Founded in 1999, Barone is a Real Estate Development & Construction Firm operating in the New York City Metro market. With separate but complimentary divisions dedicated to developing their own real estate holdings, they have found a unique niche in the highly competitive NYC marketplace, allowing for an impressive track record, with a prestigious list of partners and projects. A dedicated approach focused on acquiring premium real estate, coupled with a commitment to a value-add business plan rooted in the ability to construct their own projects, has yielded a solid portfolio of NYC assets in the hospitality, multifamily, office, and industrial sectors. As of mid-year 2022, they have over 2 million square feet of projects that are completed or under development.
As its primary objective, Barone seeks to achieve high-yield opportunistic rates of return for its principals and investors, as opposed to more risk-averse “core” investment opportunities. It endeavors to accomplish this by leveraging a six-stage approach to real estate development that has been curated throughout the company’s 20+ year operating history, characterized by sourcing deals, underwriting investment opportunities, pre-development activities, financing arrangements, construction oversight, and finally asset management. During each stage of the process, Barone implements a carefully refined strategy characterized by in-house expertise and a wide-ranging network of third-party relationships.
The redevelopment of 629 Courtlandt Avenue, a 24,300 SF, three-story vacant commercial building for The Bronx Charter School for Children (BCSFC). The Sponsor has executed a 99-year ground lease with the fee owner (Lancourt Associates, LLC) creating a long-term leasehold position in the Property. The existing structure will largely remain in place and an additional floor will be created to redevelop the building into a four-story 28,500 SF educational facility that has been pre-leased to a successful and long-established charter school. The tenant (BCSFC) was K-5 until 2019/20 but received an expansion to K-8. BCSFC is fully enrolled through 8th grade and is moving its middle school program to this site. Zoning for the Property is as of right with entitlements in hand. In addition to a considerable amount of administrative and support space, the school features 11 classrooms, 2 science specifics rooms, an art room, a 3,300 SF full gymnasium, a nearly 1,750 SF cafeteria, and an outdoor terrace located on the first floor. The new additions and gut renovation to this already existing building will bring new life to the community and create a wonderful home for children of The Bronx. The Project site is located between 151st Street and 152nd Street, in the heart of The Bronx, making it a prime location with close proximity to some of the borough's most notable landmarks such as Yankee Stadium, Lincoln Hospital, Bronx Terminal Market, New York Botanical Garden, and The Bronx Zoo just to name a few.
| Tenant | SF | Lease Start | Lease End |
Rent PSF (In-Place)(1) |
Lease Type |
| Bronx Charter School for Children | 28,469 | 8/1/2024 | 9/30/2056 | $37.20 | NNN |
(1) Per Tenant Lease Agreement, base rent is $35.08 PSF based on a minimum rent factor of $5,284.69 and a current student enrollment of 189 students. Rent factor and student enrollment are subject to minimum annual escalations which are included in the Investments' rent escalation assumptions.
Sales Comparables
| 45-20 83rd Street | 34-12 10th Street | 89-17/25 161st St Jamaica | Averages | Bronx Charter School for Children | |
| Sale Date | 06-21-2022 | 09-01-2023 | 07-01-2022 | 06-01-2027 | |
| Sales Price | $45,000,000 | $16,400,000 | $57,600,000 | $39,666,667 | $16,663,567 |
| Year Built | 2022 | 2023 | 2020 | 2022 | 2024 |
| Average Size | 67,568 SF | 23,820 SF | 63,976 SF | 51,788 SF | 24,469 SF |
| Sales Price / SF | $666 | $688 | $450 | $602 | $681 |
| Cap Rate | 6.00% | 6.00% | 6.00% | 6.00% | 6.00% |
| Occupancy at Sale | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% |
| Distance from Subject Property | 8.0 mi | 6.5 mi | 15.0 mi | 9.8 mi | |
| Notes | Sponsor currently owns assets, value represents As-Is appraised value of June 21, 2022 | Sponsor currently owns assets, value represents As-Stabilized appraised value of 9/1/2023, appraisal completed 9/13/21 |
Total Capitalization
| Sources of Funds | $ Amount | $/SF |
| Debt | $8,073,802 | $284 |
| GP Equity(1) | $339,726 | $12 |
| LP Equity | $3,000,000 | $105 |
| Total Sources of Funds | $11,413,528 | $401 |
| Uses of Funds | $ Amount | $/SF |
| Hard Costs | $8,401,641 | $295 |
| Soft Costs | $1,679,456 | $59 |
| Financing | $563,737 | $20 |
| RM Technologies Fee(2) | $165,288 | $6 |
| Recourse Fee | $80,738 | $3 |
| Acquisitions Fee | $66,127 | $2 |
| Development Fee | $456,541 | $16 |
| Total Uses of Funds | $11,413,528 | $401 |
(1) The Sponsor’s equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor.
