Highlands Residential (the "Sponsor") was founded by Dave Loeffel, who has over 15 years of experience in development. The Sponsor represents a partnership between Dave Loeffel and Robert Lachapelle - Vice Chairman at CBRE, Tim Schrager - CEO and founder of Perennial Properties, and Aaron Goldman - President of Perennial Properties.
The Sponsor is an experienced developer of Active Lifestyle, senior living communities which cater to residents 55 and older. The Principals have $777 million in their current portfolio (Aggregate TDC of $561mm) with an average stabilized occupancy of 97%. Of this, they have $76 million in communities under development and show a realized equity multiple of 2.78x in sold development assets thus far.
The Project will be designed and constructed as a three-story, attached building of 152 residential units with open air breezeways and approximately 145,000 net rentable square feet. Highlands Residential has designed the building so that the exterior and interior finishes are architecturally complementary to the surrounding area. The community will have multiple amenities, inclusive of a landscaped courtyard, BBQ areas, a personal training studio, library, game room, and a shared common space to host large gatherings and community get-togethers. Each unit will range in size from approximately 750 square feet to 1,230 square feet. Each unit will have 1 or 2 bedrooms, 1 or 2 baths, and a private, covered balcony or sunroom. The amenity package, interconnected living, and social community will make an easy transition for people moving from single family homes and offer a substantial upgrade for people moving from a traditional, non age-exclusive apartment.
| Unit Type | # of Units | Avg SF/Unit | Avg Rent (Stabilized) | Avg Rent per SF |
| 1x1 (A1) | 33 | 773 | $1,492 | $1.93 |
| 1x1 (A2) | 39 | 807 | $1,578 | $1.96 |
| 1x1 (A3) | 17 | 993 | $1,858 | $1.87 |
| 2x2 (B1) | 34 | 1,040 | $1,935 | $1.86 |
| 2x2 (B2) | 18 | 1,102 | $2,028 | $1.84 |
| 2x2 (B3) | 5 | 1,229 | $2,205 | $1.79 |
| 2x2 (B4) | 6 | 1,094 | $2,013 | $1.84 |
| Total/Averages | 152 | 933 | $1,761 | $1.89 |
Competitive Landscape
There are several active adult communities for sale within a short driving distance of the Property, including:
- Del Webb Chateau Elan - 784 active adult homes (200 built and occupied and 120 additional homes sold)
- Cresswind at Twin Lakes - 1,300 active adult homes planned, not yet complete
- Village at Deaton Creek - 1,100 active adult homes.
The Chateau by Highlands will provide 152 rental units as an alternative to the 2,000 or more active adult for sale units currently in the market. The Chateau will benefit from the amenities that drew the active adult sale communities to the area and the amenities that have subsequently been built to target the growing active adult population.
The Chateau expects to compete against these and other independent living offerings by leveraging amenities available at nearby locations in lieu of manufacturing amenities on-site. By doing that, Highlands Residential intends to offer its customers the same experience as is available at competing sites but at a cost that will be approximately $20,000 less per year than traditional independent living.
Nearby amenities that will be available to residents of the Chateau include (i) 45 holes of golf at Chateau Elan Golf Club, (ii) 18 holes of golf at Reunion Country Club, located across the street from the Chateau, (iii) nearby Lake Lanier, metro Atlanta’s largest lake, less than 30 minutes from The Chateau, and (iv) the accommodations, spas, shops and resort activities at the Chateau Elan Resort.
Additional sale and lease comp studies performed by Highlands Residential are available under "Offering Documentation".
