 Year 3 Year 4
Net Cash Flow   ($50,000) $0 $77 $1,615 $100,168

(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.

 

Fees

Certain fees and compensation will be paid over the life of the transaction; please refer to Diversified Properties, LLC's materials for details. The following fees and compensation will be paid(1)(2):

One-Time Fees:
Type of Fee Amount of Fee Received By Paid From
Construction Management Fee 5.0% of Hard Costs (Exclusive of Land) Diversified Properties, LLC Capitalization
Developer Fee 4.0% of Hard and Soft Costs (Exclusive of Land) Diversified Properties, LLC Capitalization
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)

       
Recurring Fees:
Type of Fee Amount of Fee Received By Paid From
Property Management Fee Greater of 5.0% of Effective Gross Income or $2,500 Third-Party Manager Cash Flow
Asset Management Fee 1.0% of Effective Gross Income Diversified Properties, LLC Cash Flow
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.

.

Disclaimers
Disclaimers

Sponsor’s Projects and Targets

*Assumptions and projections included in the information on this Page, including pro forma projections (collectively “Projections”) were provided by the Sponsor or an affiliate thereof and are not reflective of the position or opinions of, nor are they endorsed by, RM Technologies, LLC or its affiliates, or any other person or entity other than the Sponsor or its affiliates.  RM Technologies, LLC and its affiliates do not provide any assurance of returns or the accuracy or reasonableness of the Projections provided by the Sponsor or its affiliates.   There can be no assurance that the Sponsor’s methodology used for calculating any Projections, including Target IRR, Target Annualized Cash-on-Cash Return, and Target Equity Multiple (“Targets”), are appropriate or adequate.  The Sponsor’s Projections and Targets are hypothetical, are not based on actual investment results, and are presented solely for the purpose of providing insight into the Sponsor’s investment objectives, detailing its anticipated risk and reward characteristics and for establishing a benchmark for future evaluation of the Sponsor’s performance. The Sponsor’s Projections and Targets are not a predictor, projection or guarantee of future performance.  There can be no assurance that the Sponsor’s Projections or Targets will be met or that the Sponsor will be successful in meeting these Projections and Targets.  Projections and Target returns should not be used as a primary basis for an investor’s decision to invest.

No Approval, Opinion or Representation, or Warranty by RM Technologies, LLC or it Affiliates

The information on this Page, including the Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”) was provided by the Sponsor or an affiliate thereof.  RM Technologies, LLC makes no representations or warranties as to the accuracy of such information and accepts no liability therefor.  No part of the information on this Page is intended to be binding on RM Technologies, LLC or its affiliates, or to supersede any of the Sponsor’s Investment Documents.  The opinions expressed on this page are solely the opinions of the Sponsor and its affiliates and none of the opinions expressed on this Page are the opinions of, nor are they endorsed by, RM Technologies, LLC or its affiliates.

Sponsor’s Information Qualified by Investment Documents

The Information on this Page, including of the principal terms of the Sponsor’s offering, is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents.  The information on this Page is not complete, and each prospective investor should carefully read all of the Investment Documents and any supplements thereto, copies of which are available by clicking the links above or upon request, before deciding whether to make an investment.  The information on this page should not be used as a primary basis for an investor’s decision to invest.  In the event of an inconsistency between the information on this Page and the Investment Documents, investors should rely on the information contained in the Investment Documents.  The information on this Page and the information in the Investment Documents are subject to last minute changes up to the closing date at the sole discretion of the Sponsor and its affiliates.

Risk of Investment

This real estate investment is speculative and involves substantial risk.  There can be no assurances that all or any of the assumptions will be true or that actual performance will bear any relation to the hypothetical illustrations herein, and no guarantee or representation is made that investment objectives of the Sponsor will be achieved.  In the event that actual performance is below the Sponsor’s Targets, your investment could be materially and adversely affected, and there can be no assurance that investors will not suffer significant losses.  A loss of part or all of the principal value of your investment may occur.  You should not invest unless you can readily bear the consequences of such loss.  Please see the Sponsor’s Investment Documents for additional information, including the Sponsor’s discussion concerning risk factors.

