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ExchangeRight Net Leased Portfolio 15 DST - 1031
Multiple Locations
INVESTMENT STRATEGY
INVESTMENT TYPE
Equity
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100% funded
Offered By ExchangeRight Real Estate
%* TARGET IRR %-%
6.51%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 7-10 years
Estimated First Distribution 1/2017
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
1031 eligible DST offering featuring credit tenants on long term leases. Diversified Portfolio Including Pharmacy, Healthcare, Discount Retailers, and Auto Retailers.
Property At A Glance
Leverage 53.07% Loan-to-Cost / 60.06% Loan-to-Value
Tenant Diversification Nine Different Tenants
Credit Tenancy 13 of the 16 Properties are Leased to Investment Grade Tenants
Long Term Existing Leases Existing Lease Terms Range From 9 -15 Years Remaining
Acquisition Price

$51,542,845

Investment Highlights
Portfolio includes a diversified mix of tenants including multiple credit quality tenants
Experienced Repeat Sponsor with Multiple 1031 Eligible Net Leased Portfolios
Geographic diversification among properties in portfolio
Low leveraged portfolio (53% Loan-to-Cost) with 2.36x Debt Service Coverage Ratio
Management
Cumulative Distributions

ExchangeRight Real Estate

ExchangeRight is committed to providing 1031-exchangeable DST offerings of value-added multifamily properties and net-leased portfolios. Our multifamily platform targets Class B apartments with stable income and value added upside potential. Our multifamily offerings feature strong cash flow, high debt coverage ratios, conservative underwriting, long-term fixed-rate financing, and the potential to enhance return with value-added strategies.

In addition to intentionally structuring offerings with an alignment of interest with investors, the principals of the company have taken a personal investment position in each DST offering that has been brought to market. Each of our DST offerings provides both 1031 and cash investors with pass-through tax deferral advantages.

http://www.exchangeright.com/
  • David Fisher, CPA
    Managing Member
  • Warren Thomas, CPA
    Founder and Managing Director
  • Joshua Ungerecht
    Managing Member
  • Dave Van Steenis
    Chief Financial Officer
David Fisher, CPA
Managing Member

David Fisher enjoyed a successful career in banking and finance for 20 years. He is now focused on the management success of ExchangeRight and on managing his own investments. He began his career with KPMG in the tax department, and then worked in tax, treasury, and acquisitions for Wells Fargo for over nine years. He was North American Head of Asset and Structured Finance for HSBC's Investment Banking division for the last seven years of his banking career. David and his banking teams executed international financings in excess of $4 billion. He has been an active real estate investor for the past 10 years and has interests in over 30 partnerships across nine states. He graduated from the University of Northern Iowa in 1993, Magna Cum Laude in Accounting, and earned national honors with the Elijah Watt Sells Award on the May 1993 CPA exam.

Warren Thomas, CPA
Founder and Managing Director

Warren currently serves as a managing member for ExchangeRight Real Estate. He is focused on the securitization, broker dealer, and registered representative relations sides of the business. Warren is the co-founder and president over a number of integrated wealth management and securitized real estate companies with Joshua Ungerecht. Prior to focusing on the securitized 1031 exchange market in 2003, Warren developed an extensive tax practice including estate planning, financial planning, and real estate advisory services. Warren has over 30 years of experience as a CPA and has been an active commercial real estate investor for the past 15 years. He graduated in 1978 from Biola University with a B.S. in Business Administration, specializing in Accounting. He also earned a master's degree in Taxation from Golden Gate University in 1993. He maintains Series 6, 7, 22, 24, 39,63, and 79 Securities Licenses.

Joshua Ungerecht
Managing Member

Joshua currently serves as a managing member for ExchangeRight Real Estate. He is focused on the operations, investment structuring, and acquisitions aspects of the business. Concurrently, he serves as CEO and Chief Investment Officer over a number of integrated wealth management and securitized real estate companies. He developed one of the industry's leading due diligence platforms in securitized real estate analysis. Together with Warren Thomas, Joshua has overseen the acquisition of over $500 million in real estate since 2003. Joshua graduated from The Master's College, Summa Cum Laude with a B.A. in Theology, Apologetics, and Missions, and is currently on leave from Talbot Graduate School, where he was pursuing an M.A. in Philosophy of Religion and Ethics. He also maintains Series 7, 22, 24, 63, 65, and 79 Securities Licenses and an active California real estate license.

