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Funded
Estimated Hold Period 30 Months
Estimated First Distribution 8/2024
FUNDED 100%
...
View Our Due Diligence Process
Offered By
Sentinel Peak Capital Partners
Investment Strategy Value-Add
Investment Type Equity
Minimum Investment 35000
Overview
Rocco Apartment Homes is a 312-unit multifamily community in Dallas-Fort Worth that presents an opportunity to acquire an operationally distressed property at the current owners' loan value.
Basis

Sourced through off market avenues, Rocco Apartments presents an opportunity to acquire an operationally distressed property located in Dallas-Forth Worth at a basis of $112K/unit, which is well below both replacement cost and recent trades in the area. Sentinel Peak believes this distress stems from current owner's mismanagement of the Property, which has resulted in occupancy falling into the 70s in advance of an upcoming rate cap maturity and DSCR test, forcing the owner into a distressed sale.

Partner

Sentinel Peak is a vertically integrated Sponsor, who is headquartered in Dallas-Fort Worth. Sentinel Peak has purchased over 7,000 units since its inception. Currently, Sentinel Peak owns and manages over 6,500 units throughout Texas valued at approximately $1 billion. 

Business Plan

Due to the advantageous acquisition basis, achievement of the business plan is predicated largely on returning physical and economic occupancies to stabilized levels through assertive leasing and property management. The Base Case business plan projects an attractive return profile to investors without relying on significant renovations or lifting in-place rents. The Property is projected to exit at a price that is well-supported by comparable trades while leaving plenty of value-add opportunities available for the next buyer.

Property at a glance
# Units 312
Current Occupancy 70%
Year Built 1984
Total CapEx Budget $1,200,000
Exit Cap Rate 5.0%
Acquisition Price $35,000,000
Investment Highlights
Invest in a Rare Distressed Apartment Opportunity at An Attractive Basis: Rocco Apartment Homes (the “Property”) is a 312-unit Class B multifamily community in North Arlington (Dallas-Fort Worth MSA) that is operationally distressed, having been very poorly managed by its current owners. Sentinel Peak Capital Partners (the “Sponsor”) has been presented with an off-market opportunity to acquire the Property at the current owners' loan value. This represents a basis of just over $112,000/unit, which is well below both replacement cost and recent trades in the area (which have recently ranged between $130,000-160,000/unit). Given this favorable acquisition price, the business plan targets an attractive return profile to investors without relying on significant renovations or heavily lifting in-place rents.
The Property Has Been Mismanaged, and The Current Owners are Forced Sellers: The Sponsor believes the current owners have mismanaged the property, letting occupancy drop to 70%, and they face an upcoming rate cap maturity. As a result, they are under pressure to sell. The Sponsor believes that the current owners do not have the cash to invest in improving and leasing the Property. This dynamic presents an opportunity for Sentinel Peak to step in and take over the asset.
The Sponsor Has Extensive History Turning Around Distressed Assets: The Sponsor is headquartered in Dallas-Fort Worth and currently owns and manages over 6,500 units throughout Texas valued at approximately $1 billion. They own or have exited several properties in DFW (including three very close to Rocco) and have a very successful track record of managing and stabilizing highly distressed properties.
The Property’s Business Plan is Readily Attainable and Does Not Rely on Heavy Value-Add: The Sponsor plans to inject capital into the Property and improve the credit quality of the resident base. Their near-term goal will be to bring the Property back to market occupancy levels (~93%) within the first few quarters through a mixture of advertising, $630,000 in targeted capital expenditures, and $500,000 in interior investments. It should be noted that the business plan and projected returns are not reliant on improving units to a drastically higher standard or materially increasing rents over their in-place levels. Proforma rents are comparable to renovated properties in the immediate area and are directly in line with recent leases signed at the property. The business plan is largely predicated on stepping into an operationally distressed asset, re-stabilizing it, and selling it at a supportable price with ample room for future value-add initiatives, maximizing the pool of potential buyers on exit.
The Asset Is Very Well-Located, With Excellent Demographics and Access: The Property is positioned just south of Interstate-30, providing residents easy access to Downtown Fort Worth and Downtown Dallas. Additionally, it is located near several local demand drivers, including Texas Health Arlington Memorial Hospital and the University of Texas at Arlington. The Property is about one mile from national retailers, including Target, Walmart, Sam’s Club, and Lowes Home Improvement. 1- and 3-mile median incomes of $63,871 and $70,549, respectively, bode well for Class B multi-family demand.
Flexible Financing in Place: The Sponsor has secured a 3-year bridge loan with two one-year extension options at a conservative loan-to-cost ratio of 68.0%. The loan will have three years of interest only and is open to prepayment at any time after 15 months. This will allow the Sponsor, should rates drop, to take advantage of more attractive financing should the capital markets environment improve, as widely expected.
Attractive Target Return Profile: The Sponsor is targeting a 22.4% IRR and 1.64x equity multiple over a two and a half-year term, net to investors. Sponsors do not earn a promote fee until the limited partners have achieved a return of capital and a 10.0% return.
Management
Cumulative Distributions

