ExchangeRight is committed to providing 1031-exchangeable DST offerings of value-added multifamily properties and net-leased portfolios. Our multifamily platform targets Class B apartments with stable income and value added upside potential. Our multifamily offerings feature strong cash flow, high debt coverage ratios, conservative underwriting, long-term fixed-rate financing, and the potential to enhance return with value-added strategies.
In addition to intentionally structuring offerings with an alignment of interest with investors, the principals of the company have taken a personal investment position in each DST offering that has been brought to market. Each of our DST offerings provides both 1031 and cash investors with pass-through tax deferral advantages.
The Portfolio consists of three Class B garden-style multifamily buildings located in North Austin: Amor, Feliz, and Vida.
Amor is located at 1200 Mearns Meadow Blvd. in North Austin, TX. This property was built in 1984 and is currently 98% occupied. The 132 units consist of 20 studio, 88 one-bedroom one-bathroom, and 23 two-bedroom two-bathroom units. Average in place rents are $800 per unit ranging from $675 to $995. Amor is a gated community that offers amenities including a swimming pool, laundry facilities, and a leasing office. Recent capital improvements at the property in 2014 included full exterior painting, landscaping and new pool decking. Standard unit interiors at Amor include basic appliances, faux wood vinyl or vinyl tile flooring, laminate countertops, pantries, mini blinds, walk-in closets, and a patio or balcony. The approximately 90 currently upgraded units generally contain white GE appliances, resurfaced countertops, faux wood plank flooring, brushed nickel hardware, and two inch blinds. The effective rent growth for these upgraded units has been approximately 6.7% from January 2015 through April 2016.
| Unit Type | # of Units | Avg SF/Unit | Avg Rent/Unit | Avg Rent/SF |
|---|---|---|---|---|
| 0/1 | 20 | 396 | $675 | $1.70 |
| 1/1 | 88 | 545 | $775 | $1.42 |
| 2/2 | 24 | 875 | $995 | $1.14 |
| Total | 132 | 582 | $800 | $1.37 |
Feliz is located at 1804 W. Rundberg Ln. in North Austin, TX. This property was built in 1980 and is currently 95% occupied. The 130 units consist of 90 one-bedroom one-bathroom, 30 two-bedroom one-bathroom, and 10 two-bedroom two-bathroom units. Average in place rents are $851 per unit ranging from $759 to $1,084. Feliz is a gated community that offers amenities including a swimming pool, laundry facilities, fitness center, picnic area with barbecue grills, and a leasing office. Recent major capital improvements include new pool decking in 2014 and a significant amount of repairs to patios, stairs, and exterior siding. Standard interior features at Feliz include plain white or cream appliances, laminate countertops, mini blinds, vinyl tile flooring, walk-in closets, and a patio or balcony. The current owners have implemented an interior value-add renovation program and have completed approximately 80 units or 62% of the property. Upgraded units vary slightly, but generally consist of black or stainless steel appliances, faux wood plank flooring in wet areas and throughout living areas in ground floor units, resurfaced countertops, painted cabinets, brushed nickel hardware, and two inch blinds. The effective rent growth for these upgraded units has been approximately 8.3% from the beginning of 2015 through April 2016.
| Unit Type | # of Units | Avg SF/Unit | Avg Rent/Unit | Avg Rent/SF |
|---|---|---|---|---|
| 1/1 | 90 | 591 | $787 | $1.34 |
| 2/1 | 30 | 816 | $977 | $1.20 |
| 2/2 | 10 | 1,005 | $1,084 | $1.08 |
| Total | 130 | 670 | $851 | $1.27 |
Vida is located at 1735 Rutland Dr. in North Austin, TX. This property was built in 1983 and is currently 96% occupied. The 160 units consist of 32 studio, 56 one-bedroom one-bathroom, 56 two-bedroom one-bathroom, and 16 two-bedroom two-bathroom units. Average in place rents are $851 per unit ranging from $745 to $1,040. Vida is a gated community that offers amenities including a swimming pool, laundry facilities, fitness center, and a leasing office. The pool area, with new decking and a pool resurface in 2014, is the focal point of the amenity set and is the largest of the three properties. Standard units at Vida include vintage appliances, faux wood vinyl or vinyl tile flooring, laminate countertops, walk-in closets, patios and balconies, and mini blinds. The approximately 100 currently upgraded units generally contain GE stainless steel appliances, resurfaced countertops, faux wood plank flooring, two-tone paint, brushed nickel hardware, and two inch blinds. The effective rent growth for these upgraded units has been approximately 7.6% from January 2015 through April 2016.
