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Completed Equity
Industrial
Orlando Flex Industrial Portfolio
Multiple Locations
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Lucky Property Management Group
18.7%* TARGET IRR 18.7%-%
8.5%* TARGET AVG CASH ON CASH
1.96* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 years
Estimated First Distribution 3/2017
*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
Invest in a three property industrial flex portfolio in the greater Orlando market alongside a sponsor who specializes in Florida industrial flex product.
Property at a glance
Years Built Monroe: 2003 Hanging Moss: 2004-2005 Goldenrod: 2006
Rentable Square Feet Portfolio: 289,346 Monroe: 116,500 Hanging Moss: 94,200 Goldenrod: 78,646
Number of Buildings: Portfolio: 13 Monroe: 5 Hanging Moss: 5 Goldenrod: 3
Number of Tenants (as of September 2016) Portfolio: 66 Monroe: 19 Hanging Moss: 24 Goldenrod: 23
Parking Portfolio: 514 spaces (1.79/1,000 rentable square feet) Monroe: 211 spaces (1.81/1,000 rentable square feet) Hanging Moss: 167 spaces (1.77/1,000 rentable square feet) Goldenrod: 136 spaces (1.73/1,000 rentable square feet)
Acquisition Price

$17,500,000

Land

Portfolio: 25.62 acres Monroe: 8.49 acres Hanging Moss: 7.25 acres Goldenrod: 9.88 acres

Investment Highlights
September 2016 CBRE Appraised Portfolio Value is $1.55 million over Purchase Price (8.9% Premium to Purchase)
Florida Sponsor who Specializes in Industrial Flex Product Type
Diverse Tenant Roster with Only One Tenant Representing more than 5.0% of Total Rentable Square Footage
Management
Cumulative Distributions

Lucky Property Management Group

Lucky Property Management Group ("Lucky") is a privately held real estate investment company that was established in 1981.  The firm is focused on acquiring, owning and operating industrial real estate across South Florida. Lucky’s portfolio includes over 1.3 million square feet of industrial class B and C product in South Florida with over 300 tenants under management. Additionally, the Lucky owns and manages real estate in Tennessee and South Carolina totaling over 1.1 million additional square feet of similar product. The principals, Brian Holland and Wayne Chaplin, have been in the real estate industry for over 30 years.

Lucky has been able to acquire undervalued industrial real estate and add value by identifying and correcting existing problems and adding capital improvements. Lucky acquires properties, and provides all of the adjunct services, skills and systems necessary to maintain each property to high standards of quality. The goal is to achieve the greatest operating efficiencies and realize the highest potential profit performance.  Their in house management team allows them to keep expenses down while providing excellent value to all of their tenants.  In addition to the partners, Lucky employs third party consultants and four back-office employees.

Other Members in the Sponsor Entity

In addition to Lucky there are two other partners in the Sponsor entity, both of whom are expected to have voting rights therein.  All the partners of this project provide significant capital contributions.  

One partner is Daniel Stuzin of SF Partners.  Daniel is a founder and managing principal of SF Partners and is responsible for setting the investment strategy of that firm.

The other active partner is Michael Kramer of the Kramer family office Kramerica Equity, LLC.  

  • Brian Holland
  • Daniel Stuzin
  • Michael Kramer
Brian Holland

Brian Holland is a founder and managing principal of Lucky Property Management and is responsible for acquiring all of the real estate for the company. 

Brian has been in the real estate industry for about 40 years and additionally oversees any repositioning of Lucky's industrial portfolio. 

Between Lucky Property Management Group and another venture which Brian owns, Industrial Assets, Brian is responsible for overseeing and managing over 2,000,000 square feet of industrial real estate owned by Luck and Industrial Assets. 

Brian is a graduate of the University of Miami.

Daniel Stuzin

Daniel is a founder and managing principal of SF Partners and is responsible for setting the investment strategy of the firm. He maintains overall responsibility for all operations of the firm. Daniel holds a bachelors degree in accounting from the University of Illinois and a J.D. from the University of Miami School of Law. Daniel was President and founder of SF Partners Mortgage LLC, a licensed commercial Florida lender that originated and managed commercial loans between 2003-2009.