Dave Van Steenis
Chief Financial Officer

Dave currently serves as Chief Financial Officer for ExchangeRight Real Estate. He is focused on financial reporting and acquisitions for the Company. Dave began his career with KPMG in the financial services audit practice, and most recently was with Kaufman Jacobs Real Estate Investments were he was involved in the investment acquisition, capital markets, and financial reporting aspects of the business. Dave graduated from Trinity Christian College with highest honors with a B.S. in Accounting and a Finance concentration. Dave is a CPA and is also a CFA Level III candidate.

Track Record

 
Offering Description Projected Annualized Return Actual Annualized Return*
Net-Leased Preferred Equity Fund 1 Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Range of 12-20%** Average
Annualized
Fund
Return of
14%
Net-Leased Preferred Equity Fund 2 Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Performing as expected. Range of 8-12%** 10%
Net-Leased Preferred Equity Fund 3 Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Performing as expected. 8.25% 8.25%
Acquisition Notes Company that issues short term debt capital to the Sponsor to acquire and sell net-leased assets. Performing as expected. Range of
12-14%**
12%
Acquisitions Notes II Company that issues short term debt capital to the Sponsor to acquire and sell net-leased assets. Performing as expected. Range of 8-
12%**
10%
Net-Leased Portfolio 1 Portfolio of two long-term net-leased properties leased to Family Dollar. One of the two properties sold in January, 2015 at a 10.59% annualized  net profit to investors. Current remaining property return shown in chart and is exceeding expectations. 7.25% 7.39%
Net-Leased Portfolio 2 Portfolio of seven long-term net-leased properties leased to Family Dollar (6) and Dollar General (1). Performing as expected. 7.23% 7.23%
Net-Leased Portfolio 3 Portfolio of nine long-term net-leased properties leased to Family Dollar (8) and Dollar General (1). Performing as expected. 7.30% 7.30%
Net-Leased Portfolio 4 Portfolio of eleven long-term net-leased properties leased to Family Dollar (8), Dollar General (1), Aaron's (1) and Advance Auto Parts (1). Performing as expected. 8.02% 8.02%
Net-Leased Portfolio 5 Portfolio of fourteen long-term net- leased properties leased to Family Dollar (5), Dollar General (4), Advance Auto Parts (2), AutoZone (1), Sherwin Williams (1) and The Christ Hospital (1). Performing as expected. 7.50% 7.50%
Net-Leased Portfolio 6 Portfolio of sixteen long-term net- leased properties leased to Family Dollar (3), Dollar General (8), Advance Auto Parts (1), AutoZone (1), CVS (1), Dollar Tree (1) and Tractor Supply  (1). Performing as expected. 7.51% 7.51%
Net-Leased Portfolio 7 Portfolio of sixteen long-term net- leased properties leased to Family Dollar (4), Dollar General (8), Advance Auto Parts (1), CVS (1), Napa Auto Parts (1), and O'Reilly Auto Parts (1). Performing  as expected. 7.75% 7.75%
Net-Leased Portfolio 8 Portfolio of thirteen long- term net- leased properties leased to Advance Auto Parts (3), AutoZone (2), CVS (1), Dollar General (2), Family Dollar (1), Franciscan Alliance (1), Ross Stores (1) and Tractor Supply (2). Performing as expected. 7.32% 7.32%
Net-Leased  Portfolio 9 Portfolio of twenty-two long- term net- leased properties leased to Advance Auto Parts (4), AutoZone (4), CVS (1), Dollar General (9), Hobby Lobby (1), Napa Auto Parts (2) and TCF National Bank (1). Performing  as expected. 7.03% 7.03%
Net-Leased Portfolio 10 Portfolio of twenty-two long-term net- leased properties leased to Advance Auto Parts (3), AutoZone (1), CVS (1), Dollar General (5), Dollar Tree (1), Family Dollar (4), Napa Auto Parts (2), O'Reilly Auto Parts (2), PNC Bank (1) and Tractor Supply (2). Performing as expected. 7.03% 7.03%
Net-Leased Portfolio 11 Portfolio of seventeen long-term net- lease properties leased to Advance Auto Parts (3), CVS (1), Dollar General (5), Family Dollar (2), Hobby Lobby (1), Napa  Auto Parts (3), Sherwin- Williams (1) and Walgreens (1). 6.75% 6.75%
Net-Leased Portfolio 12 Portfolio of nineteen long-term net-lease properties leased to Advance Auto Parts (3), Dollar General (9), Family Dollar (1), Fresenius Medical Care (1), Kroger (1), Napa Auto Parts (2), Tractor Supply (1), and Walgreens (1). 6.15% 6.30%
Net-Leased Portfolio 13 Portfolio of twenty long-term net-lease properties leased to Advance Auto Parts (1), CVS, (1), Dollar General (5), Family Dollar (4), Hobby Lobby (1), Napa Auto Parts (1), Sherwin Williams (4), Tractor Supply (1) and Walgreens (2). 6.64% 6.80%
Net-Leased Portfolio 14 Portfolio of seventeen long-term netlease properties leased to Advance Auto Parts (1), Athletico Physical Therapy (1), Dollar General (6), Fresenius Medical Care (2), MedSpring (1), Napa Auto Parts (1), O’Reilly Auto Parts (1), Tractor Supply (1) and Walgreens (3) 6.50% 6.57%
Multifamily 1 - Van Mark Creek Apartments One (1) apartment community consisting of 144 units. Performing as expected. 7.11% 7.11%
Mira Bella  and San Martin One (1) apartment community consisting of 378 units. Performing as expected. 6.56% 6.62%
Lakeside at Arbor Place Apartments One (1) apartment community consisting of 246 units. Performing as expected. 6.20% 6.20%
North Austin Apartment Portfolio Three (3) apartment communities consisting of 422 units. Performing as expected. 6.25% 6.25%