Total Capitalization
| Sources of Funds | $ Amount | $/Unit | |||
| Construction Loan | $19,500,000 | 128,289 | |||
| RM Investor Equity | $5,000,000 | 32,895 | |||
| Other LP Equity | $6,052,959 | 39,822 | |||
| Total Sources of Funds | $30,552,959 | 201,006 | |||
| Uses of Funds | $/Unit | ||||
| Land Purchase Price | $1,939,000 | 12,757 | |||
| Developer Fee | $1,160,000 | 7,632 | |||
| Hard Costs | $23,905,000 | 157,270 | |||
| Construction Period Interest | $368,191 | 2,422 | |||
| Soft Costs (1) | $2,787,982 | 18,341 | |||
| Initial Operating Deficit | $392,787 | 2,584 | |||
| Total Uses of Funds | $30,552,959 | 201,006 | |||
Please note that Highlands Residential's equity contribution may consist of friends and family equity and equity from funds controlled by Highlands Residential. Additionally, the numbers represented above can change prior to closing depending on many factors including, but not limited to, final loan proceeds, property condition assessments, appraisals, final closing costs, and other lender-mandated expenses.
(1) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Closing Costs and is intended to be capitalized into the transaction at the discretion of the Manager.
The expected terms of the debt financing are as follows:
- Estimated Proceeds: $19,500,000
- Estimated Annual Interest Rate (Floating): 3.0% over LIBOR
- Term: 4 years
- Interest Only: 4 years
- Operating Reserves: $200,000
There can be no assurance that a lender will provide debt on the rates and terms noted above, or at all. All rates and terms of the debt financing are subject to lender approval, including but not limited to possible increases in capital reserve requirements for funds to be held in a lender-controlled capital reserve account.
Highlands Residential intends to make distributions from GA Hall Uninco 347, LLC to GA Hall Uninco 347 Core, LLC as follows:
- To the Members, pari passu, all excess operating cash flows to an 8.0% Preferred Return to the Members;
- 70% / 30% (70% to Members / 30% to Promote) of excess cash flow to a 14.0% IRR;
- 55% / 45% (55% to Members / 45% to Promote) of excess cash flow and appreciation thereafter.
GA Hall Uninco 347 Core, LLC intends to make distributions to investors. Note that all distributions will occur after the payment of both 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 at the discretion of Highlands Residential, who may decide to delay distributions for any reason, including maintenance or capital reserves.
Cash Flow Summary
| Year 1 | Year 2 | Year 3 | ||||
| Effective Gross Revenue | $0 | $577,350 | $2,402,458 | |||
| Total Operating Expenses | $10,000 | $678,361 | $1,028,634 | |||
| Net Operating Income | -$10,000 | -$101,011 | $1,373,824 | |||
Investor-Level Cash Flows
| Year 1 | Year 2 | Year 3 | |||
| Net Cash Flow | -$11,052,959 | $0 | $18,049,446 | ||
Investor-Level Cash Flows - Hypothetical $50,000 Investment*
| Year 1 | Year 2 | Year 3 | |||
| Net Cash Flow | -$50,000 | $0 | $81,650 | ||
*Returns should be net of all fees including RealtyMogul's 1.0% annual asset management fee.
Certain fees and compensation will be paid over the life of the transaction; please refer to Highlands Residential' materials for details. The following fees and compensation will be paid(1)(2)(3):
| Type of Fee | Amount of Fee | Received By | Paid From |
|---|---|---|---|
| Developer Fee | 4.00% of Total Project Costs | Highlands Residential | Capitalized Equity Contribution |
| Type of Fee | Amount of Fee | Received By | Paid From |
|---|---|---|---|
| Property Management Fee | 4.0% of Effective Gross Income | Highlands Residential | Distributable Cash |
| Asset Management Fee | $30,000/year | Highlands Residential | Distributable Cash |
|
Administrative Services Fee |
1.00% of amount invested | RM Admin(3) | Distributable Cash |
(1) Fees may be deferred to reduce impact to investor distributions
(2) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Closing Costs and is intended to be capitalized into the transaction at the discretion of the Manager.
(3) RM Admin will be providing the following services:(a) responding to inbound investor inquiries regarding how to subscribe to the Project, (b) distribution of all annual tax forms (after receipt of same from Project Sponsor), (c) processing distributions that are payable from RM VA WB LLC to Investors, however, RM Admin will not be deemed to have custody of client funds, (d) distribution of all quarterly reports (after receipt of same from Project Sponsor) and (e) summarizing sponsor information on property performance, responding to investor inquiries regarding sponsor performance information as well as the real estate market generally.
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.