Michael Kramer

Michael Kramer is co-founder and one of the managing principals of Kramerica Equity, LLC and Kramerica Lender, LLC. Both entities are run through a private family office.  Kramerica Equity, LLC focuses primarily on investments in commercial and multi-family real estate assets and also invests in operating business in a variety of industries including telecommunications, structured settlements and transportation.  Kramerica Equity, LLC is currently invested in over 20 commercial real estate deals across the country, with a focus on acquisitions in Florida. Kramerica Lender, LLC is a private lender specializing in commercial loans with a focus on South Florida properties.  Michael Kramer is responsible for implementing the investment strategies, origination, and the management and oversight of portfolio assets.

Michael is also an Assistant Vice President with Thomas D. Wood & Company, a commercial mortgage brokerage company with offices throughout Florida and a footprint across the country. Michael is responsible for the origination, underwriting, and execution of commercial real estate loans with the company.

It is anticipated that Michael will be actively involved in the oversight of the leasing and property management of the Portfolio.

Michael Kramer attended the University of Florida and has a major in Economics.

Track Record

Lucky Track Record Only

Address  Location   Asset Type   Date
Acquired 

Square Feet

Purchase Price
 
3550 NW 58 Street Miami, FL Industrial/Flex May 1991 37,951 $355,000
5400 NW 79th Avenue Medley, FL Industrial/Flex April 1992 48,817 $780,000
8800 NW 77th Court Medley, FL Industrial/Flex Sep 1993 214,821 $2,877,500
3550 NW 33 Street Miami, FL Industrial/Flex October 1993 30,000 $352,800
8545 NW 79th Avenue Medley, FL Industrial/Flex June 1994 67,500 $3,600,000
16301 NW 15th Avenue Miami Gardens, FL Industrial/Flex April 1998 41,445 $907,500
4595 NW 37th Avenue Miami, FL Industrial/Flex March 1999 98,000 $1,400,000
625 W 18th Street Miami, FL Industrial/Flex November 1999 102,000 $4,250,000
16501 NW 16th Court Miami Gardens, FL Industrial/Flex November 2000 45,000 $1,925,000
3890 NW 42nd Avenue Opa-Locka, FL Industrial/Flex February 2001 289,200 $8,900,000
13000 NW 45th Avenue Opa-Locka, FL Industrial/Flex November 2001 25,000 $525,000
5520 NW 35th Avenue Miami, FL Land August 2006 3 Acres $1,000,000
5400 NW 37th Avenue Miami, FL Industrial/Flex February 2007 25,000 $2,250,000
13005 NE 14th Avenue North Miami, FL Industrial/Flex January 2008 12,000 $675,000
7700 NW 36th Avenue Miami, FL Industrial/Flex November 2009 37,228 $1,200,000
3500 NW 114th Street Miami, FL Industrial/Flex October 2011 30,151 $775,000
4700 NW 128th Street Miami, FL Industrial/Flex Sep 2012 28,000 $708,750
12801 NW 32nd Avenue Opa-Locka, FL Land November 2012 5 Acres $1,531,783
4730 NW 128th Street Opa-Locka, FL Industrial/Flex April 2013 40,000 $780,000
1050 East 9th Street Hialeah, FL Industrial/Flex January 2014 63,000 $950,000
3501 NW 67th Street Miami, FL Industrial/Flex June 2014 44,000 $875,000
3970 NW 132nd Street Opa-Locka, FL Industrial/Flex July 2015 44,541 $2,200,000
10700 NW 89th Avenue Hialeah, FL Industrial/Flex January 2016 24,000 $1,700,000
      Totals / Avg 1,347,674 $40,518,333

Note: In addition to the Florida industrial assets shown above, Brian Holland, the Founder of Lucky, owns and operates more than 1.1 million square feet of additional real estate in South Carolina and Tennessee.  

Business Plan

In this transaction, RealtyMogul.com investors will invest in Realty Mogul 71, LLC. Realty Mogul 71, LLC is expected to subsequently invest in Orlando Industrial 3 RE, LLC, the entity that will hold title to the Portfolio.

The Hanging Moss and Goldenrod properties have a combined occupancy of approximately 96% as of September 2016 and are well-located in East Orlando.  The business plan for these two assets is simply to maintain current occupancy through lease renewals and the lease-up of the one vacant industrial bay at Goldenrod. 

