ExchangeRight Real Estate
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.http://www.exchangeright.com/
David Fisher enjoyed a successful career in banking and finance for 20 years. He is now focused on the management success of ExchangeRight and on managing his own investments. He began his career with KPMG in the tax department, and then worked in tax, treasury, and acquisitions for Wells Fargo for over nine years. He was North American Head of Asset and Structured Finance for HSBC's Investment Banking division for the last seven years of his banking career. David and his banking teams executed international financings in excess of $4 billion. He has been an active real estate investor for the past 10 years and has interests in over 30 partnerships across nine states. He graduated from the University of Northern Iowa in 1993, Magna Cum Laude in Accounting, and earned national honors with the Elijah Watt Sells Award on the May 1993 CPA exam.
Warren currently serves as a managing member for ExchangeRight Real Estate. He is focused on the securitization, broker dealer, and registered representative relations sides of the business. Warren is the co-founder and president over a number of integrated wealth management and securitized real estate companies with Joshua Ungerecht. Prior to focusing on the securitized 1031 exchange market in 2003, Warren developed an extensive tax practice including estate planning, financial planning, and real estate advisory services. Warren has over 30 years of experience as a CPA and has been an active commercial real estate investor for the past 15 years. He graduated in 1978 from Biola University with a B.S. in Business Administration, specializing in Accounting. He also earned a master's degree in Taxation from Golden Gate University in 1993. He maintains Series 6, 7, 22, 24, 39,63, and 79 Securities Licenses.
Joshua currently serves as a managing member for ExchangeRight Real Estate. He is focused on the operations, investment structuring, and acquisitions aspects of the business. Concurrently, he serves as CEO and Chief Investment Officer over a number of integrated wealth management and securitized real estate companies. He developed one of the industry's leading due diligence platforms in securitized real estate analysis. Together with Warren Thomas, Joshua has overseen the acquisition of over $500 million in real estate since 2003. Joshua graduated from The Master's College, Summa Cum Laude with a B.A. in Theology, Apologetics, and Missions, and is currently on leave from Talbot Graduate School, where he was pursuing an M.A. in Philosophy of Religion and Ethics. He also maintains Series 7, 22, 24, 63, 65, and 79 Securities Licenses and an active California real estate license.
Dave currently serves as Chief Financial Officer for ExchangeRight Real Estate. He is focused on financial reporting and acquisitions for the Company. Dave began his career with KPMG in the financial services audit practice, and most recently was with Kaufman Jacobs Real Estate Investments were he was involved in the investment acquisition, capital markets, and financial reporting aspects of the business. Dave graduated from Trinity Christian College with highest honors with a B.S. in Accounting and a Finance concentration. Dave is a CPA and is also a CFA Level III candidate.
|Offering||Description||Projected Annualized Return||Actual Annualized Return*|
|Net-Leased Preferred Equity Fund 1||Shorter-term fund to acquire and sell net-leased assets for the Sponsor.||Range of 12-20%**||Average
|Net-Leased Preferred Equity Fund 2||Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Performing as expected.||Range of 8-12%**||10%|
|Net-Leased Preferred Equity Fund 3||Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Performing as expected.||8.25%||8.25%|
|Acquisition Notes||Company that issues short term debt capital to the Sponsor to acquire and sell net-leased assets. Performing as expected.||Range of
|Acquisitions Notes II||Company that issues short term debt capital to the Sponsor to acquire and sell net-leased assets. Performing as expected.||Range of 8-
|Net-Leased Portfolio 1||Portfolio of two long-term net-leased properties leased to Family Dollar. One of the two properties sold in January, 2015 at a 10.59% annualized net profit to investors. Current remaining property return shown in chart and is exceeding expectations.||7.25%||7.39%|
|Net-Leased Portfolio 2||Portfolio of seven long-term net-leased properties leased to Family Dollar (6) and Dollar General (1). Performing as expected.||7.23%||7.23%|
|Net-Leased Portfolio 3||Portfolio of nine long-term net-leased properties leased to Family Dollar (8) and Dollar General (1). Performing as expected.||7.30%||7.30%|