Sentinel Peak Capital Partners

Sentinel Peak Capital Partners LLC (“Sentinel”, “Sentinel Peak” or “SPCP”) is a private, vertically integrated, commercial real estate investment firm primarily focused on the acquisition and repositioning of multifamily properties located in major metropolitan markets throughout Texas.  Based in Dallas, Texas, Sentinel seeks to enhance the value of each asset it acquires across all phases of the business cycle by (i) acquiring properties below historical replacement cost, (ii) providing active oversight of the construction and renovation process, and (iii) making targeted capital investments to address physical and operational deficiencies with the goal of driving increased rent growth and reduced maintenance expenses.

Established in 2015, Sentinel was co-founded and is managed by Richard Chesney and Ryan Beaupré (the “Principals”). Sentinel targets multifamily properties built between 1980 and 2008 that the Principals believe can be repositioned to achieve superior returns for its limited partners.  In order to reposition each asset, Sentinel deploys investment capital to address capital structure or physical and operating deficiencies that have caused the asset to under-perform relative to its competitive set.  Once these deficiencies have been addressed, depending on market conditions, Sentinel seeks to either refinance the asset to recapture investor capital and hold long term, or sell the asset immediately following its repositioning.

https://summitapm.com/sentinel-peak/
  • Richard Chesney
    Managing Partner
  • Ryan Beaupre
    Managing Partner
Richard Chesney
Managing Partner

Richard Chesney is a co-founder and Managing Partner of Sentinel Peak Capital Partners.  He is responsible for developing and effectuating the repositioning strategies for each property that Sentinel Peak acquires. Prior to co-founding Sentinel Peak, he worked within the Real Estate Finance Group at Goldman, Sachs & Company in Dallas, where he participated in the origination, loan closing, and securitization of approximately $1.0 billion in commercial mortgage loans across several asset classes, including, multifamily, retail, office and hospitality properties.  Prior to his time at Goldman Sachs, Richard worked within the special servicing division within J.E. Robert Companies (JER Partners) where he was part of a team that actively managed all non-performing loans and REO assets. During his time at JER, he was part of a team that repositioned a portfolio multifamily property in excess of 1,000 units. These repositioning strategies allowed the firm to recoup its original loan balance. Prior to JER, he worked for Cole Capital in Phoenix in an asset management role and began his career with Holliday Fenoglio Fowler in its Dallas office on its debt platform. Richard earned his Masters of Business Administration, concentrating in finance, from Southern Methodist University in Dallas, Texas, and his Bachelors in Architecture from the University of Arizona in Tucson, Arizona.  He is an active member of the Urban Land Institute, serves on the Boards of Directors for the Lake Highlands Public Improvement District & local apartment associations, and lives in Dallas with his wife Melanie and their son and daughter.

Ryan Beaupre
Managing Partner

Ryan Beaupré is a co-founder and Managing Partner of Sentinel Peak Capital Partners. He is focused on investment partner communication and the strategy of Sentinel Peak’s corporate growth. Prior to co-founding Sentinel Peak, Ryan worked in the sports and entertainment industry, where he provided niche investment banking services to various clients focused on sports facility and real estate development. With a primary focus on arena feasibility analyses and economic/fiscal impact studies, Ryan participated in advisory services on more than $2.0 billion in sports-related capital investment projects. He also held roles in sales and marketing capacities within the NBA and the NFL. He is originally from Dallas and earned his Masters of Business Administration from Southern Methodist University and his Bachelors in Business from the University of Arizona. Ryan is an active member of Young Presidents’ Organization (YPO), an avid sports fan, and enjoys spending time with his wife, Rachel, and their three children.