Risk of Forward-Looking Statements

Forward-looking statements are found here and in the applicable Investment Documents and may include words like “expects,” “intends,” “anticipates,” “estimates” and other similar words. These statements are intended to convey the Project Sponsor’s projections or expectations as of the date made. These statements are inherently subject to a variety of risks and uncertainties. Please see the applicable Investment Documents for disclosure relating to forward-looking statements.  All forward-looking statements attributable to the Sponsor or its affiliates apply only as of the date of the offering and are expressly qualified in their entirety by the cautionary statements included elsewhere in the Investment Documents.  Any financial projections are preliminary and subject to change; the Sponsor undertakes no obligation to update or revise these forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.  Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.

Sponsor’s use of Debt

A substantial portion of the total acquisition for the Property will be paid with borrowed funds, i.e., debt.  There can be no assurance that the Sponsor will secure debt on the rates and terms noted above, or at all.  All of the Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, including but not limited to the annual interest rate and possible increases in capital reserve requirements for funds to be held in a lender-controlled capital reserve account. The use of borrowed money to acquire real estate is referred to as leveraging.  Leveraging increases the risk of loss.  If the Sponsor were unable to pay the payments on the borrowed funds (called a "default"), the lender might foreclose, and the Sponsor could lose its investment in its property.

In addition, unless the debt provides for a fixed rate of interest during the term of the loan and/or any subsequent extensions, the total amount of interest paid over the term of the debt will increase by the same amount as the related index. For example, if the index rate increases by 0.50% (50 basis points) the interest rate on the loan will increase by the same amount. The amount of such interest rate increases may be capped either by its terms or as the result of the Sponsor entering into an arrangement that caps the interest rate with respect to the debt at a particular rate.

Sponsor’s Offering is Not Registered

The interests offered by the Sponsor will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement.”).  In addition, the interests will not be registered under any state securities laws in reliance on exemptions from registration.  Such interests are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption.  All Private Placements on the RealtyMogul Platform are intended solely for “Accredited Investors,” as that term is defined Rule 501(a) of the Securities Act.  Prospective investors must certify that they are Accredited Investors and provide either certain supporting documents or third party verification, and must acknowledge that they have received and read all investment materials.

RM Technologies, LLC Fees and Conflicts

RM Technologies, LLC, an affiliate of RealtyMogul, operates the RealtyMogul Platform.  RM Technologies, LLC charges a fixed, non-percentage-based licensing fee for real estate companies and their sponsors to license and use the RM Technologies LLC’s proprietary Platform, including one-time flat licensing fees for its Technology Solution and an ongoing quarterly flat licensing fees for its Administration Solution.  An estimate of the Technology Solution licensing fee is included in the Closing Costs above and is intended to be capitalized into the transaction at the discretion of the Sponsor.  The licensing fees received by RM Technologies, LLC are disclosed in the relevant operating agreement(s). Additionally, from time to time, employees of RM Technologies, LL C and its affiliates invest in Sponsor’s offering.  RM Technologies LLC’s receipt of licensing fees and its employee’s investments in Sponsor’s offering creates a conflict of interest between RealtyMogul and its affiliates, and investors or prospective investors.

No Investment Advice

RealtyMogul and RM Technologies, LLC are not a registered broker-dealer, investment adviser or crowdfunding portal.  Nothing on this Page should not be regarded as investment advice, either on behalf of a particular security or regarding an overall investment strategy, a recommendation, an offer to sell, or a solicitation of or an offer to buy any security.  Advice from a securities professional is strongly advised, and we recommend that you consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any real estate investment.

For additional information on risks and disclosures visit https://www.realtymogul.com/investment-disclosure.

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