 

*These returns were provided by and calculated by the Sponsor

**These investment opportunities are open-ended (i.e. Investors come into the fund at different times) resulting in a range of returns

Business Plan

Over a period from August 11, 2016 through the Loan Closing Date, the Sponsor acquired the Properties from the Sellers for an aggregate acquisition cost of $51,542,845 and then assigned all of the Properties to the Trust pursuant to the terms of the Trust Agreement. The Properties are now owned 100% by the Trust. In conjunction with the purchase of the Properties, ExchangeRight NLP 15 Master Lessee ("Master Lessee") became the lessor under the Tenants’ leases. The Trust is a passive owner of the Properties and is not to be involved in any manner in the active management of the Properties. The Manager has been appointed to manage the Trust pursuant to the Trust Agreement.

The Trust expects to provide the Owners a return on their investment in two primary ways: (i) in the form of monthly cash distributions to the Owners; and (ii) upon any disposition of the Properties. The Trust intends to dispose of all of the assets in the Portfolio in a single disposition of the Properties. This strategy is anticipated to provide investors with the opportunity to perform a 1031 exchange following the disposition.

Property

Investors are being offered the opportunity to invest in a portfolio of sixteen (16) single-tenant, long-term net-leased retail assets (the "Portfolio", or the "Properties") that are currently 100% occupied. The Portfolio is composed of a diversified tenant base:

  • 28% pharmaceutical (CVS and Walgreens)
  • 26% other retail (Hobby Lobby and Goodwill)
  • 22% discount dollar (Dollar General and Family Dollar)
  • 16% necessity health care (Fresenius Medical Care and Indianapolis Osteopathic Hospital)
  • 8% discount automotive (Advance Auto)

ExchangeRight Net-Leased Portfolio 15 DST, a Delaware Statutory Trust ("DST"), owns the Portfolio, and ExchangeRight Real Estate, LLC ("Sponsor") is offering beneficial interests in the trust to investors. The Sponsor is retaining at least a 1.0% ownership interest in the Portfolio and is offering up to 99.0% of the beneficial interests in the DST to accredited investors ("Beneficial Owners"). The Trust expects to provide the Beneficial Owners a return on their investment in two primary ways: (i) in the form of monthly cash distributions to the Beneficial Owners; and (ii) upon any Disposition of the Properties.

The total offering amount is $58,790,000, of which $27,590,000 is equity and $31,200,000 is long-term fixed-rate financing. 

This offering is designed for two types of investors. "Existing 1031 Investors" who have already sold or are planning to sell an existing property that is 1031 eligible and want to invest in this offering to complete their 1031 exchange.  As well as "Cash Investors" who are investing with funds that are not part of an existing 1031 exchange but want the option for future sales to be 1031 exchange eligible. Existing 1031 Investors may invest for a minimum of $100,000; Cash Investors may invest for a minimum of $25,000.