The Monroe South property, the third asset in the portfolio, has in-place occupancy of approximately 55% as of September 2016.  A considerable amount of the vacancy at the Monroe property was tied to a residential real estate-related tenant who went bankrupt near the end of The Great Recession and the existing owner has been unable to execute a lease to back-fill this space.  The Sponsor and the leasing agent for the Portfolio believe that this inability is largely due to the existing owner's unwillingness to invest into a speculative space build-out.  For this reason, PRIME Finance, the lender for the current acquisition of the Portfolio, is reserving $375,000, of which $200,000 is for leasing cost reserves ($125,000 for new leases and $75,000 for lease rollover) and $175,000 for speculative leasing capital to lease-up the Monroe property.  The leasing plan for Monroe intends to focus on the 4140 Flex Court buildings (16,875 square feet of in-place vacancy, or 14.5% of rentable square footage) and the vacant office/retail space with Monroe Road frontage (14,640 square feet of in-place vacancy, or 12.6% of rentable square footage).  Please refer to the Portfolio Leasing Floorplan Aerials attached to the Financials tab of this offering in order to examine the layout of the properties in the Portfolio.  If the Sponsor manages to successfully lease this space while maintaining current tenants, the occupancy of the property is targeted to exceed 80%, a sufficient level to sell the property. The Sponsor expects to be able to execute this leasing strategy within the first two years of acquiring the Portfolio.  

NAI Realvest is to oversee both the day-to-day property management and leasing of the Portfolio.

A schedule of all initial leasing reserves held-back by the lender to execute the leasing strategy across the Portfolio, as well as what portion of these funds have already been allocated, is as follows.

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Property

RealtyMogul.com, along with Lucky Property Management Group ("Lucky" or the "Sponsor"), is providing the opportunity to invest in the acquisition and ownership of the Orlando Flex Portfolio (the "Portfolio"), a three property, 13-building, 289,346 rentable square foot industrial / office / retail flex portfolio in Northeast Orlando, FL and Sanford, FL (approximately 17 miles away from the Orlando properties).

The primary objective for the Portfolio is focused on 1) maintaining current occupancy at the Goldenrod and Hanging Moss properties located in Orlando, FL, 2) leasing-up, and subsequently selling, the Monroe South property located in Sanford, FL in the first two (2) years of the hold period. The Goldenrod and Hanging Moss properties are anticipated to be held for five (5) years before being sold.  

Due to existing occupancy at the Goldenrod and Hanging Moss properties, the Sponsor sees this investment as an opportunity to acquire a Portfolio with in-place cash flow and potential appreciation through the lease-up of current vacancy of the Monroe property. 

Property Details

Built from 2003-2006, the Portfolio is currently 81% leased.  Construction style of the Portfolio is consistent throughout, with each building having a six-foot concrete base with metal walls and a metal roof throughout.  The office/retail space generally has 16 foot clear heights and industrial space has 20 foot clear heights.  The buildings have slide-up metal doors throughout the Portfolio which extend down to the ground.  The Portfolio has 1.8 parking spaces per 1,000 rentable square feet, which is considerably above the 1.0 space per 1,000 square feet guidelines per CBRE's property condition assessment reports for the Portfolio. Several of the industrial use buildings include free gated storage areas for tenants to use. Private use of the outdoor spaces is provided to tenants in their leases. 

Comparables

Sales Comps - Hanging Moss & Goldenrod
  Hanging Moss Goldenrod 100 Technology Parkway 6438 University Blvd 7101 Presidents Plaza Averages
Date Oct-16 Oct-16 June-16 Jan-15 Aug-16 Jan-15
Square Feet 94,200 78,646 297,582 84,251 108,432 163,423
Year Built 2004-2005 2006 1985 1990 1980 1985
Purchase Price $4,441,558 $4,441,558 $21,300,000 $5,021,700 $9,950,000 $12,090,567
$/SF $38 $38 $72 $60 $92 $74
Distance from Hanging Moss N/A 1.6 miles 12.9 miles 2.5 miles 14.5 miles 10.0 miles
Distance from Goldenrod 1.6 miles N/A 10.1 miles 2.9 miles 14.7 miles 9.2 miles

Note:  Sales comparable information for the Hanging Moss and Goldenrod properties is from the DRAFT CBRE appraisals for those properties attached hereto.