Track Record

Property Name City, State Asset Type Status Acq Date Units Purchase Price Sales Price or Estimated Value Implied or Realized IRR EMx T12 at Closing Annualized NOI at Closing/Current Delta (%)
Oakwood Apartments Dallas-Fort Worth, TX Multifamily SOLD 10-26-2016 60 $3,400,000 $6,200,000 24.70% 1.90X $177,410 $382,536 115.6%
The View at Lake Highlands Dallas-Fort Worth, TX Multifamily SOLD 12-07-2017 292 $23,500,000 $35,250,000 26.50% 1.90X $1,378,283 $2,274,440 65.0%
The Junction Apartments Dallas-Fort Worth, TX Multifamily SOLD 12-03-2018 205 $16,950,000 $27,300,000 31.00% 2.46X $913,274 $1,378,326 50.9%
Forest Ridge Apartments Dallas-Fort Worth, TX Multifamily SOLD 01-28-2016 160 $7,495,000 $21,250,000 42.80% 4.85X $473,723 $940,536 98.5%
The Reserve at Lake Highlands Dallas-Fort Worth, TX Multifamily SOLD 05-17-2017 152 $9,475,000 $19,500,000 29.80% 3.24X $629,628 $1,096,239 74.1%
Eleven600 Apartments Dallas-Fort Worth, TX Multifamily OWNED 05-08-2018 216 $18,250,000 $30,000,000 23.00% 2.57X $946,299 $1,617,901 71.0%
Twenty-One 15 Apartments Dallas-Fort Worth, TX Multifamily OWNED 04-17-2018 280 $22,000,000 $45,000,000 27.60% 3.22X $1,056,809 $1,958,460 85.3%
The Hub on Chisholm Trail Apartments Dallas-Fort Worth, TX Multifamily OWNED 01-29-2019 256 $23,250,000 $39,000,000 24.90% 2.67X $1,191,383 $1,811,592 52.1%
The District Apartments Dallas-Fort Worth, TX Multifamily OWNED 04-04-2019 228 $20,350,000 $36,000,000 32.10% 3.01X $1,222,068 $1,741,176 42.5%
Lakebridge Apartments Houston, TX Multifamily OWNED 02-26-2020 272 $26,650,000 $49,500,000 58.20% 3.74X $1,177,784 $2,270,616 92.8%
Carrara at Cypress Creek Houston, TX Multifamily OWNED 08-18-2020 234 $20,000,000 $30,000,000 25.90% 2.23X $972,106 $1,649,292 69.7%
The Hampton on Jupiter Dallas-Fort Worth, TX Multifamily OWNED 11-02-2020 364 $36,000,000 $54,600,000 52.10% 2.71X $1,772,748 $3,211,296 81.1%
The Linc at Cypress Houston, TX Multifamily OWNED 12-18-2020 176 $16,250,000 $24,000,000 23.90% 1.97X $572,096 $1,329,696 132.4%
The Edge at Clear Lake Houston, TX Multifamily OWNED 03-12-2021 320 $34,000,000 $44,800,000 Property Under Renovation Property Under Renovation $1,891,392 $2,632,328 39.2%
The Haven on Chisholm Trail Dallas-Fort Worth, TX Multifamily OWNED 05-20-2021 328 $35,000,000 $52,480,000 Property Under Renovation Property Under Renovation $1,395,795 $2,425,908 73.8%
The Landing at Clear Lake Houston, TX Multifamily OWNED 05-20-2021 244 $26,200,000 $34,160,000 Property Under Renovation Property Under Renovation $1,381,927 $1,943,850 40.7%
