NAPA Ventures, LLC
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.http://napa-ventures.com/
Shravan Parsi is an entrepreneur and an innovator with a background in two diversified professional fields: real estate investments and pharmaceutical research.
Shravan is the Co-CEO & Co-Founder of NAPA, LLC, which has acquired 7 apartment complexes and 2 commercial properties in the past 18 months. NAPA will continue to aggressively grow with a forecasted pipeline of $150MM in planned acquisitions in 2016. Shravan is a featured speaker at Texas CEO Magazine’s 2015 Enlightened Speaker series event & was recently featured as a value investor in the Austin American Statesman for the commercial real estate investment he purchased adjacent to the Formula 1 Race Track prior to the inaugural US Grand Prix in Austin, Texas.
By education, Shravan is a Pharmaceutical Scientist, owns investments in Medical Device & Health-Tech space. Shravan has published articles in the academic journals and made presentations to FDA and American Association of Pharmaceutical Scientists (AAPS).
With 11 years of RE Investment experience and 12 years of Pharma industry scientific and management experience, Shravan brings a unique skill set and strategic business vision to NAPA investments. He is currently a member of prestigious entrepreneur network TIGER 21, Central Texas Angel Network (CTAN), and the Austin Technology Council (ATC), and a past member of Entrepreneurs Org (EO).
Mr. Glenn Gonzales is an entrepreneurial individual able to leverage 25 years of commercial real estate experience. Glenn served as Treasurer on the Board of Directors for the Washington Multi-family Housing Association, and was elected as President of the association in 2006. From 1994 to 1998, Glenn was a board member for the Utah Apartment Association. He also served a two-year term as the Chairman of the Public Relations Committee and a one-year term as the Secretary-Treasurer for the Institute of Real Estate Management (IREM). Since 1994, Glenn has also been an instructor for the Apartment Associations in his local markets.
|Property Name||Location||Asset Type|| Date
| # of
|Encinal||San Antonio, TX||Multifamily||12/19/2013||201||$4,818,750|
|Lakeview Apartments||Killeen, TX||Multifamily||4/4/2014||62||$1,175,000|
|Morgan Manor||San Antonio, TX||Multifamily||9/26/2014||157||$3,650,000|
|Sante Fe||San Antonio, TX||Multifamily||6/30/2015||327||$7,300,000|
|Montecito Creek||Dallas, TX||Multifamily||9/30/2015||650||$34,000,000|
|Oates Creek||Mesquite, TX||Multifamily||6/30/2016||280||$15,700,000|
|Parkside Townhomes||Arlington, TX||Multifamily||7/14/2016||144||$11,500,000|
|Woodbridge Townhomes||Arlington, TX||Multifamily||8/24/2016||91||$6,225,000|
|Westwood Apartments||Dallas, TX||Multifamily||8/31/2016||187||$7,400,000|
|Ravenwood Apartments||Fort Worth, TX||Multifamily||10/12/2016||122||$4,900,000|
|Brandon Mill||Dallas, TX||Multifamily||9/26/2016||300||$12,160,000|
|Eagle Point||Dallas, TX||Multifamily||11/15/2016||156||$6,961,100|
|Pleasant Creek||Lancaster, TX||Multifamily||12/30/2016||159||$8,580,000|
|Oyster Creek||Lake Jackson, TX||Multifamily||2/28/2017||201||$15,900,000|
|Treasure Bay||Lake Jackson, TX||Multifamily||2/28/2017||200||$15,100,000|
|Prescott Woods||Tulsa, OK||Multifamily||5/12/2017||256||$8,300,000|
The Sponsor's bio and track record were provided by the Sponsor and have not been verified by RealtyMogul.com or NCPS
In this transaction, RealtyMogul.com investors are to invest in Realty Mogul 82, LLC. Realty Mogul 82, LLC is to subsequently invest in NAPA Ventures Yardarm, LLC, the entity that will hold title to the Property, a 150-unit multifamily asset built in 1983, located in Corpus Christi, TX.
Within the first three to five months of acquiring the Property, the Sponsor intends to implement a $314,500 exterior capital improvement plan to address deferred maintenance and mechanical issues, make improvements to the common areas, and increase the Property's curb appeal. The planned exterior capital improvements include refreshing the parking lots and striping throughout the Property, painting the building exteriors, rehabilitating the leasing office, upgrading the landscaping, as well as renovating the pool and laundry room. The Sponsor has also budgeted for interior renovations of $578,182, or $7,709 per unit to be renovated, for 50% of the rentable units, which is expected to include new countertops, new appliances, refreshing of cabinetry, new paint and new carpet. In addition to budgeted capital expenses the Sponsor has included a capital expenditure of 10.0% of total construction costs, or approximately $89,000. The Sponsor estimates that upon renovation, the renovated units are expected to be able to achieve rental premiums of approximately 16.8% above the average in-place rents.
It is expected that all interior renovations will be completed in approximately 13 months, with an average of six (6) units being renovated per month. Upon completion of all renovations, the Sponsor intends on selling the Property within three years, although if the renovations are successfully implemented ahead of schedule and market conditions allow for a favorable sale, the hold period could be shorter. However, the hold period is not guaranteed and could also extend beyond the three year expected hold period.
