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Multifamily
West End Place
Charlotte, NC
INVESTMENT STRATEGY
Development
INVESTMENT TYPE
Equity
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Offered By Gordon Road Capital
22.9%* TARGET IRR 17.0%-23.9%
11.9%* TARGET AVG CASH ON CASH
3.14X* TARGET EQUITY MULTIPLE
Estimated Hold Period 10 Years
Estimated First Distribution 11/2025
Minimum Investment 35000
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Explore this project
Overview
86-unit build-to-rent (“BTR”) Opportunity Zone Project in a rare, institutional, high barriers-to-entry, infill submarket in Charlotte, NC.
Market

One hundred people move to Charlotte every day, contributing to an acute housing shortage. The Project’s submarket, located at the heart of the West End neighborhoods in Charlotte, is at the center of even more transformational growth. From 2015-2020, single-family homes in the West End neighborhoods appreciated by over 142%. Placemaking and institutional investor activity located within walking distance from the Project include (i) Savona Mill (J.P. Morgan/Portman) a 27-acre mixed-use destination with 183k SF of creative office, 16k SF of retail and +/- 800 units of residential, and (ii) Lower Tuck (Angelo Gordon) with +/- 400k SF of creative office and retail.

Location

The Project sits directly on the Charlotte “Greenway”, a network of 62 miles of trails connecting Charlotte’s most popular neighborhoods. The Greenway is comparable to the New York Highline and Atlanta BeltLine trails, providing pedestrian connectivity and spurring development along the trails. Many units of the Project will have sweeping views of the Greenway and as well as a bucolic stream that serves as a border to the western edge of the Property.   

Cash Flow

The Project’s expected returns of 18% (before factoring in any Opportunity Zone tax benefit) are approximately 600-800 bps higher compared to a typical IRR target of 10-12% for Opportunity Zone deals. When factoring in the tax benefit from investing in Opportunity Zones, an 18% IRR could equate to a 22.9% IRR on a non-Opportunity Zone development. Project returns are driven by a compelling land basis and a high barriers-to-entry location which will drive long-term rent growth and asset appreciation. The Sponsor is contributing the land at cost despite an estimated ~46% appreciation in value over the course of a rezoning that lasted over a year. The Project was sourced off-market.   

Property at a glance
# of Units 86
Construction Start Date April 2023
Construction Completion Date January 2025
Total Development Budget $36,122,901
Target Cash on Cash 11.9%
Land Acquisition Price