The Legacy at Clear Lake Houston, TX Multifamily OWNED 05-20-2021 164 $16,800,000 $22,960,000 Property Under Renovation Property Under Renovation $818,910 $1,046,219 27.8%
Lakebridge Townhomes Houston, TX Multifamily OWNED 07-01-2021 94 $12,400,000 $15,500,000 Property Under Renovation Property Under Renovation $534,109 $821,556 53.8%
The Preston Apartments Houston, TX Multifamily OWNED 08-01-2021 144 $20,000,000 $24,000,000 Property Under Renovation Property Under Renovation $1,044,403 $1,341,852 28.5%
The Domain at Ellington Houston, TX Multifamily OWNED 10-15-2021 256 $26,750,000 $35,840,000 Property Under Renovation Property Under Renovation $957,016 $1,489,422 55.6%
The Pines at Spring Rain Houston, TX Multifamily OWNED 12-15-2021 232 $33,650,000 $41,760,000 Property Under Renovation Property Under Renovation $1,171,727 $1,637,317 39.7%
Waterside Apartments Houston, TX Multifamily OWNED 12-15-2021 259 $33,000,000 $41,440,000 Property Under Renovation Property Under Renovation $1,366,703 $1,634,388 19.6%
The Parker at Ellington Houston, TX Multifamily OWNED 12-15-2021 244 $29,950,000 $34,160,000 Property Under Renovation Property Under Renovation $1,061,104 $1,407,254 32.6%
The Beverly at Clear Lake Houston, TX Multifamily OWNED 12-15-2021 214 $26,050,000 $31,200,000 Property Under Renovation Property Under Renovation $938,189 $1,356,908 44.6%
The Bradford at the Park Dallas-Fort Worth, TX Multifamily OWNED 12-15-2021 300 $50,500,000 $55,500,000 Property Under Renovation Property Under Renovation $1,833,622 $2,857,320 55.8%
The Gates Houston, TX Multifamily OWNED 05-01-2022 270 $29,500,000 $37,800,000 Property Under Renovation Property Under Renovation $903,185 $1,403,292 55.4%
The Gentry Houston, TX Multifamily OWNED 05-01-2022 146 $20,000,000 $25,000,000 Property Under Renovation Property Under Renovation $724,204 $975,132 34.6%
The Gibson Houston, TX Multifamily OWNED 05-01-2022 196 $26,000,000 $32,000,000 Property Under Renovation Property Under Renovation $1,065,901 $1,404,948 31.8%
The Grove Houston, TX Multifamily OWNED 05-01-2022 464 $51,500,000 $65,000,000 Property Under Renovation Property Under Renovation $1,531,195 $2,419,344 58.0%
The Madison on the Lake Houston, TX Multifamily OWNED 06-01-2022 392 $48,500,000 $57,500,000 Property Under Renovation Property Under Renovation $1,843,795 $2,499,835 35.6%
Totals/Weighted Avg.         7,162 $763,370,000 $1,068,700,000          