Property Details

 
Tenant Location Credit Rating* Size Yr Built Annual Rent Lease Type Lease Expiration
Indianapolis Osteopathic Indianapolis, IN A-2 11,475 1986 (renovated 2013) $288,306 NN 7/15/2029
Family Dollar​ Baton Rouge, LA BB+ 8,380 2016 $79,941 NNN 6/30/2031
Dollar General Goshen, IN BBB 9,413 2016 $89,884 NNN 12/31/2031
Dollar General Sugar Creek, MO BBB 8,812 1950 (renovated 2016) $96,580 NN 3/31/2026
Dollar General Gadsden, AL BBB 10,833 2016 $121,932 NNN 3/31/2031
Dollar General Baton Rouge, LA BBB 9,017 2013 $98,902 NNN 2/28/2029
Dollar General Saint Amant, LA BBB 9,091 2014 $109,721 NNN 4/30/2030
Dollar General Hammond, LA BBB 9,111 2012 $107,221 NNN 6/30/2028
Advance Auto Parts Mokena, IL BBB- 6,824 2012 $137,088 NN 8/31/2027
Advance Auto Parts Norcross, GA BBB- 6,907 2005 $136,500 NN 12/31/2026
Walgreens Arlington, TX BBB 13,775 1997 (renovated 2016) $257,242 NN 8/31/2027
Walgreens Independence, MO BBB 15,043 2001 $317,953 NN 7/31/2028
CVS Pharmacy Bolingbrook, IL BBB+ 13,052 2005 $351,351 NN 1/31/2030
Goodwill​ Skokie, IL N/A 20,806 2016 $427,425 NN 10/27/2031
Fresenius Medical Care St. Louis, MO BBB- 11,475 2007 $231,525 NN 5/25/2026
Hobby Lobby Brunswick, GA N/A 55,132 2016 $418,000 NN 8/31/2031

*Credit Ratings are from S&P (Standard & Poor)

Tenant Summaries**

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Community Health Network (Indianapolis Osteopathic) includes 10 acute care hospitals, 9 surgery centers, 7 imaging centers, 7 immediate care centers, 40 ambulatory care centers, 2 endoscopy centers, and 4 long term care facilities. Their other operations include physician practices, occupational health facilities, a rehab center, and home health practices. Community Health Network was rated A-2 with a positive outlook by Moody's representing a strong investment-grade credit rating.

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Family Dollar is one of the nation’s largest small-box discount retailers. It has over 50,000 employees operating a chain of over 7,900 stores across 45 states primarily serving low- to middle-income consumers. It serves smaller neighborhoods with a focused selection of major brand names and private label brands to reduce costs, lower prices, and provide easier access for the end customer. In 2015 Family Dollar became a wholly owned subsidiary of Dollar Tree (NASDAQ: DLTR).

 

Dollar General (NYSE: DG) is one of the nation’s largest small-box discount retailers. Dollar General has over 90,000 employees operating over 11,100 locations in 40 states and has plans to open approximately 900 new stores in 2016. It strives to make shopping for everyday needs simpler and hassle-free by offering a carefully selected assortment of the most popular brands at low everyday prices in small, convenient locations.

 

Advance Auto Parts (NYSE: AAP) is an aftermarket retailer of automotive parts and supplies and a provider of auto maintenance services. It operates nearly 4,000 stores and employs about 55,000 “Team Members.” Increases in new vehicle sales allow Advance Auto to demonstrate its key strategies: superior availability and service leadership. It continues to increase its delivery speed, reliability, and supply chain, and it is opening new stores in underserved markets.

Walgreens (NASDAQ: WBA) is the largest drug retailer in America—employing approximately 248,000 people and operating 8,678 stores throughout the United States. Walgreens’ products include over-the-counter medicine and consumer products, pharmacy services and photo services. Walgreens has expanded through a series of strategic acquisitions and was included in Fortune’s World’s Most Admired Companies list for the 20th consecutive year.

CVS Health (NYSE: CVS) is a health care retailer based in the United States. It operates over 7,000 pharmacy and drug stores, and was ranked 10th on the Fortune 500 list in 2015. CVS Health consists of four divisions, which include CVS/pharmacy, CVS/caremark, CVS/specialty, and CVS/ minuteclinic. CVS has achieved much of its growth through acquisition of other companies.