Leasing Comps - Hanging Moss & Goldenrod
  Hanging Moss Goldenrod 351 Central Park Drive 2800 W Airport Drive 4510 Orange Blvd. Averages
Space Type Flex Retail Flex Retail Industrial Class B Flex Class C Flex Class C N/A
Lease/Available SF 2,000 6,536 4,500 2,000 2,480 2,993
Year Built 2004-2005 2006 2000 1985 1986 1990
Building SF 94,200 78,646 40,000 33,236 25,841 33,026
$ / SF / Year $8.10 NNN $7.43 NNN $6.50 NNN $11.00 NNN $6.32 NNN $7.94 NNN
Distance from Hanging Moss N/A 1.6 miles 1.8 miles 4.4 miles 1.0 mile 2.4 miles
Distance from Goldenrod 1.6 miles N/A 3.0 miles 3.8 miles 2.4 miles 3.1 miles

Note:  Lease comparable information for the Hanging Moss and Goldenrod propeties is from CoStar.

Sales Comps - Monroe
  Subject 110 Tech Drive 120 Maritime Drive 4625 Church Street Averages
Date Oct-2016 May-15 April-14 June-16 May-15
Square Feet 116,500 40,000 19,980 17,120 25,700
Year Built 2003 1995 1998 2005 1999
Purchase Price $4,441,558 $2,000,000 $1,100,000 $1,198,000 $1,700,200
$/SF $38 $50 $55 $70 $58
Distance from Subject N/A 1.6 miles 2.2 miles 0.2 miles 1.3 miles

Note:  Sales comparable information for the Monroe property is from CoStar.

Leasing Comps - Monroe
  Subject 351 Central Park Drive 2800 W Airport Drive 4510 Orange Blvd. Averages
Space Type Flex Retail Flex Class B Industrial Class C Industrial Class C N/A
Lease/Available SF 51,890 12,000 9,500 3,150 8,217
Year Built 2003 1994 1982 1954 1977
Building SF 116,500 12,000 27,935 3,150 14,362
$ / SF / Year $5.40 NNN $6.50 NNN $6.06 NNN $5.62 NNN $6.06 NNN
Distance from Subject N/A 1.3 miles 2.6 miles 1.0 mile 1.6 miles

Note:  Lease comparable information for the Monroe property is from CoStar.

Location

The Hanging Moss and Goldenrod properties are located approximately 2.5 miles apart from one another in NE Orlando, FL, in Orlando's NE Orange County light industrial submarket.  Both properties have street frontage for office and retail space.  Hanging Moss has frontage for two of its four buildings and is located directly next to a golf course, a public school, a Walmart and a Food Factory.  Goldenrod has retail frontage for one of its three buildings and is located in a residential, single-family home neighborhood, a block from a local high school.  Both locations have direct access to State Highway 50 and 417.  

The Monroe South property is located directly up I-4, approximately 23 miles from the Orlando central business district and approximately 17 miles from the Hanging Moss and Goldenrod properties in the town of Sanford, FL, which is in the Seminole County light industrial submarket.  The property is directly adjacent to Lake Monroe and is a couple blocks from two on-ramps for I-4.  The property is located in a primarily residential apartment neighborhood and is next to the Central Florida Zoo & Botanical Gardens.  

Submarket Overview - Goldenrod and Hanging Moss

Per Costar, the Northeast Orange County light industrial submarket has effectively no current vacancy (0.9%), with year-over-year rent growth of 8.8% and flat trailing-12-month absorption, implying the market has maintained full occupancy over the past year.  No products have been delivered in the market since 2007, and no new product is planned, suggesting the properties should not be facing any additional competition in the near future.

Submarket Overview - Monroe

Per Costar, the Seminole County light industrial submarket has current vacancy of 4.9%, with year-over-year rent growth of 6.4% and trailing 12-month net absorption of 361,000 square feet.  Vacancy among 20,000+ square foot product newer than 1990, which the Monroe property would qualify as, is currently at 2.5%.  However, Seminole County covers a significant area and most of the vacancy in the submarket is focused in Sanford, where the Monroe property is located, and a flex industrial corridor to the south in Altamonte Springs.  The leasing agent suggested that vacancy among similar product in Sanford was closer to 10%, which seems consistent with CoStar’s reports.  As was noted in the strengths above, only one competitive building has been constructed in Sanford since 2014 (a 20,000 square foot building delivered in 2016), and no new construction is underway or planned.