The above bios and track record were provided by Sentinel Peak Capital Partners and have not been independently verified by RealtyMogul.

(1) Units that are covered under business income insurance are counted as occupied.

(2) Oakwood Sold on 1/16/2020 for $6.2 million.

(3) The View at Lake Highlands sale closed in September 2020 for a sale price of $35.25 million.

(4) The Junction sale closed in March 2022 for a sale price of $27.3 million.

(5) Forest Ridge sale closed in June 2022 for a sale price of $21.25 million.

(6) Reserve at Lake Highlands closed in March 2023 for a sale price of $19.2 million.

(7) Current occupancy taken as of May 2023. Harvested Assets include physical occupancy at date of sale.

(8) Renovation completion percentage and renovated rental rate increase taken from the 5/2023 report.

(9) TTM at closing taken from the last available report from the prior owner prior to purchase.

(10) Current Annualized NOI was taken from April 2023 financials and annualized. Harvested assets were taken from the last full month of operations.

 

Built in 1984, Rocco (the “Property”) is a 312-unit apartment community that presents an extremely unique opportunity to acquire a distressed asset at a below-market basis of ~$112,179 per unit. Stabilized assets in comparable condition located in North Arlington near the Property have traded at an average of $130,000 to $160,000 per unit in this current environment.

Located on Randol Mill Road near Eastchase Parkway, the Property is positioned just south of Interstate-30, providing residents easy access to Downtown Fort Worth and Downtown Dallas. Additionally, Rocco is conveniently located near several local demand drivers, including Texas Health Arlington Memorial Hospital (~3.5 miles) and University of Texas at Arlington (~4 miles), as well as to ATT Stadium, Globe Life Field, Six Flags Over Texas and Hurricane Harbor Waterpark. Additionally, the Property is about 1 mile from national retailers, including Target, Walmart Supercenter, Sam’s Club, and Lowes Home Improvement. Sentinel Peak Capital Partners (“Sentinel Peak” or “SPCP”) believes the ability to generate superior risk-adjusted returns for the next 18-24 months will rest within the distressed property segment where prior owners have either over levered, miscapitalized, and/or mismanaged their assets. Rocco is the first of these opportunities that we expect to come over this time period. As such, the Property’s current occupancy of 70% provides an opportunity to create value by placing the existing vacant unit stock into a leasable condition and improving the credit quality of the overall resident base. The current owner does not have adequate cash to turn 30% of the Property currently vacant into a leasable condition; SPCP’s injection of capital will address this issue, and the near-term goal will be to get the Property leased back to market occupancy level (~93%) within the first few quarters. 

Further, the current owner does not currently have an adequate marketing mix to drive sufficient qualified traffic to the Property; due to this lack of a qualified resident base, property operations have slipped, vacancy has increased, and cash flow has declined. To address this issue, SPCP’s business plan will include placing the Property on Apartment.com’s boost program, which places the Property within the top slots on their website within a defined area. Historically, SPCP has been successful in placing our properties undergoing renovation on this program which has aided the speed of accomplishing our business plans by driving qualified traffic to our properties and re-tenanting assets within the first year of ownership. Sentinel Peak has budgeted about $660k for any exterior deferred maintenance/minor upgrades and $420k for interior make-ready costs. Upon stabilization, Sentinel Peak expects to exit the property in 2.5 years. Sentinel Peak has an extensive and successful track record of managing and stabilizing highly distressed properties like Rocco throughout our history. Further, SPCP owns and has owned several comparable properties in DFW and within this submarket. Sentinel Peak has an internal Property Management, Asset Management, and Construction Management team that oversees the daily asset and overall renovation process.

It is worth underscoring the fact that the business plan and projected returns are not reliant on turning units to a drastically higher standard or materially increasing rents over their in-place levels. The business plan is largely predicated on stepping into an operationally distressed asset, re-stabilizing it, and selling it at a supportable price with ample room for future value-add initiatives, maximizing the pool of potential buyers on exit.

CapEx Breakdown

Interior Renovations Total Amount Per Unit Per Unit (Renovated)
Make Ready of Current Vacant Units $136,667 $438 $4,556
Black Appliances $46,500 $149 $1,550
Chrome Fixtures $42,000 $135 $1,400
Backsplash $10,500 $34 $350
Resurfacing $40,000 $128 $1,333
New Flooring $52,500 $168 $1,750
Repainting $50,000 $160 $1,667
Labor $40,000 $128 $1,333
Total Interior Renovations $418,167 $1,340 $13,939
       
Exterior Renovations Total Amount Per Unit  
Exterior Lighting $75,000 $240  
Repaint and Site Carpentry $25,000 $80  
Foundation Repair $25,000 $80  
Landing Repair $10,000 $32  
Roof Repairs $15,000 $48  
Sewer Pipe Clean Out $25,000 $80  
Parking Lot Repairs $75,000 $240  
Hot Tub Repair $25,000 $80  
Security Cameras $50,000 $160  
Restain Cedar Balconies $25,000 $80  
Landscaping $75,000 $240  
Excess Marketing $75,000 $240  
New HVAC Units $125,000 $401  
Signage Replacement $25,000 $80  
Exterior Fence $10,000 $32  
Total Exterior Renovation Costs $660,000 $2,113  
       
Other Costs Total Amount Per Unit  
Contingency $53,908 $173  
Construction Fees $67,925 $218  
Total Other Costs $121,833 $391  
       
Grand Total $1,200,000 $3,844  
Property Information

The Project is located in Fort Worth, Texas, directly south of Interstate 30. Following the acquisition of the Project, the Partnership will undertake an approximately $1,200,000 capital improvement plan to address certain operational and physical deficiencies at the Project that the Sponsor believes will allow the Project to compete with recently renovated properties in the immediate area. The Project is currently named Rocco Apartment Homes (“Rocco”), but the Manager may choose to change the name of the project during the due diligence phase.