| Unit Type | # of Units | Avg SF/Unit | Avg Rent/Unit | Avg Rent/SF |
|---|---|---|---|---|
| 0/1 | 32 | 450 | $745 | $1.66 |
| 1/1 | 56 | 598 | $830 | $1.40 |
| 2/1 | 56 | 846 | $990 | $1.17 |
| 2/2 | 16 | 935 | $995 | $1.11 |
| Total | 160 | 688 | $878 | $1.29 |
| Subject | Arbors of Austin | Creekside Trace | Northgate Hills | Villas del Sol | Total / Averages | |
|---|---|---|---|---|---|---|
| # of Units | 422 | 226 | 192 | 416 | 294 | 282 |
| Year Built | 1982 | 1984 | 1984 | 1984 | 1978 | 1983 |
| Average SF (Per Unit) | 649 | 687 | 585 | 671 | 676 | 661 |
| Average Rental Rate (Per Unit) | $757 | $880 | $850 | $885 | $862 | $872 |
| Average Rent PSF | $1.17 | $1.28 | $1.45 | $1.32 | $1.27 | $1.32 |
| Rating | - | Superior | Superior | Superior | Similar | - |
Source: CBRE Appraisal
| Subject | Meridian | Northchase Apartments | Shadow Oaks | Uptown Crossing | Total / Averages | |
|---|---|---|---|---|---|---|
| Date | Oct-16 | May-16 | Dec-15 | Nov-15 | April-15 | - |
| # of Units | 422 | 200 | 120 | 176 | 88 | 146 |
| Year Built | 1982 | 1985 | 1983 | 1985 | 1969 | 1981 |
| Average SF (per Unit) | 649 | 741 | 747 | 763 | 832 | 763 |
| Purchase Price | $39,071,047 | $17,250,000 | $9,750,000 | $16,350,000 | $9,000,000 | $14,194,521 |
| $/Unit | $92,585 | $86,250 | $81,250 | $92,898 | $102,273 | $89,641 |
| Cap Rate | 6.00% | 6.00% | 6.35% | 5.71% | 6.00% | 5.98% |
| Occupancy at Sale | 97% | 96% | 95% | 97% | 100% | 97% |
Source: CBRE Appraisal
Property Appraisal available upon request. Please email investor-help@realtymogul.com.
| Equity | $21,030,000 | |
| Debt | $23,610,000 | |
| Total Sources of Funds | $44,640,000 | |
| Acquisition Price* | $39,071,047 | |
| Acquisition Fee | $744,047 | |
| Broker-Dealer Fee and Marketing Allowance | $1,682,400 | |
| Prepaid Taxes | $109,881 | |
| Reserves | $2,487,024 | |
| Closing Costs | $545,600 | |
| Total Uses of Funds | $44,640,000 | |
* Purchase price of $38,350,000 and $721,047 of acquisition related costs
The Portfolio has existing debt:
- Lender: JPMorgan Chase, N.A.