While it's most well known for its more than 3,000 thrift stores, Goodwill Industries focuses on providing rehabilitation, job training, placement, and employment services for people with disabilities and others. Goodwill is one of the world's largest providers of such services, as well as one of the largest employers in the world of the physically, mentally, and emotionally disabled. Support for its programs is generated primarily from the sale of donated goods.

 

Fresenius Medical Care (NYSE: FMS) provides dialysis and related products, inpatient/outpatient care products, and services such as engineering to hospitals and related facilities. Fresenius operates more than 2,100 dialysis centers in North America and has over 100,000 employees. These facilities routinely provide medically necessary renal care to hundreds of thousands of patients with chronic kidney failure, a condition that affects more than 2.1 million individuals globally.

Hobby Lobby owns and operates a chain of over 600 arts and craft stores throughout the United States, which are estimated to employ over 23,000 individuals. The average store is over 55,000 square feet, and offers more than 70,000 arts, crafts, hobbies, home decor, Holiday, and seasonal products. Hobby Lobby is privately held and does not carry any long-term debt. It ranks 138th on the Forbes list of America’s Largest Private Companies.​

**Tenant Summaries have been provided by Sponsor and have not been verified by Realty Mogul or North Capital Private Securities

Comparables

Appraisals for all properties available upon request. Please email investor-help@realtymogul.com.

Location

The Portfolio contains properties located in the following cities and states:

  • Indianapolis, IN
  • Baton Rouge, LA (2) 
  • Goshen, IN
  • Sugar Creek, MO
  • Gadsden, AL
  • Saint Amant, LA
  • Hammond, LA
  • Mokena, IL
  • Norcross, GA
  • Arlington, TX
  • Independence, MO
  • Bolingbrook, IL
  • Skokie, IL
  • St. Louis, MO
  • Brunswick, GA
Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Equity $27,590,000
Debt $31,200,000
Total Sources of Funds $58,790,000
Uses of Funds Cost
Purchase Price $51,542,845
Acquisition Closing Costs $2,161,418
Acquisition Fee $1,013,995
Broker-Dealer Fee and Marketing Allowance $2,207,200
Syndication Costs & Third Party Costs $220,000
Organizational, Offering Costs, Pre-Paid Taxes, & Insurance $517,786
Reserves $988,806
Sponsorship Cost $137,950
Total Uses of Funds $58,790,000
Debt Assumptions

The Portfolio has existing debt: 

  • Lender: Société Générale
  • Loan Origination Date: 03/02/2017
  • Loan Proceeds: $31,200,000
  • Loan to Cost: 53.1%
  • Interest Rate: Fixed (4.379%)
  • Amortization: 10-year interest only
  • Recourse: Non-recourse to the Trust, but recourse to the Trust and principals of the Sponsor for certain (i) "bad acts," and (ii) environmental indemnification
  • Term: 10 years
  • Prepayment Penalty: Subject to Defeasance fee if loan repaid before January 2027
Distributions

The Sponsor is to make distributions directly to investors who own a beneficial interest in the DST on a pro-rata basis.

Distributions are expected to start for each investor within 45 days of the completion of that investors beneficial interest in the DST. Distributions are expected to continue on a monthly basis thereafter. These distributions are at the discretion of the Sponsor and made directly by the Sponsor, neither Realty Mogul Co. nor any of its affiliates have any control or discretion on the timing or amount of distributions.

Fees

Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:

Type of Fee Amount of Fee Received By Paid From Notes
One-Time Fees:
Acquisition Fee $1,013,995 Sponsor Capitalized Equity Contribution 3.68% of the offering amount.
Broker-Dealer Fee 7.0% Broker Dealers Capitalized Equity Contribution Paid to North Capital(1) or other licensed broker-dealers based on the amount of equity capital raised. Surplus fees retained by Sponsor.
Marketing & Due Diligence Fee 1.0% Broker Dealers Capitalized Equity Contribution 1.0% based on the amount of equity invested by investors through RealtyMogul.com, third-party Broker Dealers (including North Capital(1)) are entitled to additional fees based on equity they originate. Surplus fees retained by Sponsor.
Syndication Costs $140,000 Sponsor or Third Parties Capitalized Equity Contribution  
Organizational & Offering Costs $413,850 Sponsor Capitalized Equity Contribution 1.5% of maximum offering amount.
Sponsorship Cost $137,950 Sponsor Capitalized Equity Contribution 0.5% of the offering amount. To reimburse Sponsor for accounting, due diligence, marketing, distribution, and other costs.
Disposition Fee 2% Manager Disposition Proceeds 2% of gross proceeds from disposition of property if disposition price plus reserves is greater than $58,790,000.
Recurring Fees:
Asset Management Fee 2.9% of gross rental income Manager Operating Cash Flow Year One - 1.05%; Year Two - 1.85%; Year Three - 2.00%; Year Four - 2.25%; Years Five through Ten - 2.90%
Trustee Fee $750 annually Third-Party Operating Cash Flow Unaffiliated third party
Master Lease Operating Profit N/A Master Lessee Operating Cash Flow Master Lessee will retain operating revenues from the Properties that exceed the annual base rent. 