A summary of the capital expenditures planned at the Property is as follows:
|CapEx Item||$ Amount||Per Unit|
|Interior Rehab ($7,709 each for 75 units)||$578,182||$3,855|
|Stairwell & Balcony Maintenance||$45,000||$300|
|Concrete and Striping||$42,000||$280|
|Leasing Office Rehab||$30,000||$200|
|Fascia and Trim Updates||$30,000||$200|
|Leasing Office Furniture||$20,000||$133|
|Pool Deck Repair||$15,500||$103|
|Condensor Pad Relevel||$12,500||$333|
|Exterior Wall & Fence Repair||$10,000||$67|
|Railroad Ties & Retaining Walls||$10,000||$67|
|Construction Management Fee 3.0%||$29,453||$196|
RealtyMogul.com, along with NAPA Ventures, LLC (“NAPA” or the “Sponsor”), is providing the opportunity to invest in the acquisition and ownership of Yardarm Apartments (the "Property"), a 150 unit, garden-style apartment complex in Corpus Christi.
The primary objective of this investment is to implement exterior improvements throughout immediately after acquisition, renovate the interiors of half of the units within the first 18 months of the hold period and sell the Property within three (3) years of acquisition.
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%|
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.
|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|
|Miles from Subject||-||-||1.4||2.3||0.1||1.7||5.7||2.2|
|# of Units||64||64||74||-||48||55||64||60|
|Average Size (SF)||690||690||695||-||623||677||616||653|
|# of Units||86||86||176||144||112||52||136||124|
|Average Size (SF)||944||944||938||937||1,021||931||1,018||969|
|*Note: Lost Creek is recently renovated and of similar construction style to Property.
|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|
|Miles from Subject||-||17.7||17.4||2.1||1.7||22.2||20.6||13.6|
The Property is located on Leopard Street directly off of Interstate Highway 37, approximately 13 miles northwest of Downtown Corpus Christi, TX. The Property is located just to the south of the Calallen suburb of Corpus Christi. The Property itself is located in the Annaville neighborhood, which was formerly its own town before being annexed into Corpus Christi in the 1960's.
The surrounding neighborhoods to the Property are largely singe family residences, although across the street from the Property are restaurant uses, including Pizza Hut, Rigatoni's Italian and China Bear.
The Property is located in the Tuloso-Midway school district, an academic-focused school district which utilizes a year-round school session and does not offer school organized sports to its students. The primary school is located directly across Mckinze Road from the Property, and the the high school is located approximately one mile down Mckinze Road from the Property.
According to the 2015 Census Bureau, the City of Corpus Christi has a population of approximately 326,000. Per the U.S. Bureau of Labor Statistics the unemployment rate in Corpus Christi was 6.2% as of April 2017.
Per a market study dated September 2016 and published by the U.S. Department of Housing and Urban Development total jobs in the Corpus Christi Housing Market Area (which consists of Aransas, Nueces, and San Patricio Counties on the Texas Gulf Coast) grew by 1.5% for the 12 months ended August 2016. Government is the largest employment sector in Corpus Christi, consisting of 17.1% of total jobs, but is closely followed by education and health services, which comprise 15.8% of total jobs in the market. During the 12 months ending August 2016 the education and health services sector increased by 1,500 jobs, or approximately 5.1%. Per the market study, this was due in large part to due to $325 million expansions at CHRISTUS Spohn Health System and Driscoll Children’s Hospital.
Per Axiometrics, as of 2016 year-end vacancy in the City of Corpus Christi, TX was approximately 7.8%, and the annual growth rate during the first four quarters of the expected hold period (July 2017 - June 2018) is 3.6%.
|Distance from Property||1 Mile||3 Miles||5 Miles|
|Predicted Growth (2017-2022)||4.74%||4.58%||4.66%|
|Median HH Income||$58,563||$64,936||$66,648|
|Average HH Income||$75,163||$78,913||$80,809|
|Median Home Value||$143,085||$140,589||$142,156|
Demographic information above was obtained from CoStar.
|Sources of Funds||Cost|
|Total Sources of Funds||$10,403,537|
|Uses of Funds||Cost|
|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|
|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.
|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|
|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|
|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)|
(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.
Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated”, “projected”, “forecasted”, “estimated”, “prospective”, “believes”, “expects”, “plans”, “future”, “intends”, “should”, “can”, “could”, “might”, “potential”, “continue”, “may”, “will” and similar expressions to identify these forward-looking statements.
Non-Transferability of Securities
The transferability of membership interests in Realty Mogul 82, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Moreover, the estimated investment holding period described herein is only a projection, and there can be no assurance when or if an investment may be liquidated. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
Realty Mogul 82, LLC's investment in NAPA Ventures Yardarm, LLC will relate to a Property that will undergo some degree of renovation, a situation that does not always meet the financing criteria for conventional financing from institutional sources. Credit risk is inherent in the real estate financing industry, and there can be no assurance that the credit worthiness of the Sponsor will be sufficient to assure the full repayment of the Realty Mogul 82, LLC's common equity investment and thus Realty Mogul 82, LLC's ability to provide returns (or even repayment of principal) to investors.
