The team at our affiliated broker-dealer, RM Securities, conducts diligence on of the issuer, including detailed background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to screening for any criminal background, we may also turn down sponsors due to poor reference checks, even if the background and criminal checks are satisfactory.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent.* When an investor makes an investment with such sponsors using the RealtyMogul platform, the investor’s money is transferred directly into a third-party escrow account. All closing conditions in connection with a sponsor’s contingency offering need to be met before the third-party escrow agent will approve releasing investor funds to the issuer or general partner. For example, if an issuer or general partner plans to use funds for a real estate acquisition that does not ultimately transact, the third-party escrow agent will not transfer investor funds to the issuer or general partner, and funds will be returned to investors.
* Unless otherwise disclosed, escrow accounts are not required for some investments that accommodate 1031 investments where the property is already acquired.
Our processes typically includes visiting certain properties (or a subset of properties if it's a fund) to confirm the real estate is what and where the real estate is supposed to be. For certain properties that accommodate 1031 exchange investments, the team will review third-party prepared due diligence reports in lieu of a site visit.
We have formalized processes and checklists for every private placement deal listed on the platform.
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.
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.
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.
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 and focus on "missing middle housing", 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 CoulterManaging Partner -
Martin PawlikManaging Partner -
Brian CoulterChairman -
Rob StewartChairman
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 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 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 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.
| 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
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 |
Representative Walkthrough of the Same Unit at a Sister Property
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 |
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 |
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.
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.
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: 30 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.
Gordon Road Capital intends to make distributions from Gordon Road Capital LP Investor QOF LLC as follows:
- To the Investors, pari passu, all excess cash flows to a 7.0% IRR;
- 80% / 20% (80% to Investors / 20% to Promoted/Carried Interest) of excess cash flow to a 10.0% IRR;
- 70% / 30% (70% to Investors / 30% to Promote/Carried Interest) of excess cash flow to a 12.0% IRR;
- 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.
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.
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RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe information on this Page is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete and subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.
Risk of InvestmentThis investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.
No Reliance on Forward-Looking Statements; Sponsor AssumptionsSponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.
Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.
No Reliance on Past PerformanceAny description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.
Sponsor’s Use of DebtA substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.
Sponsor’s Offering is Not RegisteredSponsor’s securities offering will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement”). In addition, the offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership interests) are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.
No Investment AdviceNothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
1031 Exchange RiskInternal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.