|Net-Leased Portfolio 4||Portfolio of eleven long-term net-leased properties leased to Family Dollar (8), Dollar General (1), Aaron's (1) and Advance Auto Parts (1). Performing as expected.||8.02%||8.02%|
|Net-Leased Portfolio 5||Portfolio of fourteen long-term net- leased properties leased to Family Dollar (5), Dollar General (4), Advance Auto Parts (2), AutoZone (1), Sherwin Williams (1) and The Christ Hospital (1). Performing as expected.||7.50%||7.50%|
|Net-Leased Portfolio 6||Portfolio of sixteen long-term net- leased properties leased to Family Dollar (3), Dollar General (8), Advance Auto Parts (1), AutoZone (1), CVS (1), Dollar Tree (1) and Tractor Supply (1). Performing as expected.||7.51%||7.51%|
|Net-Leased Portfolio 7||Portfolio of sixteen long-term net- leased properties leased to Family Dollar (4), Dollar General (8), Advance Auto Parts (1), CVS (1), Napa Auto Parts (1), and O'Reilly Auto Parts (1). Performing as expected.||7.75%||7.75%|
|Net-Leased Portfolio 8||Portfolio of thirteen long- term net- leased properties leased to Advance Auto Parts (3), AutoZone (2), CVS (1), Dollar General (2), Family Dollar (1), Franciscan Alliance (1), Ross Stores (1) and Tractor Supply (2). Performing as expected.||7.32%||7.32%|
|Net-Leased Portfolio 9||Portfolio of twenty-two long- term net- leased properties leased to Advance Auto Parts (4), AutoZone (4), CVS (1), Dollar General (9), Hobby Lobby (1), Napa Auto Parts (2) and TCF National Bank (1). Performing as expected.||7.03%||7.03%|
|Net-Leased Portfolio 10||Portfolio of twenty-two long-term net- leased properties leased to Advance Auto Parts (3), AutoZone (1), CVS (1), Dollar General (5), Dollar Tree (1), Family Dollar (4), Napa Auto Parts (2), O'Reilly Auto Parts (2), PNC Bank (1) and Tractor Supply (2). Performing as expected.||7.03%||7.03%|
|Net-Leased Portfolio 11||Portfolio of seventeen long-term net- lease properties leased to Advance Auto Parts (3), CVS (1), Dollar General (5), Family Dollar (2), Hobby Lobby (1), Napa Auto Parts (3), Sherwin- Williams (1) and Walgreens (1).||6.75%||6.75%|
|Net-Leased Portfolio 12||Portfolio of nineteen long-term net-lease properties leased to Advance Auto Parts (3), Dollar General (9), Family Dollar (1), Fresenius Medical Care (1), Kroger (1), Napa Auto Parts (2), Tractor Supply (1), and Walgreens (1).||6.15%||6.30%|
|Net-Leased Portfolio 13||Portfolio of twenty long-term net-lease properties leased to Advance Auto Parts (1), CVS, (1), Dollar General (5), Family Dollar (4), Hobby Lobby (1), Napa Auto Parts (1), Sherwin Williams (4), Tractor Supply (1) and Walgreens (2).||6.64%||6.80%|
|Net-Leased Portfolio 14||Portfolio of seventeen long-term netlease properties leased to Advance Auto Parts (1), Athletico Physical Therapy (1), Dollar General (6), Fresenius Medical Care (2), MedSpring (1), Napa Auto Parts (1), O’Reilly Auto Parts (1), Tractor Supply (1) and Walgreens (3)||6.50%||6.57%|
|Multifamily 1 - Van Mark Creek Apartments||One (1) apartment community consisting of 144 units. Performing as expected.||7.11%||7.11%|
|Mira Bella and San Martin||One (1) apartment community consisting of 378 units. Performing as expected.||6.56%||6.62%|
|Lakeside at Arbor Place Apartments||One (1) apartment community consisting of 246 units. Performing as expected.||6.20%||6.20%|
|North Austin Apartment Portfolio||Three (3) apartment communities consisting of 422 units. Performing as expected.||6.25%||6.25%|
The Trust acquired the three apartment buildings comprising the Portfolio on October 27, 2016 from Rutland Communities, an unaffiliated third party. Concurrently with the acquisition of the Portfolio, the Trust obtained a loan from JPMorgan Chase Bank. The Properties are master leased by the Trust to North Austin Apartment Portfolio Master Lessee, LLC ("Master Lessee" or "Master Tenant") an affiliate of the Sponsor. The Master Tenant will pay rent to the Trust and sub-lease the apartment units to tenants pursuant to residential leases. The Trust is a passive owner of the Properties and will not be involved in any manner in the active management of the Properties. The Master Lessee is to enter into a property management agreement with United Core Management Inc., an unaffiliated third party ("Property Manager") to manage the day-to-day operations of the Properties.
The Sponsor intends to implement approximately $2,500,000 toward interior upgrades to 193 units and add/upgrade amenities including clubhouses, dog parks, grilling stations, fitness centers, etc. The Sponsor estimates that upon renovation the renovated units should be able to achieve rental premiums of approximately 6.71% above in place rents. Under the prior owner, the 229 units that underwent similar interior upgrades in the last two years, without many of the amenity upgrades, realized 7% asking rent growth over the past year.
