NAPA Ventures, LLC also known as NAPA, is a multifamily and commercial real estate investment company focused on the acquisition, rehabilitation and operation of value-add and core asset investment properties in Texas. NAPA is currently continuing to aggressively and profitably expand their real estate holdings within Texas and other growth markets of the USA.
NAPA currently has ownership in over 3,700 existing units. Realty Mogul investors have previously invested with NAPA on the Woodbridge Townhomes and Ravenwood Apartments transactions.
The Property is a 150-unit garden-style apartment complex located at 10660 Leopard Street, Corpus Christi, TX. The Property was built in 1983 and is 95% leased as of May 2017. The unit mix consists of 64 one (1) bedroom, one (1) bathroom units, 24 two (2) bedroom, one (1) bathroom units, 60 two (2) bedroom, (2) bathroom units, and two two (2) bedroom, 1.5 bathroom townhome units. Average in-place rents for one (1) bedroom units are $713 per month, with two (2) bedroom units averaging $812 per month.
Amenities at the Property include large, walk-in closets, two swimming pools, a business center, in-unit laundry hookups (with washers and dryers for rent), park BBQ pits and public gazebos. Interior finishes include ceiling fans, microwave ovens, dishwashers, wood-burning fireplaces, and patios/balconies with exterior storage closets.
| Unit Type | # of Units | Avg SF/Unit | In-Place Rent | Rent/SF | Post-Reno Rent* | Rent/SF | % Variance** |
|---|---|---|---|---|---|---|---|
| 1 Bed, 1 Bath | 32 | 690 | $708 | $1.03 | $815 | $1.18 | 15.1% |
| 1 Bed, 1 Bath with Fireplace | 32 | 690 | $718 | $1.04 | $845 | $1.22 | 17.7% |
| 2 Bed, 1 Bath | 24 | 913 | $757 | $0.83 | $930 | $1.02 | 22.9% |
| 2 Bed, 2 Bath | 60 | 950 | $829 | $0.87 | $955 | $1.01 | 15.2% |
| 2 Bed, 1.5 Bath Townhome | 2 | 1,116 | $955 | $0.86 | $1,050 | $0.94 | 10.0% |
| Total | 150 | 835 | $770 | $0.92 | $899 | $1.09 | 16.8% |
Note: Only 75 of 150 units at the Property are anticipated to be fully renovated during the hold period.
*Note: These projected post-renovation rent assumptions are used in the Estimated Financials of this offering.
**Note: This figure is representative of the projected achievable rents for post-renovation units as a percentage of in-place rents.
[[{"fid":"43354","view_mode":"default","type":"media","field_deltas":{},"attributes":{"height":"754","width":"667","class":"media-element file-default","data-delta":"1"},"fields":{}}]]
| Lease Comps | ||||||||
| Subject - In-Place | Subject - Projected Renovated Units | Lost Creek* | Riversquare Apartments | Peachtree | Churchhill Market Square | Wood River Apartments | Comp Set Averages | |
| # of Units | 150 | 150 | 250 | 204 | 188 | 107 | 200 | 190 |
| Year Built | 1983 | 1983 | 1984 | 2005 | 1982 | 1985 | 1983 | 1988 |
| Miles from Subject | - | - | 1.4 | 2.3 | 0.1 | 1.7 | 5.7 | 2.2 |
| 1 Bedroom | ||||||||
| # of Units | 64 | 64 | 74 | - | 48 | 55 | 64 | 60 |
| Average Size (SF) | 690 | 690 | 695 | - | 623 | 677 | 616 | 653 |
| Average Rent | $713 | $830 | $789 | - | $675 | $704 | $745 | $728 |
| Average $/SF | $1.03 | $1.20 | $1.14 | - | $1.08 | $1.04 | $1.21 | $1.12 |
| 2 Bedroom | ||||||||
| # of Units | 86 | 86 | 176 | 144 | 112 | 52 | 136 | 124 |
| Average Size (SF) | 944 | 944 | 938 | 937 | 1,021 | 931 | 1,018 | 969 |
| Average Rent | $812 | $950 | $984 | $875 | $835 | $849 | $749 | $868 |
| Average $/SF | $0.86 | $1.01 | $1.05 | $0.93 | $0.82 | $0.91 | $0.78 | $0.90 |
| *Note: Lost Creek is recently renovated and of similar construction style to Property. Source: Axiometrics |
||||||||
| Sales Comps | ||||||||
| Subject | Glen Willows Apartments | Embassy House | Churchhill Square Apartments | Lost Creek Ranch | San Marin Apartments | Ocean Drive Estates | Total / Averages | |
| Date | - | April 2015 | August 2015 | September 2015 | May 2016 | July 2016 | September 2016 | March 2016 |
| # of Units | 150 | 234 | 176 | 107 | 250 | 220 | 99 | 170 |
| Year Built | 1983 | 1973 | 1979 | 1987 | 1984 | 1997 | 1964 | 1982 |
| Purchase Price | $8,875,000 | $15,150,000 | $9,200,000 | $6,100,000 | $19,000,000 | $23,000,000 | $7,500,000 | $12,960,000 |
| $/unit | $59,167 | $64,744 | $52,273 | $57,009 | $76,000 | $104,545 | $75,758 | $73,117 |