Demographic Information - Goldenrod & Hanging Moss

 
Distance from Property 1 Mile 3 Miles 5 Miles
Population 9,672 86,700 234,572
Population Growth (2010-2016) 9.20% 11.37% 10.37%
Projected Growth (2016-2021) 7.55% 7.88% 7.72%
Average HH Income  $61,123 $65,318 $65,517
Median HH Income  $47,096 $46,357 $46,693
Median Home Value $125,579 $141,046 $138,796
Owner Occupied Households 2,176 19,232 50,763
Renter Occupied Households 1,596 16,147 40,113

Demographic information above was obtained from CoStar and represents the Goldenrod property. Goldenrod and Hanging Moss are only a couple miles apart and therefore their demographic information is similar.

Demographic Information - Monroe

 
Distance from Property 1 Mile 3 Miles 5 Miles
Population 3,899 34,917 100,512
Population Growth (2010-2016) 9.31% 11.28% 10.53%
Projected Growth (2016-2021) 5.85% 6.14% 5.90%
Average HH Income  $65,927 $76,059 $71,627
Median HH Income  $50,533 $55,267 $50,770
Median Home Value $159,956 $194,329 $165,590
Owner Occupied Households 519 7,444 24,225
Renter Occupied Households 1,003 6,255 14,804

Demographic information above was obtained from CoStar.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Debt $14,650,000
Equity $3,800,000
Total Sources of Funds $18,450,000
Uses of Funds Cost
Purchase Price $17,500,000
Leasing Cost Reserves $375,000
Loan Fee (1.0%) $146,500
Doc Stamps $81,950
Interest Rate Cap Reserve $80,000
Buyer's Broker Fee $70,000
Broker Dealer Fee (4.0%) $56,000
Legal* $50,000
Working Capital $45,550
Sponsor Acquisition Fee $25,000
Third Parties and Lender Costs $20,000
Total Uses of Funds $18,450,000

*Note: A portion of the legal fees will be paid to a third party attorney as reimbursement for legal pursuit costs. 

Debt Assumptions

The projected terms of the debt financing are as follows:

  • Lender: PRIME Finance
  • Proceeds: $14,650,000
  • Term: Two (2) years
  • Extension Options: Three (3) one year options
  • Extension Costs: 0.00%, 0.25% and 0.50% for extensions one, two and three, respectively
  • Prepayment: Yield maintenance through Month 24, then none
  • Property Release: Yield maintenance through Month 18, then none
  • Loan Paydown Upon Property Release: 125% of allocated loan value
  • Rate: 30-Day LIBOR + 5.25% (5.77% as of 9/12/16)
  • Rate Cap: Two (2) year cap = 1.00% + 30-Day LIBOR at closing date
  • Amortization: $18,000 per month beginning in the second extension period (Month 37)
  • Interest Only: Initial term and first extension period (36 months)
  • Loan to Cost: 79.3%
  • Exit Fee: 1.0%
  • Recourse: Environmental and Bad-Boys only
  • Lender Reserves:
    • CapEx and Spec Space Reserve:  $175,000
    • Leasing Reserve for Rollover: $75,000 initially, and $4,000 monthly in swept cash
    • Leasing Reserve for Currently Vacant Space:  $125,000
    • Ongoing Capital Expense Reserve: $0.10 per square foot / year

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.

Distributions

Orlando Industrial 3 RE, LLC intends to make distributions of operating cash flows to Realty Mogul 71, LLC as follows:

  1. To the Members, pari passu, all excess operating cash flows to a 10.0% Preferred Return to the Members,
  2. 60.0% / 40.0% (60.0% to Members / 40.0% to the Sponsor) of excess operating cash flows thereafter. 