Constructed in 1984, the Property is improved with fifteen (15) two-story buildings containing three hundred and twelve (312) units, one (1) pool, and one (1) leasing office building. The residential buildings are made up of brick and wood siding atop a concrete slab on grade foundation. The exterior veneers are a combination of Hardie plank, cedar plank, and brick with pitched composition roofs. The Property's site encompasses 11.75 acres (37.7 units per acre), 505 total parking spaces consisting of 449 regular parking spaces, 36 covered parking spaces, and 20 handicap spaces. The Project contains 312 units with a mix of 209 one-bedroom units (67%) and 103 two-bedroom units (33%). Per the June 7, 2023 rent roll, the Project is 70.5% physically occupied with 88 vacant units. The Property's units consist of two-hundred and twelve (212) soft-surface countertops, while the remaining one hundred (100) units are renovated with hard-surface quartz countertops. The Project has been owned by its current ownership since 2021 and has received a light renovation from the current owner. Property amenities include one (1) swimming pool, one (1) leasing center, and one (1) playground.

The Property currently has three levels of finish out (“classic”, “summit,” and “quartz”), and SPCP does not plan to change this mix as we believe it is appropriately suited for this submarket and will allow SPCP to position the Property to capture the entire spectrum renters within the submarket. Being able to market the Property to the entire leasing spectrum will allow SPCP to achieve its occupancy and stabilization goal as quickly as possible. Aside from turning the current vacant unit stock into a leasable condition, the Sponsor plans to inject capital into the asset to address some deferred maintenance items on the exterior of the Property, which will aid in accomplishing their leasing goals.

Unit Mix

Unit Type # of Units Avg SF/Unit Avg Rent
(Proforma)
Rent PSF
(Proforma)
Avg Rent
(In-Place)
Rent PSF
(In-Place)
A1 - 1x1 64 552 $965 $1.75 $966 $1.75
A2 - 1x1 74 683 $1,074 $1.57 $1,057 $1.55
A3 - 1x1 71 789 $1,145 $1.45 $1,147 $1.45
B1 - 2x2 55 917 $1,331 $1.45 $1,241 $1.35
B2 - 2x2 48 1,020 $1,454 $1.43 $1,451 $1.42
Totals / Averages 312 773 $1,172 $1.51 $1,152 $1.49
Comparables

Lease Comparables

  Campbell Maxwell Tides at Eastchase Tides on Randol East Tides on Randol West Averages Rocco Apartments (Post Reno)
Distance from Subject Property 2.6 Miles 1.1 Miles 0.3 Miles 0.15 Miles 0.3 Miles 0.9 Miles NA
Year Built 1984 1984 1984 1984 1984 1984 1984
Number of Units 263 292 340 356 208 292 312
               
1 Bedroom              
$ / Unit $1,181 $1,167 $1,181 $1,188 $1,098 $1,163 $1,115
Square Feet 674 716 704 774 695 713 679
$ / SF $1.75 $1.63 $1.68 $1.53 $1.58 $1.64 $1.64
               
2 Bedrooms              
$ / Unit $1,515 $1,534 $1,407 $1,514 $1,461 $1,486 $1,474
Square Feet 987 1,019 965 1,126 1,044 1,028 965
$ / SF $1.53 $1.50 $1.46 $1.34 $1.40 $1.45 $1.53