$6,750,000

Investment Highlights
Sponsors Have A Long Track Record With Industry-Leading Firms: Sponsorship is anchored by former JBG Companies (NYSE: JBGS) executives and Managing Partners Brian Coulter (Chief Development Officer) and Rob Stewart (chair of the Investment Committee). Justin Coulter and Martin Pawlik bring decades of institutional experience from leading global firms such as Brookfield Asset Management, Canyon Partners, Drake Real Estate Partners, and J.P. Morgan. Additionally, the Sponsor’s development manager is Charlotte-based and has completed several comparable townhome projects.
Build-To-Rent (“BTR”) Townhomes Offer Competitive Advantages Vs. Multifamily: (1) BTR townhomes have shorter construction timelines (12-18 months) than traditional multifamily, which mitigates development risks, including rising costs. (2) BTR townhomes typically have faster lease-up periods. Buildings are delivered as they are completed, rather than upon completion of one large multifamily building. (3) If BTR townhomes are built by a national builder (such as Stanley Martin in this case), there is significantly less construction risk given an “off-the-shelf” floorplan and design which has been built hundreds if not thousands of times. (4) BTR units do not compete with traditional multifamily projects and are more supply-constrained. Larger unit types in the Project’s submarkets have a vacancy of 3%.
Charlotte is One Of The Most Desirable Markets in The Country And Firmly On The Institutional Radar: Leading Commercial Real Estate publications have highlighted Charlotte as one of the United States’ most attractive investment markets, due to its rapid growth, educated workforce, and thriving economic base. For example, in Urban Land Institute’s 2023 Emerging Trends in Real Estate survey, institutional investors named Charlotte as one of the top 10 markets for Overall Real Estate Prospects. Zillow Research named Charlotte as the “#1 hottest market” for 2023.
The Project’s Underlying Land is Well-Located, Owned at an Attractive Basis, and Shovel-Ready: The Sponsor closed on the land in 2022 after a rezoning process that lasted for over a year. The Property is one of the last infill sites within the entire City of Charlotte and will be the closest BTR product to Charlotte’s most desirable neighborhoods. The entire western edge of the Property is bordered by the Charlotte Greenway (New York Highline or Atlanta Beltline equivalent), and residents will have direct pedestrian access to Charlotte’s premier submarkets of South End and Uptown. Furthermore, at closing, the Project will be fully entitled, shovel ready, with a construction contract with one of the nation’s largest homebuilders, Stanley Martin (named Builder of the Year).
Rental Discount Offers An Important Interest Rate and Recession Hedge: The Project rent assumption is a ~$1,000/month discount compared to the monthly cost of home ownership in the direct submarket, and almost a $4,000/unit discount when compared to the South End and Uptown submarkets. As rising interest rates increase the cost of homeownership, the gap between renting and owning will only increase. The Project offers an attractive and affordable proposition to renters who want to live in desirable, urban submarkets.
The Project Has Favorable Financing From a Relationship Lender: Sponsorship has secured an attractive low-leverage loan (55% LTC) from United Bank. By working with a bank – an important relationship of Sponsorship – the Project will have more flexibility during construction.
BTR Is Supported By A Supply-Demand Imbalance And Other Long-Term Tailwinds: In the aftermath of the financial crisis, home building slowed to only 20% of pre-crisis levels. The number of renter households has dramatically increased since 2010 due to changing preferences (Millennials and Gen Z do not prioritize homeownership; boomers want to downsize) and stagnant wage growth (creating a housing affordability crisis).
The Project Offers Qualified Opportunity Zone Tax Benefits: Potential investor tax benefits include the deferral of capital gains until December 31, 2026, and the potential elimination of taxes on new capital gains if the investment is held for at least 10 years. The full tax benefit can increase returns by as much as 500-600 basis points compared to a non-Opportunity Zone investment.
Management
Cumulative Distributions

Gordon Road Capital

Gordon Road Capital (“Gordon Road” or “Sponsor”) was founded to pursue the most compelling development opportunities in the Southeast.

Chairmen Brian Coulter and Rob Stewart each has over 38 years of experience including leading the JBG Companies (NYSE: JBGS) where they executed over 235 investments, developed over 80 projects, and in total, invested nearly $4 billion. Their desire to pursue compelling investment and development opportunities in high-growth markets led them to partner with Justin Coulter and Martin Pawlik.

Justin Coulter and Martin Pawlik met at Harvard Business School, where they were mentored and advised by their professors to launch Gordon Road, a reference to the “middle” of a spectrum between detached single-family homes and apartment buildings as well as the “middle” of affordability in housing options. Justin Coulter and Martin Pawlik have institutional real estate backgrounds and extensive experience in sourcing, financing, acquisition, and development across a vast range of asset types, executing over $19 billion in equity and debt transactions. 