Orlando Industrial 3 RE, LLC intends to make distributions of cash flows due to the sale or refinance of any or all properties in the Portfolio to Realty Mogul 71, LLC as follows:

  1. To the Members, pari passu, all excess cash flows and appreciation to a 10.0% Preferred Return to the Members,
  2. To the Members, pari passu, all excess cash flows and appreciation until all Members have received a full return of capital, 
  3. 60.0% / 40.0% (60.0% to Members / 40.0% to the Sponsor) of excess cash flows and appreciation thereafter. 

Note that these distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).

Realty Mogul 71, LLC is to distribute 100% of its share of excess cash flow (after expenses) to the members of Realty Mogul 71, LLC (the RealtyMogul.com investors). The manager of Realty Mogul 71, LLC is to receive a portion (up to 10%) of the Sponsor's promote interest.

Distributions are expected to start in March 2017 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Sponsor, who may decide to delay distributions for any reason, including maintenance or capital reserves. 

Cash Flow Projections
  Year 1 Year 2* Year 3 Year 4** Year 5
Effective Gross Revenue $1,984,552 $2,113,135 $1,559,236 $1,602,784 $1,667,022
Total Operating Expenses $594,299 $618,125 $443,370 $456,542 $470,884
Net Operating Income $1,390,253 $1,494,983 $1,115,866 $1,146,242 $1,196,138
Distributions to Realty Mogul 71, LLC Investors $132,850 $450,743 $115,648 $72,872 $2,00,468

*Note: The Monroe property is projected to be sold at the end of Year 2.

**Note: The amortization of the existing loan commences in Year 4, which lowers projected net cash flow to investors.

Fees

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
One-Time Fees:
Acquisition Fee $25,000 Sponsor Capitalized Equity Contribution 0.1% of the Portfolio purchase price.
Broker-Dealer Fee
$56,000
North Capital (1) Sponsor's Acquisition Fee
4.0% of equity invested by Realty Mogul 71, LLC
Recurring Fees:
Property Management Fee 4.0% of effective gross revenues Third Party & Sponsor Operating Cash Flow 3.0% due to third party and 1.0% due to Sponsor
Management and Administrative Fee 1.0% of equity invested in Realty Mogul 71, LLC RM Manager, LLC Distributable Cash  RM Manager, LLC is the Manager of Realty Mogul 71, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2)

Notes:
(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 71, 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.

Disclaimers
Disclaimers

There is Significant Competition among Warehouse-Flex-Industrial Properties and other Alternatives

Competition in the Portfolio’s local market areas is significant and may affect the Portfolio’s occupancy levels, rental rates and operating expenses. The Portfolio will compete with other alternatives to attract tenants. If development of Warehouse-Flex-Industrial complexes by other operators were to increase, due to increases in availability of funds for investment or other reasons, then competition with the Portfolio could intensify. Competitive Warehouse-Flex-Industrial complexes in the local or regional areas could adversely affect the ability of Sponsor Entity to sell the property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Lease-up Risks

The Hanging Moss Property and the Goldenrod Property currently have an approximately 96.2% combined occupancy level, and the Sponsor intends to maintain current occupancy through lease renewals and the lease-up of two vacant industrial bays at the Goldenrod Property.  The Monroe Property is currently approximately 55% occupied, and the Sponsor intends to implement a leasing program in its effort to significantly increase that occupancy level. There can be no assurance that the planned lease-up program will result in the Monroe Property increasing its occupancy level at rental rates in line with those projected. Any delays or adverse effects of such lease-up efforts could adversely affect the Portfolio’s financial results or business operations and thus the value of the Company’s investment. Although the Sponsor intends to maintain and/or increase occupancy level, there can be no assurance that such maintained and/or increased occupancy levels will be achieved. Failure to realize such increased occupancy levels could adversely affect the Portfolio’s financial results or business operations and thus the value of the Company’s investment.


Sponsor Ownership Lacks Track Record of Co-Management

The Sponsor is a recently formed entity. The individual owners of the Sponsor who each have some voting rights have not collectively owned and operated a property jointly in the past. While some owners of the Sponsor (or their Principals) have significant operating experience, this is the first entity owned by the particular owners of the Sponsor. The Sponsor, as a recently formed entity, does not have an established track record of investment returns or effective management.