Investors are being offered the opportunity to invest in the acquisition of a Portfolio of three Class B, garden-style multifamily properties located in North Austin, TX (the "Portfolio", or the "Properties"). The Properties were constructed between 1980 and 1984, consist of 422 units and are currently 95.7% occupied.
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|
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|
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|
|Subject||Arbors of Austin||Creekside Trace||Northgate Hills||Villas del Sol||Total / Averages|
|# of Units||422||226||192||416||294||282|
|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|
Source: CBRE Appraisal
|Subject||Meridian||Northchase Apartments||Shadow Oaks||Uptown Crossing||Total / Averages|
|# of Units||422||200||120||176||88||146|
|Average SF (per Unit)||649||741||747||763||832||763|
|Occupancy at Sale||97%||96%||95%||97%||100%||97%|
Source: CBRE Appraisal
Property Appraisal available upon request. Please email email@example.com.
The Austin Metropolitan Statistical Area ("MSA") is home to over 2 million people and is one of the fastest growing MSAs in the country. The city has earned the nickname “Silicon Hills” because it is a major employment base for technology companies such as Apple, Dell Computer, IBM, AMD, Motorola, National Instruments, and Samsung. High-tech employment has grown at triple the national pace over the past five years. In addition, the city is home to The University of Texas’ flagship institution.*
With growth at twice the national pace, the Austin MSA took the top spot on Forbes Magazine’s “Fastest-Growing U.S. City” list from 2010–2014 and was 2nd on 2015’s list. It is currently estimated that an average of 110 people move to the city every day.** From 2016 to 2020, Austin expects an average economic growth rate of over 4%, with a population growth rate approaching 3%. Over the past decade, the Austin metro population has expanded by 36.8%, the fastest pace in the state, adding more than 500,000 new residents.*** This growth is expected to continue in Austin as the especially well-educated work force, high concentration of tech business, and steady population growth may combine to yield above-average performance.
The properties are located in the North Austin submarket. The submarket is currently at a 2.3% vacancy rate among Class B properties and has averaged 7.7% asking rent growth over the past year and 4.2% over the past five years according to REIS 2Q 2016 report. The multifamily product in the surrounding area has experienced tremendous value-add investment in recent years. This has significantly strengthened the quality of surrounding assets and the renter pool in the area.
Market and Submarket Overview information above was obtained from Axiometrics, Costar and the Appraisal.
|Distance from Property||1 Mile||3 Miles||5 Miles|
|Population Estimates (2021)||39,397||169,296||373,148|
|Median Household Income||$37,569||$48,421||$55,090|
|Average Household Size||3.0||2.4||2.3|
|Median Home Value||$149,160||$184,918||$232,316|
|Owner Occupied Households||3,261||20,856||55,997|
|Renter Occupied Households||8,044||39,575||85,930|
|Population Growth 2015 -2020||12.12%||12.77%||12.58%|
Demographic information above was obtained from CoStar and Census.gov
This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.
|Total Sources of Funds||$44,640,000|
|Broker-Dealer Fee and Marketing Allowance||$1,682,400|
|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|
|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.|
|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.|
(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.
Review of PPM
Before making any investment decision, potential investors should carefully review the Private Placement Memorandum prepared by Sponsor (the "PPM"), including but not limited to, the Risk Factor section of the PPM and all exhibits of the PPM. The PPM contains additional risk factors and information regarding the DST that are not contained herein.
DST's are ill equipped to address the untimely and unexpected need to raise capital or to re-tenant a property or to carry a property in the event of excessive vacancies. The Master Lessee is not likely to have the necessary resources to replace tenants as a result of default or untimely turnover. This risk is increased by an investment which includes multiple properties.
Although it is intended that interests will be acquired on a tax-deferred basis under Code Section 1031, each investor must satisfy a number of technical requirements to qualify for tax deferral under Section 1031. Also, no assurance can be given that investors will be able to complete a qualifying Section 1031 exchange in the future when the Portfolio is sold.
Real Estate Investment Risk
Any investment in real estate carries certain inherent risks, and there is no guaranty as to the future occupancy of the Properties or operating results. Factors which might influence outcome include:
- Changes in national or local economic conditions
- Changes in the local market, including the entry of new competitors
- Changes in the financial condition of the major tenant or tenants
- The occurrence of casualties or natural disasters
- The enactment of unfavorable laws
Master Lease Risk
The Properties are subject to a Master Lease to an affiliate of the Sponsor whose only assets and source of revenues will be the underlying Properties and which may not be able to meet its obligations as they come due. As with any Master Lease, if there is a significant upswing in rents, that upside accrues to the Master Lessee, but if there is falloff or vacancy, that risk is likely to fall on the investors. There is a substantial risk that, if the Master Lessee is unable to meet its obligation to pay rent, a default or foreclosure may occur under property financing which could result in a substantial or total loss of an investment.