- Loan Origination Date: 10/27/2016
- Loan Proceeds: $23,610,000
- Loan to Cost: 53%
- Interest Rate: Fixed (3.82%)
- Amortization: Full term (10-year) interest-only
- Recourse: Non-recourse to the Trust, but recourse to the Trust and principals of the Sponsor for certain (i) "bad acts," and (ii) environmental indemnification
- Term: 10 years
- Prepayment Penalty: Subject to Yield Maintenance fee if loan repaid before June 2026
- Other Senior Lender Provisions:
- Upfront replacement reserves to be withheld from Loan proceeds by Lender and deposited on the Trust’s behalf on the Loan closing in the amount of (A) $422,000 to be used for Replacements (the “Upfront Replacement Deposit”); (B) $1,636,834 to be used for the Replacements related to capital improvements (the “Capital Improvement Deposit”); and (C) the Trust shall thereafter deposit $250 per unit per year for replacements and repairs to the Property during the term of the Loan (the “Replacement Reserve Monthly Deposit”) (collectively, the “Replacement Reserve”);
- A required repair reserve was withheld from Loan proceeds by Lender and deposited on the Trust’s behalf on the Loan closing in the amount of $28,190, which amount equals one hundred twenty-five percent (125%) of the estimated cost for the completion of the Lender’s required repairs at the Property (the “Required Repair Reserve”); and,
- An on-going tax and insurance reserve shall be funded by the Trust beginning on the Loan payment date occurring in January, 2017 and on each Loan payment date thereafter in an amount equal to one-twelfth of the tax premiums that the Lender estimates will be payable during the next ensuing twelve (12) months (the “Tax and Insurance Reserve”).
The Sponsor is to make distributions directly to investors who own a beneficial interest in the DST on a pro-rata basis.
Distributions are expected to start for each investor within 45 days of the completion of that investors beneficial interest in the DST. Distributions are expected to continue on a monthly basis thereafter. These distributions are at the discretion of the Sponsor and made directly by the Sponsor, neither Realty Mogul Co. nor any of its affiliates have any control or discretion on the timing or amount of distributions.
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 | $744,047 | Sponsor | Capitalized Equity Contribution | 3.54% of the offering amount. |
| Broker-Dealer Fee | 7.0% | Broker Dealers | Capitalized Equity Contribution | Paid to North Capital(1) or other licensed broker-dealers based on the amount of equity capital raised. Surplus fees retained by Sponsor. |
| Marketing & Due Diligence Fee | 1.0% | Broker Dealers | Capitalized Equity Contribution | 1.0% based on the amount of equity invested by investors through RealtyMogul.com, third-party Broker Dealers (including North Capital(1)) are entitled to additional fees based on equity they originate. Surplus fees retained by Sponsor. |
| Syndication Costs | $155,150 | Sponsor or Third Parties | Capitalized Equity Contribution | Fees associated with expenses for preparation of offering materials/documents, PPM, and tax opinion paid to third parties. |
| Organizational & Offering Costs | $315,450 | Sponsor | Capitalized Equity Contribution | 1.5% of maximum offering amount. |
| Sponsorship Cost | $50,000 | Sponsor | Capitalized Equity Contribution | 0.5% of the offering amount. To reimburse Sponsor for accounting, due diligence, marketing, distribution, and other costs. |
| Recurring Fees: | ||||
| Asset Management Fee | 0.25% - 0.75% annual gross income actually collected | Manager | Operating Cash Flow | 0.25% in Year 1, 0.75% in Year 2, in 1% Year 3 through Year 10. |
| Disposition Fee | 2.0% | Manager | Disposition Proceeds | 2% of gross proceeds from disposition of property if disposition price plus reserves is greater than $44,640,000. |
| Trustee Fee | $750 annually | Third-Party | Operating Cash Flow | Joan L. Yori, unaffiliated third party |
| Master Lease Operating Profit | N/A | Master Lessee | Operating Cash Flow | Master Lessee will retain operating revenues from the Properties that exceed the Annual Base Rent and the Annual Bonus Rent due to the Trust under the Master Lease. Master Tenant is entitled to 50% of rental income above the Effective Gross Revenue Benchmark in a given year. |
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.
The above presentation is based upon information supplied by the Sponsor or others. Realty Mogul, Co. along with its 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.
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.