Notes:
(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.

The above presentation is based upon information supplied by the Sponsor or others.  Realty Mogul, Co. along with its respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein.  The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

Disclaimers/FAQs
Disclaimers

Review of PPM

Before making any investment decision, potential investors should carefully review the Private Placement Memorandum prepared by Sponsor (the "PPM"), including but not limited to, the Risk Factor section of the PPM and all exhibits of the PPM. The PPM contains additional risk factors and information regarding the DST that are not contained herein.  


Portfolio Risk​

DST's are ill equipped to address the untimely and unexpected need to raise capital or to re-tenant a property or to carry a property in the event of excessive vacancies. The Master Lessee is not likely to have the necessary resources to replace tenants as a result of default or untimely turnover. This risk is increased by an investment which includes multiple properties. 


1031 Risk

Although it is intended that interests will be acquired on a tax-deferred basis under Code Section 1031, each investor must satisfy a number of technical requirements to qualify for tax deferral under Section 1031. Also, no assurance can be given that investors will be able to complete a qualifying Section 1031 exchange in the future when the Portfolio is sold.


Real Estate Investment Risk

Any investment in real estate carries certain inherent risks, and there is no guaranty as to the future occupancy of the Properties or operating results.  Factors which might influence outcome include:

  • Changes in national or local economic conditions
  • Changes in the local market, including the entry of new competitors
  • Changes in the financial condition of the major tenant or tenants
  • The occurrence of casualties or natural disasters
  • The enactment of unfavorable laws

Master Lease Risk

The Properties are subject to a Master Lease to an affiliate of the Sponsor whose only assets and source of revenues will be the underlying Properties and which may not be able to meet its obligations as they come due. As with any Master Lease, if there is a significant upswing in rents, that upside accrues to the Master Lessee, but if there is falloff or vacancy, that risk is likely to fall on the investors.  There is a substantial risk that, if the Master Lessee is unable to meet its obligation to pay rent, a default or foreclosure may occur under property financing which could result in a substantial or total loss of an investment.


Conflict of Interest Risk

There are various potential conflicts of interest among the Sponsor, the Trustees, the Signatory Trustees, the Master Lessee, the Property Managers, and others engagement in the management and operation of the Properties, one or more of whom may be affiliated with the others. 


DST Risk

IRS established seven prohibitions over the powers of the DST Trustee, which include the following:

  • Once the offering is closed, there can be no future equity contribution to the DST by either current or new co-investors or beneficiaries
  • The DST Trustee cannot renegotiate the terms of the existing loans, nor can it borrow any new funds from any other lender or party
  • The DST Trustee cannot reinvest the proceeds from the sale of its investment real estate
  • The DST Trustee is limited to making capital expenditures with respect to the property to those for a) normal repair and maintenance, (b) minor non-structural capital improvements, and (c) those required by law
  • Any liquid cash held in the DST between distribution dates can only be invested in short-term debt obligations
  • All cash, other than necessary reserves, must be distributed to the co-investors or beneficiaries on a current basis, and
  • The Trustee cannot enter into new leases or renegotiate the current leases

Some of these restrictions are ameliorated in part by the introduction of a Master Lessee, who will have the ability, for example, to enter into or renegotiate leases.  However, the existence of a Master Lessee carries with in its own set of risk factors. In addition, DST Members will have no voting rights, and therefore no control over future decisions regarding sale of the properties or roll-up into a limited liability company.