Gordon Road has raised capital from some of the most prominent real estate investors in the country. 

https://gordonroadcapital.com/
  • Justin Coulter
    Managing Partner
  • Martin Pawlik
    Managing Partner
  • Brian Coulter
    Chairman
  • Rob Stewart
    Chairman
Justin Coulter
Managing Partner

Justin is responsible for the firm’s day-to-day activities. Prior to founding GRC, Justin led acquisitions, dispositions, and asset management activity for Brookfield Asset Management and Brookfield Properties in its office business in New York and Boston. During his time at Brookfield, Justin executed over $19 billion in equity and debt transactions and led the completion of over one million square feet of commercial leases. Justin has also consulted for Tidewater Capital in San Francisco, CA, the Boundary Companies in Washington, DC, and WeWork in New York where he underwrote and analyzed multifamily acquisitions and developments, the development of single-family rental communities, industrial acquisitions, self-storage acquisitions, and coworking/coliving concepts. Justin is a graduate of Harvard Business School where he was a Copresident of the Real Estate Club. He completed his undergraduate studies at Haverford College where he studied political science and economics, graduated cum laude, and played varsity baseball.

Martin Pawlik
Managing Partner

Martin is responsible for the firm’s day-to-day activities. Prior to founding GRC, Martin led sourcing, financing, acquisitions, and developments across asset types and geographies for Drake Real Estate Partners. Martin was also a member of the acquisitions team at Canyon Partners, working on both debt and equity investments across asset types and geographies. Martin first started his real estate career at J.P. Morgan in the real estate investment banking group. Martin graduated with distinction from Harvard Business School where he was a Copresident of the Real Estate Club. He completed his undergraduate studies at Washington University in St. Louis, where he graduated summa cum laude and valedictorian of his class. He is also an adjunct instructor at New York University teaching real estate courses.

Brian Coulter
Chairman

Brian is a former Managing Partner, Chief Development Officer, and member of the Investment and Executive Committees at the JBG Companies (“JBG”) (now JBG Smith, NYSE: JBGS). Brian has over 38 years of experience in the commercial real estate industry. During his time with JBG, he focused primarily on managing pre-development and development activities as well as on other value-creation strategies for existing properties. He received his Bachelor of Arts, Summa Cum Laude, Phi Beta Kappa from Rutgers College, and a Master of Business Administration from Harvard Business School.

Rob Stewart
Chairman

Rob is a former Managing Partner, Chair of the Investment Committee, and member of the Executive Committee at the JBG Companies (“JBG”) (now JBG Smith, NYSE: JBGS). Rob has over 38 years of experience in the commercial real estate industry. Over the course of Rob’s career at JBG, he led acquisition, financing, and disposition efforts for JBG’s real estate private equity and development business and was integrally involved in conceiving the development programs for JBG projects. Rob received his Bachelor of Arts from Princeton University and his Master of Business Administration from The Wharton School of the University of Pennsylvania.

Track Record

Residential Product Type Units  Market 
Multifamily development Multi 417 D.C.
Multifamily development Multi 424 D.C.
Multifamily development Multi 384 D.C.
Senior housing development Multi 95 Atlanta
Senior housing development Multi 85 Augusta
Senior housing development Multi 145 Savannah
Multifamily development Multi 269 Durham 
Multifamily renovation  Multi 475 Raleigh MSA
Multifamily development Multi 144 D.C.
Multifamily development Multi 296 D.C.
Multifamily development Multi 130 D.C.
Multifamily development Multi 125 D.C.
Multifamily development Multi 263 D.C.
Multifamily development Multi 200 D.C.
Multifamily development Multi 303 D.C.
Multifamily development Multi 310 D.C.
Multifamily development Multi 256 D.C.
Multifamily development Multi 377 Northern VA
Multifamily development Multi 358 D.C.
Multifamily development Multi 245 D.C.
Multifamily development Multi 345 D.C.
Multifamily development Multi 356 D.C.
Multifamily development Multi 253 D.C.
Multifamily development Multi 141 D.C.
Multifamily development Multi 74 Northern VA
Multifamily development Multi 253 Northern VA
Multifamily development Multi 385 Northern VA
Multifamily development Multi 474 Northern VA
Multifamily development Multi 457 Silver Spring, MD
Multifamily development Multi 210 Silver Spring, MD
Multifamily development Multi 214 Rockville, MD
Multifamily development Multi 279 Rockville, MD
Multifamily development Multi 225 D.C.
Multifamily development Multi 266 D.C.
Multifamily development Multi 264 D.C.
Multifamily development Multi 93 D.C.
Multifamily development Multi 465 D.C.
Multifamily development Multi 385 Bethesda, MD
Multifamily development Multi 204 Northern VA
Condo development Condo 116 Northern VA
Condo development Condo 246 D.C.
Condo development Condo 60 Northern VA
Condo development Condo 46 D.C.
Condo development Condo 160 D.C.
Condo development Condo 62 D.C.
Condo development Condo 141 D.C.
Condo development Condo 194 Northern VA
Condo development Condo 81 Northern VA
Condo development Condo 159 Northern VA
Townhome Development Townhome 116 D.C.
Townhome Development Townhome 237 D.C.
Townhome Development Townhome 63 Northern VA
Townhome Development Townhome 152 Bethesda, MD
Townhome Development Townhome 30 Bethesda, MD
Townhome Development Townhome 137 Northern VA
Townhome Development Townhome 249 Northern VA
Townhome Development Townhome 168 Northern VA
Townhome Development Townhome 407 Rockville, MD
Total Residential (units)   13,468  
       