Sales Comparables

  The Aria Jaxon Apartments The Madrid The Preslee 6 Eleven Lamar Oakley Blakely Crossroads at Arlington Cantebria Crossing The Hub Averages Rocco Apartments
Sale Date Dec-22 Aug-22 Jul-22 May-22 Mar-22 Oct-21 Nov-22 Jul-21 May-23 Nov-22   Sept-23
Sales Price $28,500,000 $41,000,000 $33,500,000 $46,300,000 $31,000,000 $32,340,000 $28,416,000 $30,750,000 $24,992,000 $23,500,000 $32,029,800 $35,000,000
Year Built 1980 1985 1984 1981 1979 1980 1981 1986 1983 1980 1982 1984
# of Units 184 240 201 290 200 196 192 216 176 168 206 312
Average Unit Size 861 SF 843 SF 779 SF 714 SF 717 SF 918 SF 743 SF 828 SF 745 SF 861 SF 801 SF 773
Sales Price / Unit $154,891 $170,833 $166,667 $159,655 $155,000 $165,000 $148,000 $142,361 $142,000 $139,881 $154,429 $112,179
Sales Price / SF $180 $203 $214 $224 $216 $180 $199 $172 $190 $162 $194 $145
Occupancy at Sale 92.90% 87.50% 95.00% 94.40% 95.00% 90.00% 94.70% 97.20% 97.10% 91.70% 93.55% 70.00%
Distance from Subject Property 3.7 Miles 5.4 Miles 3.8 Miles 5.4 Miles 2.9 Miles 3.0 Miles 3.8 Miles 2.0 Miles 5.3 Miles 3.7 Miles 3.9 mi NA
Notes Renovated Renovated Renovated Renovated Renovated Renovated Non/Partial Reno Non/Partial Reno Non/Partial Reno Non/Partial Reno        
Location Information

Market Overview

As the Dallas/Fort Worth metroplex continues to capitalize on its pro-business environment and general affordability, wage growth and rent growth are expected to increase above national averages. Furthermore, many of the jobs that have been announced in recent years have yet to start, as many of these corporate relocations are still in the process of constructing their new regional headquarters. Given this fact, job growth and wage growth are expected to continue into the medium term throughout the DFW region. 

Longer-term, above-average population growth, along with strong demographics, has positioned the Dallas/Fort Worth Metroplex as one of the top regional economies in the U.S., not only today but into the future. DFW’s diversified economic base and proactive business climate continue to attract both people and businesses to the area. DFW is expected to remain on its long-term growth trends for the near and extended future, outpacing the state and the nation on most major measures. Oxford Economics is forecasting that DFW will generate 306,730 new jobs from 2020 through 2025. The large concentrations of technology businesses and corporate headquarters, along with the large, young, educated, and growing workforce, are critical assets to this region. The resilient local economy, access to skilled workers, and relatively low costs of living and doing business should continue to drive business startups, expansions, and relocations to the area, allowing DFW to remain one of the strongest economies in the nation.

Submarket Overview

Despite Rocco Apartment Homes underperforming under the current management, fundamentals in the Randol Mill submarket of East Fort Worth have remained strong. Over the trailing twelve months ending Q2 2023, rental rates have increased 5.2% year over year. Currently, there are not any multifamily developments underway due to the strict zoning restrictions of Tarrant County and lack of land on which to develop. Rocco's desirable East Fort Worth address boasts a 3-mile median household income of over $70,000 which is favorable to quickly improve the resident base at the Property. The population within the submarket is expected to grow by almost 4% in the next 5 years. The Property is located within the sought-after Fort Worth Independent School District.

The East Fort Worth / North Arlington submarkets continue to be in demand due to it being equidistant from Downtown Dallas and Downtown Fort Worth. Because of its central location, the mid-cities have historically been a hub for entertainment, business parks, and various employment centers. Some large employment centers include in the area include Dallas-Forth Worth International Airport, American Airlines Headquarters, AT&T Stadium, Globe Life Field, and General Motors Assembly Plant.  

Cap Stack
Sources & Uses

Total Capitalization

Sources of Funds $ Amount $ / Unit
Benefit Street - Senior Mortgage $28,225,000 $90,465
Equity Contributed by Sponsor Principals/Officers/Immediate Family $1,950,000 $6,250
LP Equity $11,325,000 $9,615
Total Sources of Funds $41,500,000 $133,013
     
Uses of Funds $ Amount $/Unit
Purchase Price $35,000,000 $112,179
Capital Budget $1,200,000 $3,846
Closing Costs $1,010,925 $3,240
Interest Reserve $500,000 $1,603
Working Capital $791,000 $2,535
Debt Fees and Closing Costs $998,075 $3,199
Rate Cap Premium $2,000,000 $6,410
Total Uses of Funds $41,500,000 $133,013

(1) The Sponsor’s equity contribution may consist of friends and family equity and equity from funds controlled by the Sponsor.