Property Demand

Demand for industrial, flex and warehouse properties depends on various factors including the local and national economy and other specific factors impacting demand for industrial, flex and warehouse properties. Specific factors impacting tenant demand for subject and comparable properties in the local area may include transportation patterns, differential in tax rates between local cities and counties, health of the warehouse/distribution businesses in the local area, access to transportation routes, ability of companies located outside the area (such as online suppliers) to supply physical goods to the local area and demand for physical goods in the local and regional areas.


Interest-Only Loan Period

The loan being used to acquire the Portfolio is expected to have an interest-only period during the both the initial term (24 months) and the first extension period (12 months) for a total of 36 months, 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 Portfolio (since higher loan interest rates might mean that potential buyers would face proportionately higher debt service expenses).


Florida Hurricane Risk

Orlando and Sanford Florida are located near the Atlantic Ocean, which is subject to frequent and sometimes destructive hurricanes. There can be no assurance that a sizable hurricane will not cause significant damage to the Portfolio, in which case the business and financial condition of the Sponsor Entity, and thus the Company, would be materially adversely affected. There is no guarantee that the Sponsor Entity has or will obtain hurricane or flood insurance for the Portfolio.


Florida Tornado Risk

Orlando and Sanford Florida are located 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 Portfolio properties or otherwise interrupt operations in a manner not covered by the Portfolio’s insurance, in which case the business and financial condition of the Sponsor Entity.


Tenants’ Loss of Revenues Could Reduce the Sponsor Entity’s Cash Flow

Tenants of the Portfolio may encounter significant macroeconomic, governmental and competitive forces. Adverse changes in consumer spending or consumer preferences for particular goods, services or store-based retailing could severely impact these tenants’ ability to pay rent. The default, financial distress, bankruptcy or liquidation of one or more of the Portfolio’s tenants could cause substantial vacancies, which would likely reduce the Sponsor Entity’s revenues, increase property expenses and could decrease the value of the Portfolio. Upon the expiration of a lease, the tenant may choose not to renew the lease and/or the Sponsor Entity may not be able to re-lease the vacant space at a comparable lease rate or without incurring additional expenditures in connection with such renewal or re-leasing.


Vacancies and Tenant Defaults May Reduce the Portfolio’s Revenues

A vacancy or default of a tenant on its rent will cause the Sponsor Entity to lose the revenue from that unit and, if enough effective vacancies occur, it could cause the 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.


Forward-Looking Statements

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 71, 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 Portfolio as projected.


Interest Rate Risk

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 a negative effect on the future value of the Portfolio (since higher loan interest rates might mean that potential buyers would face proportionately higher debt service expenses).


Mortgage Risk

The Sponsor has a signed term sheet with a lender to provide the debt financing for the acquisition of the Portfolio, but there can be no assurance that the lender will complete financing on the rates and terms included in the underwriting being presented in the model for this investment opportunity. All rates and terms of the debt financing are subject to final lender committee approval, including but not limited to a modification in lender held capital reserve requirements that may result in a corresponding movement of certain funds currently projected as being held in a Sponsor controlled capital escrow account.


Management Risk

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 Orlando Industrial 3 RE, LLC (including Realty Mogul 71, 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, Orlando Industrial 3 RE, LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 71, LLC is pursuing a venture capital strategy through its investment in Orlando Industrial 3 RE, LLC, and the manager of Realty Mogul 71, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.


Manager of Realty Mogul 71, LLC Will Participate in Sponsors' Promote Interest

The manager of Realty Mogul 71, LLC will be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the Portfolio realized upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 71, LLC. Investors must recognize and agree to waive and bear the risk of this conflict of interest.


Uncertain Distributions

The Sponsor cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 71, 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 Orlando Industrial 3 RE, LLC from Realty Mogul 71, LLC is unknown, and although Orlando Industrial 3 RE, 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 71, LLC does not intend to participate in a capital call if one is requested by Orlando Industrial 3 RE, LLC, and in such event the manager of Orlando Industrial 3 RE, LLC may accept additional contributions from other members of Orlando Industrial 3 RE, LLC. Amounts that the manager of Orlando Industrial 3 RE, LLC advances on behalf of Realty Mogul 71, LLC will be deemed to be a manager loan at an expected interest rate of 10%. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 71, LLC's interest in Orlando Industrial 3 RE, LLC will suffer a proportionate amount of dilution.


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 thePortfolio 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 71, 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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