Commercial Product Type SF (million) Market 
Office sale Office 1.8 NY Metro
Office refinancing Office 3.4 Houston
Office recapitalization Office 2.3 NY Metro
Office acquisition/redevelopment Office 2.3 NY Metro
Office refinancing Office 2.3 NY Metro
Office acquisition/redevelopment Office 0.4 NY Metro
Office refinancing Office 1.7 NY Metro
Multi-Asset REIT acquisition Lab 2.3 Multiple Markets
Office acquisition/redevelopment Office 1.3 NY Metro
Total Commercial (million SF)   17.7  

The above bios and track record were provided by Gordon Road Capital and have not been independently verified by RealtyMogul

Business Plan

The Sponsor closed on the land in 2022 after a rezoning process that lasted for over one year. At Closing, the Project will be fully entitled, shovel-ready, with a construction contract with Stanley Martin. The Project has favorable financing from a relationship lender (United Bank).

Timeline:

  • Investment Hold: 10 years
  • Land Closing: already owned by Sponsor
  • Closing and Construction Loan Funding: Q2 2023
  • Leasing Stabilization: Q1 2025 (within 23 months)
  • Refinance: Q3 2025
  • Target Exit: Q1 2033

Development Costs

Hard Costs Total Amount Per Unit
Sitework Costs $3,568,510 $41,494
Vertical Construction $19,750,000 $229,651
Vertical Contingency $987,500 $11,483
Total Hard Costs $24,306,010 $282,628
     
Soft Costs Total Amount Per Unit
A&E Costs $515,200 $5,991
Permits & Fees $465,025 $5,407
Insurance $145,836 $1,696
Marketing  $75,000 $872
Other Soft Costs/Contingency  $120,106 $1,397
RE Tax Carry $179,128 $2,083
Legal & Closing  $203,388 $2,365
Total Soft Costs $1,703,683 $19,810
     
Financing + Other Costs Total Amount Per Unit
Other Construction Fees $200,200 $2,328
FF&E $145,000 $1,686
Operating Reserve $76,885 $894
Financing Costs & Carry $1,300,587 $15,123
Development Fee $1,298,463 $15,098
Land  $6,750,000 $78,488
Pre-Dev Work $342,073 $3,978
Total Financing + Other Costs $10,113,208 $117,595
     
Grand Total $36,122,901 $420,034
Property

Property Details

The Project is a ground-up Opportunity Zone development that will include:

  • 86 total units totaling 143,442 NSF including:
    • 32, 2-bdrm townhome units (1,413 SF/unit)
    • 54, 3-bdrm townhome units (1,819 SF/unit)
  • 5 units will be Affordable at 80% of AMI

All units will feature a two-car tandem garage and private outdoor space (something not offered by apartment communities comparables). Units will have class-A finishes such as high-quality quartz or granite countertops, walk-in closets, standing showers,  LVP flooring, and high-quality carpet in applicable areas. Units are anticipated to boast smart home features such as Nest Thermostats and smart lock systems.