The Sponsor has a signed term sheet with a lender to provide the debt financing for the acquisition of the Property, but there can be no assurance that the lender will complete financing on the rates and terms included in the underwriting being presented in the model for this investment opportunity. All rates and terms of the debt financing are subject to final lender committee approval, including but not limited to a modification in lender held capital reserve requirements that may result in a corresponding movement of certain funds currently projected as being held in a Sponsor controlled capital escrow account.
Investors will be relying solely on the Sponsor for the execution of its business plan. The Sponsor may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of NAPA Ventures Yardarm, LLC (including Realty Mogul 82, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the Sponsor has significant operating experience, NAPA Ventures Yardarm, LLC, and the manager of Realty Mogul 82, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.
Manager of Realty Mogul 82, LLC May Participate in Sponsors' Promote Interest
The manager of Realty Mogul 82, LLC may be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the Property realized upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 82, LLC. Investors must recognize and agree to waive and bear the risk of this conflict of interest.
Capital Call Risk
The amount of capital that may be required by NAPA Ventures Yardarm, LLC from Realty Mogul 82, LLC is unknown, and although NAPA Ventures Yardarm, LLC does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or additional capital. Realty Mogul 82, LLC does not intend to participate in a capital call if one is requested by NAPA Ventures Yardarm, LLC, and in such event the manager of NAPA Ventures Yardarm, LLC may accept additional contributions from other members of NAPA Ventures Yardarm, LLC. Amounts that the manager of NAPA Ventures Yardarm, LLC advances on behalf of Realty Mogul 82, LLC will be deemed to be a manager loan at an expected interest rate of 10%. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 82, LLC's interest in NAPA Ventures Yardarm, LLC will suffer a proportionate amount of dilution.
Real Estate Market Risk
NAPA Ventures Yardarm, LLC's economic performance and value, and thus the value of investors’ investment in Realty Mogul 82, LLC, is subject to various risks associated with the Property. Real estate markets are affected by many factors, such as general economic conditions, supply and demand for real estate investments, interest rates, the availability of financing, and other factors. Investments related to real estate are also subject to market valuation risks that may be caused by changing economic and local market conditions such as local real estate market conditions. The Property’s economic performance and value, and thus the value of investors’ investment in Realty Mogul 82, LLC, is subject to such risks, all of which are beyond the control of both Realty Mogul 82, LLC and NAPA Ventures Yardarm, LLC.
Financial Past of Sponsor’s Principal
Investors should consider that one of the Sponsor’s principals experienced personal bankruptcy in 2002 and a foreclosure on his primary residence in 2009. It should be noted that past financial events are not necessarily indicative of future performance or management ability.
South Texas Hurricane Risk
Corpus Christi is a major port city and lies on the Gulf of Mexico, 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 Property, in which case the business and financial condition of the Sponsor Entity, and thus the Company, would be materially adversely affected. There is no guarantee that the Sponsor Entity will procure hurricane or flood insurance for the Property.
Apartment Complex - Competition
Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses. The Property will compete with other residential alternatives to attract tenants, including but not limited to other apartment units that are currently available for rent, new apartments that are built and condominiums/houses that are for rent or sale. If development of apartment complexes by other operators were to increase, due to increases in availability of funds for investment or other reasons, then competition with the Property could intensify. If the Property is not able to successfully compete with the competitive residential alternatives in the local or regional area this could adversely affect the ability of Sponsor Entity to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.
The Sponsor intends to renovate the Property in order to be able to demand the significantly higher rents it is projecting to receive at the Property following such renovations. Such renovations are expected to include $8,478 per unit in half of the units at the Property for interior upgrades, in addition to approximately $346,000 in exterior improvements. There can be no assurance that such renovations will be consummated on a timely basis or that such work will not materially adversely affect other aspects of the operation of the Property. Any delays or adverse effects of such renovation work could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment. Following the renovations, the Sponsor expects to be able to rent the apartment units at average rates that would represent an approximate 16.8% increase over the existing rental rates. Although the Sponsor believes that comparable properties are currently achieving rental rates that are greater than the future rental rates expected from the Property, there can be no assurance that such increased rental rates will be achieved. Failure to realize such increased rental rates could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment.
Vacancies and Tenant Defaults May Reduce the Property’s Revenues
A vacancy or default of a tenant on its rent will cause the Sponsor Entity to lose the revenue from that unit and, if enough effective vacancies occur, it could cause the Sponsor Entity to have to find an alternative source of revenue to meet any loan payments and other operating expenses for a particular property and it may not be possible to have to find a viable alternative source of revenue. If the company managing the investment property does not employ sufficiently aggressive marketing campaigns and/or lease incentive programs, vacancies may increase and an investment in the Company may be adversely affected.
Interest-Only Loan Period
The loan being used to acquire the Property is expected to have an interest-only period during the first 24 months of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.
The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Issuer Document Package for a discussion of additional risks.
The above presentation is based upon information supplied by the Sponsor and 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.
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