Forward-Looking Statements

ExchangeRight Net-Leased Portfolio 15, LLC (the "Signatory Trustee") has based these forward-looking statements on its current expectations and predictions about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Property, including, among other things, factors discussed below:

  • General economic performance of the local and national economy;
  • Required capital expenditures at the Property
  • Competition from properties similar to and near the Property
  • Adverse changes in local population trends, market conditions, neighborhood values, and local economic and social conditions
  • Supply and demand for property such as the Property
  • Interest rates and real estate tax rates
  • Governmental rules, regulations and fiscal policies
  • The enactment of unfavorable real estate, rent control, environmental, zoning or hazardous material laws
  • Uninsured losses
  • Anticipated market capitalization rates at the time of sale

Limited Transferability of Securities

Each Beneficial Owner will be required to represent that he is acquiring the Interests for investment and not with a view to distribution or resale, that such Beneficial Owner understands the Interests are not freely transferable and, in any event, that such Beneficial Owner must bear the economic risk of investment in the Interests for an indefinite period of time because: (i) the Interests have not been registered under the Act or applicable state “Blue Sky” or securities laws; and (ii) the Interests cannot be sold unless they are subsequently registered or an exemption from such registration is available. There will be no market for the Interests and the Beneficial Owner cannot expect to be able to liquidate their investment in case of an emergency. See “Restrictions on Transferability” in the PPM. Finally, the sale of the Interests may have adverse federal income tax consequences. See “Federal Income Tax Consequences” in the PPM.


Sale of the Property

The proceeds realized from the sale of the Properties will be distributed among the Beneficial Owners, but only after satisfaction of the claims of other third-party creditors and Affiliates of the Sponsor. The ability of a Beneficial Owner to recover all or any portion of its investment, accordingly, will depend on the amount of net proceeds realized from such sale and the amount of claims to be satisfied therefrom. There can be no assurance that the Beneficial Owners will realize gains on sale of the Properties.


Loss of Deposit

The Signatory Trustee may on behalf of the Trust retain the deposit of a Purchaser who is in default under the Purchase Agreement. See “Summary of Purchase Agreement and Escrow Instructions - Deposit; Liquidated Damages” in the PPM.​


No Representation of Beneficial Owners

Each Beneficial Owner acknowledges and agrees in the Purchase Agreement and Escrow Instructions that legal counsel representing the Depositor, the Signatory Trustee, the Property Manager and their Affiliates do not represent, and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing, any or all of the Beneficial Owners.​


Receipt of Compensation Regardless of Profitability​

The Sponsor, the Signatory Trustee, the Property Manager and their Affiliates are entitled to receive certain significant fees and other significant compensation, payments and reimbursements from the acquisition and operation of the Properties regardless of whether the Properties operate at a profit. See “Estimated Use of Proceeds" and “Compensation of the Sponsor and Affiliates” in the PPM. ​


Louisiana Hurricane & Flood Risk

There are four (4) properties in the Portfolio that are located in Louisiana. Louisiana lies near the Gulf of Mexico and is subject to frequent and sometimes destructive hurricanes. Louisiana has also recently experienced massive flooding as a result of large amounts of rain fall and rising water levels throughout the state. There can be no assurance that a sizable hurricane or a large amount of rain will not cause significant damage to the Property, in which case the business and financial condition of the Trust would be materially adversely affected. There is no guarantee that the Trust or the tenants of the property will carry adequate flood insurance for the properties at the time of a loss.


Hurricane Risk

The Portfolio contains properties located that lie near the Atlantic Ocean, which is subject to frequent and sometimes destructive hurricanes.  There can be no assurance that a sizable hurricane will not cause significant damage to the properties, in which case the business and financial condition of the Trust would be materially adversely affected. There is no guarantee that the Trust or the tenants will procure adequate hurricane insurance for the properties.


No Fiduciary Duty

The Trust, the Signatory Trustee, and the Property Manager and their Affiliates will not have a fiduciary duty to the Beneficial Owners as would be applicable to a limited liability company, partnership, or corporation and, therefore, may take actions that would not be in the best interests of one or more of the Beneficial Owners. As permitted under applicable Delaware law, the Signatory Trustee and the Delaware Trustee have expressly disclaimed all duties to the Beneficial Owner except for the duties expressly contained under the Trust Agreement.


The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Private Placement Memorandum for a discussion of additional risks.

The above presentation is based upon information supplied by the Sponsor and others. Realty Mogul, Co., along with its respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

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