Community amenities will include a pool, fitness center, leasing office, and landscaped greenspaces with grilling stations (which is not offered by for-sale townhome comparables). The entire western edge of the Property is bordered by the Charlotte Greenway (New York Highline or Atlanta Beltline equivalent); residents will be able to directly walk onto a trail that winds through creeks, breweries, and restaurants, and will soon connect to provide direct pedestrian access into and around Uptown and other Charlotte amenity centers.

Unit Mix

Unit Type # of Units Avg SF/Unit Avg Rent (Pro-Forma/Reno) Rent PSF (Pro-Forma/Reno)
16x40 - 2bd (afford) 5 1,413 $1,333 0.94
16x40 - 3bd 54 1,819 $3,350 1.84
16x40 - 2bd 27 1,413 $2,975 2.11
Totals 86 1,668 $3,115 1.87
Comparables

Lease Comparables

  Arlo The Griff The Bryant Village at Commonwealth Sky Terrace Townes at Greenway 500 West Trade Uptown 550 Ascent Uptown West End Towns Averages Subject Property (West End Place)
Year Built 2018 2021 2020 2015 2021 2021 2021 2019 2017 2021 2019 2024
Class A A A A A A A A A A   A
Average Unit Size 882 SF 986 SF 843 SF 959 SF 1,596 SF 1,726 SF 974 SF 1,008 SF 892 SF 1,521 SF 1,139 SF 1,668 SF
Distance from Subject Property 1.7 mi 2.0 mi 2.2 mi 4.9 mi 1.5 mi 0.1 mi 1.9 mi 2.8 mi 2.3 mi 1.0 mi 2.0 mi  
                         
3 Bedrooms                     Market Rent  
$ / Unit $2,693 $3,366 $3,181 $4,209 $3,500 $3,150 $4,006 $3,781 N/A $2,900 $3,421 $3,350
Square Feet 1,480 SF 1,870 SF 1,374 SF 1,601 SF 1,650 SF 1,866 SF 1,513 SF 1,662 SF N/A 1,521 SF 1,615 SF 1,819 SF
$ / SF $1.82 / SF $1.80 / SF $2.32 / SF $2.63 / SF $2.12 / SF $1.69 / SF $2.65 / SF $2.27 / SF N/A $1.91 / SF $2.13 / SF $1.84 / SF
                         
2 Bedrooms                      
$ / Unit $2,186 $2,452 $2,500 $2,513 $3,100 N/A $2,916 $2,884 $3,430 N/A $2,748 $2,950
Square Feet 1,220 SF 1,191 SF 1,164 SF 1,248 SF 1,460 SF N/A 1,191 SF 1,213 SF 1,319 SF N/A 1,251 SF 1,413 SF
$ / SF $1.79 / SF $2.06 / SF $2.15 / SF $2.01 / SF $2.12 / SF N/A $2.45 / SF $2.38 / SF $2.60 / SF N/A $2.20 / SF $2.11 / SF

 