(2) RM Technologies, LLC, an affiliate of RealtyMogul, operates the RealtyMogul Platform. RM Technologies, LLC charges a fixed, non-percentage-based fee for real estate companies and their sponsors to use the Platform and for Platform-related services. Please see the Fees and Disclaimers sections below for additional information concerning fees paid to RM Technologies, LLC.
The expected terms of the debt financing are as follows:
- Lender: LIIF
- Loan Type: Construction Interim Loan
- Term: 84 Months
- Loan-To-Value: 71.0%
- Loan-To-Cost: 70.7%
- Estimated Proceeds: $8,073,802
- Interest Type: Fixed
- Annual Interest Rate: 7Y Treasury + 288bps (6.50%)
- Interest-Only Period: During Construction Only. Post-Construction, monthly payments of principal and interest based on the 25-year amortization schedule.
- Amortization: 25 Years
- Prepayment Terms: Yield Maintenance Until Month 60
- Extension Requirements: None
- Recourse Description: Full Recourse
(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.
Barone Management intends to make distributions from Courtlandt Fund LLC as follows:
- Pari passu to all cash flows available for distribution to the Equity Investors(1) until Equity Investors(1) receive a Preferred Return of 9.0% IRR;
- 65% / 35% (65% to Equity Investors(1) / 35% to Promote/Carried Interest) of all cash flow available for distribution thereafter.
Barone Management intends to make distributions to investors after the payment of the company's liabilities (loan payments, operating expenses, and other fees as more specifically set forth in the LLC agreements, in addition to any member loans or returns due on member loan).
Distributions are expected to start in June 2025 and are projected to continue on an Annual basis thereafter. Distributions are at the discretion of Barone Management, who may decide to delay distributions for any reason, including maintenance or capital reserves.
Barone Management will receive a promoted/carried interest as indicated above.
| Cash Flow Summary | |||||
| Year 1 | Year 2 | Year 3 | Year 4 | ||
| Effective Gross Revenue | $0 | $529,479 | $1,148,606 | $1,253,847 | |
| Total Operating Expenses | $0 | $88,406 | $339,022 | $355,710 | |
| Net Operating Income | $0 | $441,073 | $809,585 | $898,138 | |
| Project-Level Cash Flows | |||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Net Cash Flow | ($3,339,726) | $0 | $111,246 | $149,930 | $8,579,925 |
| Investor-Level Cash Flows(2) | |||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Net Cash Flow | ($3,005,753) | $0 | $100,122 | $104,880 | $6,381,089 |
| Investor-Level Cash Flows - Hypothetical $50,000 Investment(2) | |||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Net Cash Flow | ($50,000) | $0 | $1,665 | $1,745 | $106,148 |
(1) Equity Investors include all members part of the Limited Partnership and General Partnership, including Barone Management.
(2) RM Technologies, LLC and its affiliates do not provide any assurance of returns. Returns presented are net of all fees. Please carefully review the Fees and Disclaimers sections below for additional information concerning Sponsor’s use or projected returns and fees paid to Sponsor and RM Technologies, LLC.
Certain fees and compensation will be paid over the life of the transaction; please refer to Barone Management'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 |
| Acquisition Fee | $66,126.56 (1.0% of all base rent payable under the Ground Lease, discounted at a 5% cap rate) | Sponsor | Capitalized Equity Contribution |
| Recourse Fee | 1.0% of Debt | Sponsor | Capitalized Equity Contribution |
| Development Fee | 4.0% of Total Costs | Sponsor | Capitalized Equity Contribution |
| Construction Management Fee | 5.0% of Hard Costs | Sponsor | Capitalized Equity Contribution |
| 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 | 2.0% of Net Rent | 3rd Party Property Manager | 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.
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RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including 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”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe information on this Page 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 subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.
Risk of InvestmentThis investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. 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. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.
No Reliance on Forward-Looking Statements; Sponsor AssumptionsSponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.
Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.
No Reliance on Past PerformanceAny description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.
Sponsor’s Use of DebtA substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.
Sponsor’s Offering is Not RegisteredSponsor’s securities offering 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 offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership 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 Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.
No Investment AdviceNothing on this Page should be regarded as investment advice (either with respect to 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 to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
1031 Exchange RiskInternal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.