| Cap Rate | - | 6.00% | - | - | 6.80% | 6.50% | - | 6.65% |
| Miles from Subject | - | 17.7 | 17.4 | 2.1 | 1.7 | 22.2 | 20.6 | 13.6 |
| Source | - | CoStar | CoStar | RCA | CoStar | CoStar | RCA | - |
| Sources of Funds | Cost |
|---|---|
| Debt | $7,085,000 |
| Equity | $3,318,537 |
| Total Sources of Funds | $10,403,537 |
| Uses of Funds | Cost |
| Purchase Price | $8,875,000 |
| CapEx Reserve | $1,011,409 |
| Sponsor Acquisition Fee | $88,750 |
| North Capital Broker Dealer Fee | $75,000 |
| Lender Origination Fee | $70,850 |
| Title and Due Diligence | $32,000 |
| Legal Fees paid to Outside Counsel | $30,000 |
| Taxes and Insurance Escrows | $185,528 |
| Working Capital | $35,000 |
| Total Uses of Funds | $10,403,537 |
The projected terms of the debt financing are as follows:
- Lender: Prudential Multifamily Mortgage, LLC
- Loan Type: Agency (Fannie Mae)
- Proceeds: $7,085,000
- Term: 10 Years
- Rate: 10-year US Treasury + 2.37% (underwritten at 4.47%)
- Amortization: 30 years
- Interest Only Period: 24 months
- Prepayment Fee: 9.5 Years Yield Maintenance; Followed by 1.0%, with last 90 days at Par
- Assumption Fee: 1.0%
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.
NAPA Ventures Yardarm, LLC intends to make distributions to Realty Mogul 82, LLC as follows:
- To the Members, pari passu, all excess cash flows and appreciation to a 10.0% IRR to the Members,
- 85.0 / 15.0 (85.0% to the Members / 15.0% to the Sponsor) of excess cash flows and appreciation to a 17.0% IRR to Realty Mogul 82, LLC,
- 60.0 / 40.0 of excess cash flow and appreciation to a 20.0% IRR to Realty Mogul 82, LLC, and
- 50.0 / 50.0 of excess cash flow and appreciation thereafter.
Note that these distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).
Realty Mogul 82, LLC will distribute 100% of its share of excess cash flow (after expenses and fees) to the members of Realty Mogul 82, LLC (the RealtyMogul.com investors).
Distributions are expected to start in December 2017 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Sponsor, who may decide to delay distributions for any reason, including maintenance or capital reserves.
| 2017* | 2018 | 2019 | |
|---|---|---|---|
| Effective Gross Revenue | $732,741 | $1,554,691 | $1,628,763 |
| Total Operating Expenses | $433,484 | $878,207 | $896,665 |
| Net Operating Income | $299,257 | $676,484 | $732,097 |
| Annual Debt Service | $158,350 | $316,700 | $372,985 |
| Distributions to Realty Mogul 82, LLC Investors | $84,032 | $230,230 | $3,367,547 |
*Note: This underwriting assumes six months of operations for the Property in 2017, whereas 2018 and 2019 are representative of twelve months of projected Property operations.
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 | $88,750 | Sponsor | Capitalized Equity Contribution | 1.0% of the property purchase price |
| Disposition Fee | 1.0% of Gross Sales Price | Sponsor | Sales Proceeds | |
| Broker-Dealer Fee | 3.0% of Realty Mogul 82, LLC invested equity | North Capital (1) | Capitalized Equity Contribution | Minimum of $50,000 |
| Recurring Fees | ||||
| Property Management Fee | 4.0% of Effective Gross Income | Sponsor-Affiliated Party | Distributable Cash | |
| Construction Management Fee | 3.0% of Total Costs | Sponsor | Capital Expenditure Reserve | |
| Asset Management Fee | 1.0% of Effective Gross Income | Sponsor | Operating Cash Flow | |
| Management and Administrative Fee | 1.0% of amount invested in Realty Mogul 82, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of Realty Mogul 82, LLC and a wholly-owned subsidiary of Realty Mogul, Co. (2) |
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.
(2) Fees may be deferred to reduce impact to investor distributions.
The above presentation is based upon information supplied by the Sponsor or others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 82, LLC, along with their 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.
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 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. Sponsor is 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.
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. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.