Sales Comparables

  244 Judson Ave 2341 Wesley Village Road 2331 Wesley Village Road 2319 Wesley Village Road 426 Simeon Drive 347 S Bruns Ave Unit WET0411 327 S Bruns Ave Unit WET0516 335 S Bruns Ave Unit WET0414 442 Simeon Drive 312 Uptown West Drive Averages Subject Property (West End Place)
Year Built 2021 2021 2021 2021 2021 2022 2022 2022 2021 2021 2021 2024
Class A A A A A A A A A A   A
Average Unit Size 1,886 SF 1,738 SF 1,738 SF 1,738 SF 1,923 SF 2,339 SF 2,339 SF 2,339 SF 1,906 SF 1,399 SF 1,935 SF 1,668
Sale Date 09-29-2022 02-25-2022 05-09-2022 01-07-2022 09-15-2022 11-30-2022 11-30-2022 12-09-2022 08-31-2022 07-07-2022 08-04-2022  
Sales Price / Unit $505,000 $625,000 $645,000 $608,500 $512,000 $661,754 $652,984 $630,301 $523,000 $492,000 $585,554 $827,583
Sales Price / SF $268 $360 $371 $350 $266 $283 $279 $269 $274 $352 $307 $511
Distance from Subject Property 0.1 mi 1.5 mi 1.5 mi 1.5 mi 0.3 mi 1.0 mi 1.0 mi 1.0 mi 0.3 mi 1.1 mi 0.9 mi  
Notes Townes at Greenway Sky Terrace Sky Terrace Sky Terrace Townes at Greenway West End Towns West End Towns West End Towns Townes at Greenway Uptown West    
Location

Market Overview

Sunbelt Migration: The Charlotte MSA continues to draw residents from across the country. The Northeast accounted for 6 of the top 10 metros that the Charlotte MSA draws from. Migration from South Florida (Miami-Fort Lauderdale) increased by 450% and migration from California increased by 500%.  

Diversified Economy with an influx of relocations: Coined the “Queen City of Finance,” Charlotte is home to 1,200+ companies and ranks as the second-largest banking hub in the U.S. followed by New York City. Nine Fortune 500 companies are headquartered in Charlotte, and in 2022, a Fortune 50 healthcare technology company’s HQ announcement was the largest economic development announcement in North Carolina’s history.

Top Ranked: Charlotte consistently tops many rankings including (i) the #1 “hottest” housing market of 2023 (Zillow), (ii) the #1 state to do business in (CNBS), (iii) the #1 most up-and-coming city in America (Yelp), (iv) and the #5 market for homebuilding prospects (ULI)

Growing Tech Hub: Charlotte was ranked #1 in STEM Job Growth Index by RCLCO and the #1 tech market in 2018 by the Tech Town Index. Several recent technology job announcements include Duke Energy (500 employees at Optimist Hall), Lowe’s Home Improvement (2,000 jobs in South End), and Centene Corporation (6,000 jobs in University Research Park)

Submarket Overview

Charlotte’s West End neighborhood is a burgeoning development hub located less than one mile from the vibrant Uptown submarket, uniquely providing an exceptional living experience in an urban setting. As the recent beneficiary of the wave of economic growth emanating from Charlotte’s urban core, West End, once dubbed as Charlotte’s “next great urban living experience,” is a rapidly expanding, yet cohesive community with a distinctly authentic flair. With a 110% property value increase since 2016 (22% CAGR), West End is the most rapidly appreciating area in the Charlotte MSA, underscoring its overall desirability for residential uses.

With a bevy of food and beverage offerings, an emerging creative office node, and a strong residential base, West End will continue to evolve into a vital live-work-play community with the Project adding highly demanded new residential supply that will integrate seamlessly with this up-and-coming corridor. Savona Mill, an adaptive reuse project featuring +/-200K SF of creative office and retail, public greenspace, multifamily units, amphitheater, and a community plaza sits just across the MLK Jr. Park from the Project. Lower Tuck, a +/-260K SF adaptive reuse creative office and retail space spanning across 4 buildings sits just south of the Project.

West End is an attractive location as it is the next available node in the path of growth for proximate supply to the urban core. Located less than a ten-minute drive to Uptown, South End, and NoDa, the Project will benefit from exceptional accessibility to Charlotte’s largest job centers. The immediate area surrounding the Property also greatly benefits from the recent expansion of the CityLYNX Gold Line streetcar, providing direct access to Uptown and serving as an additional catalyst in fueling urban renewal in West End.