Conflict of Interest Risk
There are various potential conflicts of interest among the Sponsor, the Trustees, the Signatory Trustees, the Master Lessee, the Property Managers, and others engagement in the management and operation of the Properties, one or more of whom may be affiliated with the others.
IRS established seven prohibitions over the powers of the DST Trustee, which include the following:
- Once the offering is closed, there can be no future equity contribution to the DST by either current or new co-investors or beneficiaries
- The DST Trustee cannot renegotiate the terms of the existing loans, nor can it borrow any new funds from any other lender or party
- The DST Trustee cannot reinvest the proceeds from the sale of its investment real estate
- The DST Trustee is limited to making capital expenditures with respect to the property to those for a) normal repair and maintenance, (b) minor non-structural capital improvements, and (c) those required by law
- Any liquid cash held in the DST between distribution dates can only be invested in short-term debt obligations
- All cash, other than necessary reserves, must be distributed to the co-investors or beneficiaries on a current basis, and
- The Trustee cannot enter into new leases or renegotiate the current leases
Some of these restrictions are ameliorated in part by the introduction of a Master Lessee, who will have the ability, for example, to enter into or renegotiate leases. However, the existence of a Master Lessee carries with in its own set of risk factors. In addition, DST Members will have no voting rights, and therefore no control over future decisions regarding sale of the properties or roll-up into a limited liability company.
North Austin Apartment Portfolio DST (the "Signatory Trustee") has based these forward-looking statements on its current expectations and predictions about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Property, including, among other things, factors discussed below:
- General economic performance of the local and national economy;
- Required capital expenditures at the Property
- Competition from properties similar to and near the Property
- Adverse changes in local population trends, market conditions, neighborhood values, and local economic and social conditions
- Supply and demand for property such as the Property
- Interest rates and real estate tax rates
- Governmental rules, regulations and fiscal policies
- The enactment of unfavorable real estate, rent control, environmental, zoning or hazardous material laws
- Uninsured losses
- Anticipated market capitalization rates at the time of sale
Limited Transferability of Securities
Each Beneficial Owner will be required to represent that he is acquiring the Interests for investment and not with a view to distribution or resale, that such Beneficial Owner understands the Interests are not freely transferable and, in any event, that such Beneficial Owner must bear the economic risk of investment in the Interests for an indefinite period of time because: (i) the Interests have not been registered under the Act or applicable state “Blue Sky” or securities laws; and (ii) the Interests cannot be sold unless they are subsequently registered or an exemption from such registration is available. There will be no market for the Interests and the Beneficial Owner cannot expect to be able to liquidate their investment in case of an emergency. See “Restrictions on Transferability” in the PPM. Finally, the sale of the Interests may have adverse federal income tax consequences. See “Federal Income Tax Consequences” in the PPM.
Sale of the Property
The proceeds realized from the sale of the Properties will be distributed among the Beneficial Owners, but only after satisfaction of the claims of other third-party creditors and Affiliates of the Sponsor. The ability of a Beneficial Owner to recover all or any portion of its investment, accordingly, will depend on the amount of net proceeds realized from such sale and the amount of claims to be satisfied therefrom. There can be no assurance that the Beneficial Owners will realize gains on sale of the Properties.
Loss of Deposit
The Signatory Trustee may on behalf of the Trust retain the deposit of a Purchaser who is in default under the Purchase Agreement. See “Summary of Purchase Agreement and Escrow Instructions - Deposit; Liquidated Damages” in the PPM.
No Representation of Beneficial Owners
Each Beneficial Owner acknowledges and agrees in the Purchase Agreement and Escrow Instructions that legal counsel representing the Depositor, the Signatory Trustee, the Property Manager and their Affiliates do not represent, and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing, any or all of the Beneficial Owners.
Receipt of Compensation Regardless of Profitability
The Sponsor, the Signatory Trustee, the Property Manager and their Affiliates are entitled to receive certain significant fees and other significant compensation, payments and reimbursements from the acquisition and operation of the Properties regardless of whether the Properties operate at a profit. See “Estimated Use of Proceeds" and “Compensation of the Sponsor and Affiliates” in the PPM.
No Fiduciary Duty
The Trust, the Signatory Trustee, and the Property Manager and their Affiliates will not have a fiduciary duty to the Beneficial Owners as would be applicable to a limited liability company, partnership, or corporation and, therefore, may take actions that would not be in the best interests of one or more of the Beneficial Owners. As permitted under applicable Delaware law, the Signatory Trustee and the Delaware Trustee have expressly disclaimed all duties to the Beneficial Owner except for the duties expressly contained under the Trust Agreement.
The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Private Placement Memorandum for a discussion of additional risks.
The above presentation is based upon information supplied by the Sponsor and 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.
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