Debt Assumptions

The expected terms of the debt financing are as follows:

  • Lender: Benefit Street Partners
  • Loan Type: Bridge Loan
  • Term: 36 Months & Two 1-year extension options
  • Interest Rate Cap Detail: 2.00% cap for 3 year term; $2,000,000 premium paid at closing
  • Loan-to-Value (LTV): 77.2%
  • Loan-to-Cost (LTC): 68.0%
  • Estimated Proceeds (Initial and Future Funding): $28,225,000 ($27,025,000 upfront and $1,200,000 future funding)
  • Interest Type: Floating
  • Spread about SOFR: 4.25%
  • Interest-Only Period: 36 Months
  • Amortization: 30 Years
  • Prepayment Terms: Open to prepayment at anytime. 15 months minimus interest
  • Extension Requirements: A minimum 8.0% debt yield for the first extension;
    A minimum 8.5% debt yield for the second extension;
    A maximum LTV of 70.0% based on a current Property appraisal;
    0.25% extension fee paid for each extension;
    No continuing Event of Default;
    Borrower’s purchase of interest rate protection acceptable to and assigned to Lender at the time of the Loan extension
  • Recourse Description: Completion guarantee

(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

Sentinel Peak Capital Partners intends to make distributions from SPCP31 RM Reese LP as follows:

  1. Pari passu all cash flow available for distribution to the Equity Investors(1) until a 10% Preferred Return, compounded monthly;
  2. Pari passu all cash flow available for distribution to the Equity Investors until the return of Equity Investors' capital contributions;
  3. 70% / 30% Equity Investors/Carried Interest split until 14% IRR;
  4. 60% / 40% Equity Investors/Carried Interest split thereafter.

(1) Equity Investors to mean all Limited Partners including principals/officers of the Sponsor and its affiliates

Sentinel Peak Capital Partners 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 August 2024 and are projected to continue on a quarterly basis thereafter. Distributions are at the discretion of Sentinel Peak Capital Partners, who may decide to delay distributions for any reason, including maintenance or capital reserves.

Sentinel Peak Capital Partners will receive a promoted/carried interest as indicated above.

Cash Flow Summary
  Year 0 Year 1 Year 2 Year 3
Effective Gross Revenue   $3,958,114 $4,813,241 $2,550,266
Total Operating Expenses   $2,335,595 $2,435,622 $1,252,824
Net Operating Income   $1,622,518 $2,435,622 $1,297,442
         
Project-Level Cash Flows
  Year 0 Year 1 Year 2 Year 3
Net Cash Flow ($13,275,000) $380,000 $560,000 $24,433,529
         
Investor-Level Cash Flows(1)
  Year 0 Year 1 Year 2 Year 3
Net Cash Flow ($3,045,000) $85,876 $111,554 $4,788,309
         
Investor-Level Cash Flows - Hypothetical $50,000 Investment(1)
  Year 0 Year 1 Year 2 Year 3
Net Cash Flow ($50,000) $1,410 $1,832 $78,626

(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 Sentinel Peak Capital Partners' materials for details. The following fees and compensation will be paid(1)(2):

One-Time Fees:
Type of Fee Amount of Fee Received By Paid From
Acquisition Fee 2.0% of Purchase Price Sentinel Peak Capital Partners Capitalization
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 Greater of 1.0% of EGI or $1,000 Monthly Sentinel Peak Capital Partners Cash Flow
Property Management Fee 2.5% of Effective Gross Income SPCP/Summit Property Management Cash Flow
Construction Management Fee 6.0% of Hard Costs SPCP/Summit Property Management Construction Expenditure Budget
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.

.

The following offering documents have been prepared and are being delivered by the Sponsor of this investment opportunity, and not by RM Securities, LLC. RM Securities, LLC and its associated persons did not assist in preparing, do not explicitly or implicitly adopt or endorse, and are not otherwise responsible for, the Sponsors offering documents posted below or any content therein.
RM Securities, LLC and its Affiliates Compensation

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, LLC

Sponsor 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 Documents

The 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 Investment

This 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 Assumptions

Sponsor 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 Performance

Any 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 Debt

A 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 Registered

Sponsor’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 Advice

Nothing 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 Risk

Internal 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.

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