Photos
Financials
Sources & Uses

Total Capitalization

Sources of Funds $ Amount $/Unit
GP Equity(1) $3,000,000 $34,884
LP Equity $13,255,305 $154,131
Loan $19,867,595 $231,019
Total Sources of Funds $36,122,901 $420,034
     
Uses of Funds $ Amount $/Unit
Land $6,750,000 $78,488
Pre-Dev Work $342,073 $3,978
Sitework Costs $3,568,510 $41,494
Vertical Construction $19,750,000 $229,651
Vertical Cost Contingency $987,500 $11,483
Other Construction Fees $200,200 $2,328
FF&E $145,000 $1,686
A&E Costs $515,200 $5,991
Permits & Fees $465,025 $5,407
Insurance $145,836 $1,696
Marketing  $75,000 $872
Other Soft Costs/Contingency  $120,106 $1,397
RE Tax Carry $179,128 $2,083
Legal & Closing $203,388 $2,365
Operating Reserve $76,885 $894
Financing Costs & Carry(2) $1,300,587 $15,123
Development Fee $1,298,463 $15,098
Total Uses of Funds $36,122,901 $420,034

(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. 

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Lender: United Bank
  • Loan Type: Construction Loan
  • Term: 36 months & two 1 year extensions
  • LTC: 55.0%
  • Estimated Proceeds: $19,867,595
  • Interest Type: Floating
  • Spread Above SOFR: 3.05%
  • Interest-Only Period: 30 months
  • Amortization: 30 years
  • Prepayment Terms: The loan could be prepaid in whole or in part prior to maturity subject to the following: (1) month 1-30, 1% fee, (2) month 31+, no penalty
  • Extension Requirements: Lien-free completion of the Project with receipt of final certificate of occupancy. No additional loan funding occurs during extension period. No outstanding event of default may have occurred, currently exist, nor may a potential default exist. Minimum DSCR of 1.25x, Borrower will have the right to re-margin the Loan to satisfy DSCR. Bank engaged and approved, an updated appraisal of the Project indicating that LTV does not exceed 50%.
  • Recourse Description: Partial Recourse

 

  • Modeled Refinance: Yes
  • Refinance Month: Month 31
  • Loan Amount: $35,571,971
  • LTV: 65.0%
  • DSCR: 1.27x
  • Annual Interest Rate: 5.3%
  • Amortization: 360 years

(1) A substantial portion of the total acquisition for the Property will be paid with borrowed funds, i.e., debt.  Please carefully review the Disclaimers section below for additional information concerning the Sponsors use of debt. 

Distributions

Gordon Road Capital intends to make distributions from Gordon Road Capital LP Investor QOF LLC as follows:

  1. To the Investors, pari passu, all excess cash flows to a 7.0% IRR;
  2. 80% / 20% (80% to Investors / 20% to Promoted/Carried Interest) of excess cash flow to a 10.0% IRR;
  3. 70% / 30% (70% to Investors / 30% to Promote/Carried Interest) of excess cash flow to a 12.0% IRR;
  4. 60% / 40% (60% to Investors / 40% to Promote/Carried Interest) of excess cash flow thereafter.

Gordon Road Capital intends to make distributions to investors after the payment of the company's liabilities (loan payments, operating expenses, and other fees as more specifically set forth in the LLC agreements, in addition to any member loans or returns due on member loan).

Distributions are expected to start in November 2025 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Gordon Road Capital, who may decide to delay distributions for any reason, including maintenance or capital reserves.

Promote Crystallization: To further align incentives between Sponsor and investor, there is a promote crystallization upon a refinance of the construction loan (currently anticipated at Month 31). A hypothetical promote is calculated using the above waterfall assuming a sale at fair market value. Next, the theoretical promote is calculated as a percent of the total distributable cash, which is estimated to be ~17% based on current underwriting. After the refinance event, the promote is “locked” and 17% of every dollar is paid as promote until the end of the hold period including sales proceeds upon exit (the waterfall is not “run” again at exit). This helps align incentives for both Sponsor and investor by allowing the Sponsor to participate in promote cash flow upon refinance. Importantly, the promote crystallization yields a materially higher multiple to investors. It is estimated that for every dollar invested, the promote crystallization will yield 37 cents more to the investor over a 10-year period.

Cash Flow Summary
    Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Effective Gross Revenue   $0 $1,398,324 $3,608,399 $3,733,769 $3,847,258 $3,964,196 $4,084,689 $4,208,845 $4,336,774 $4,468,591
Total Operating Expenses   $0 ($543,459) ($853,649) ($875,957) ($898,410) ($921,441) ($945,065) ($969,298) ($994,155) ($1,019,652)
Net Operating Income   $0 $854,864 $2,754,750 $2,857,812 $2,948,848 $3,042,755 $3,139,624 $3,239,546 $3,342,619 $3,448,939
                       
Project-Level Cash Flows
  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Net Cash Flow ($16,255,305) $0 $337,248 $16,261,275 $566,316 $657,352 $751,259 $848,127 $948,050 $1,051,122 $43,537,441
                       
Investor-Level Cash Flows(1)
  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Net Cash Flow ($10,000,000) $0 $149,136 $8,135,859 $55,903 $102,398 $150,360 $199,834 $250,868 $303,510 $22,002,711
                       
Investor-Level Cash Flows - Hypothetical $50,000 Investment(1)
  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Net Cash Flow ($50,000) $0 $746 $40,679 $280 $512 $752 $999 $1,254 $1,518 $110,014

(1) RM Technologies, LLC and its affiliates do not provide any assurance of returns.  Returns presented are net of all fees.  Please carefully review the Fees and Disclaimers sections below for additional information concerning Sponsor’s use or projected returns and fees paid to Sponsor and RM Technologies, LLC.

 

Fees

Certain fees and compensation will be paid over the life of the transaction; please refer to Gordon Road Capitals 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
Development Fee 5.0% of hard costs, contingency, and certain soft costs (FF&E, architect and engineering costs, permits and fees, insurance, and marketing) Gordon Road Capital 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
Asset Management Fee 1.50% of Equity Gordon Road Capital Cash Flow
Property Management Fee 2.75% of Effective Gross Income Third Party Cash Flow
Administration Solution Licensing Fee(2) Flat quarterly licensing fee of $125 per investor serviced by Sponsor through the license and use of  RM Technologies’ Administration Solution RM Technologies, LLC Cash Flow

(1) Fees may be deferred to reduce impact to investor distributions.

(2) Please see the Fees and Disclaimers sections below for additional information concerning fees paid to RM Technologies, LLC.

.

Disclaimers
Disclaimers

Target IRR Range of 17-23.9% is inclusive of the Opportunity Zone tax benefit.

Sponsor’s Projects and Targets

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

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

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

Sponsor’s Information Qualified by Investment Documents

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

Risk of Investment

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

Risk of Forward-Looking Statements

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

Sponsor’s use of Debt

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

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

Sponsor’s Offering is Not Registered

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

RM Technologies, LLC Fees and Conflicts

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

No Investment Advice

None of RM Technologies nor any affiliate are registered as a broker, dealer, investment adviser, or funding portal (except with respect to RM Adviser, LLC, which has no involvement in the transactions to be consummated hereby or contemplated herein and solely for the purposes hereof, shall not be deemed an affiliate or RM Technologies). They do not provide investment advice or recommend the purchase of any securities that are the subject of this agreement or the Sponsor’s offering with respect to the Project. Project Sponsor’s use of the Platform, including Project Sponsor’s license to utilize the Platform and any related technology, software and supporting services, Project Sponsor’s posting of offering documents and all related information on the Platform does not constitute the approval of or endorsement by RM Technologies or any of its affiliates of Project Sponsor’s securities offering with respect to the Project or signify the suitability thereof in any manner.

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

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