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Completed Equity
Multifamily
Serendipity Apartments
Dallas, TX
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Presidium Group
16.7%* TARGET IRR 15.7%-17.7%
8.2%* TARGET AVG CASH ON CASH
2.03* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 years
Estimated First Distribution 3/2018
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Overview
Value-add acquisition of a multifamily asset with institutional-quality sponsorship and management.
Property at a glance
Year Built 1975
# of Units 343
Current Occupancy 95%
Parking Ratio 1.10/Unit
Acquisition Price

$19,500,000

Investment Highlights
Experienced Real Estate Company: The Real Estate Company has owned and managed over $1 billion in real estate overall, including 10,000 multifamily units (4,000 of which are located in Dallas-Fort Worth)
Attractive Basis: The Real Estate Company acquired the Property for $56,851 / unit which compares favorably to comparable transactions in the market
Well Located: The Property is situated in a major market with favorable fundamentals; in close proximity to retail amenities, public transportation and public facilities
Conservative Business Plan: Per Axiometrics, the Property was 95% occupied as of July 31, 2017, and operating cash flows comprise a significant component of the total underwritten returns to investors
Management
Cumulative Distributions

Presidium Group

Presidium Group (the “Real Estate Company”) was founded in 2002 by Cross Moceri and John Griggs and is a vertically-integrated real estate firm specializing in opportunistic and value-add transactions in Texas. The Real Estate Company has over 250 employees and over 50 assets under management. The current portfolio consists of over 10,000 multifamily units (over 4,000 in DFW) with a value of over $800 million. Including full-cycle investments, the Real Estate Company has owned and managed over $1 billion in real estate assets.

http://www.presidiumre.com/
  • Cross Moceri
    Co-CEO
  • John Griggs
    Co-CEO
Cross Moceri
Co-CEO
Cross Moceri is a founder and principal of Presidium Group. Mr. Moceri began his real estate investment career by founding Centaurus Investments, LLC in 2002 (the predecessor company to Presidium), focusing on multi-family investments in the Southern United States. Mr. Moceri is primarily responsible for capital formation, acquisitions, financial structuring, and portfolio development. Over the past decade, Mr. Moceri has spearheaded more than $1.2B of real estate investments. Mr. Moceri heads the Austin office of Presidium Group.
 
B.A. University of Notre Dame / J.D. University of Michigan
John Griggs
Co-CEO
John Griggs is a founder and principal of Presidium Group and oversees all financial and operational aspects of Presidium Group’s 10,000 unit portfolio. Mr. Griggs is responsible for optimizing the capitalization of the portfolio and also directs asset and property management, construction and investor relations. Mr. Griggs has overseen the acquisition and successful integration of more than $1 billion of real estate assets and supervises over 250 Presidium employees. In addition to his 14 years of direct real estate experience, Mr. Griggs has passed Level 1 of the Chartered Financial Analyst program. Before launching his real estate career, he was a corporate lawyer at Milbank and Wilson Sonsini. Mr. Griggs heads the Dallas office of Presidium Group.
 
A.B. Stanford University / J.D. University of Michigan
Track Record

 Presidium Group Track Record - Current Portfolio
 Property Name   Location   Property Type   Acquisition Date   Purchase Price 
 Courtyards of Valley View   Farmers Branch, TX   Multifamily  2005 $3,400,000
 Shenandoah Woods   Houston, TX   Multifamily  2006 $5,220,000
 Southern Oaks   Houston, TX   Multifamily  2006 $4,455,000
 Unity Pointe   Houston, TX   Multifamily  2006 $2,452,500
 Ashley Square   Houston, TX   Multifamily  2006 $2,632,500
 Inglewood Village   Houston, TX   Multifamily  2006 $2,115,000
 Oak Lawn Heights   Dallas, TX   Multifamily  2010 $1,860,000
 Solaris   Austin, TX   Multifamily  2013 $23,100,000
 Elm Creek   San Antonio, TX   Multifamily  2013 $3,320,000
 The Element   Austin, TX   Multifamily  2013 $10,700,000
 Hillcroft   Houston, TX   Multifamily  2014 $14,250,000
 Vue   Austin, TX   Multifamily  2014 $10,600,000
 Axio   San Antonio, TX   Multifamily  2014 $26,500,000
 Escondido Village   San Antonio, TX   Multifamily  2014 $18,000,000
 Villas at Tenison Park   Dallas, TX   Multifamily  2014 $13,100,000
 The Surround   Dallas, TX   Multifamily  2014 $13,125,000
 The Thread   Dallas, TX   Multifamily  2014 $16,000,000
 Colonial Woods   Houston, TX   Multifamily  2014 $3,900,000
 Entro at Midtown   Dallas, TX   Multifamily  2014 $24,400,000
 The Branch at the Medical Center   Austin, TX   Multifamily  2015 $24,000,000
 The Verge   Dallas, TX   Multifamily  2015 $14,115,000
 The Link    Dallas, TX   Multifamily  2015 $26,620,000
 The Violet   Austin, TX   Multifamily  2015 $12,000,000
 Balcones Club   Austin, TX   Multifamily  2015 $30,000,000
 Bridgepoint   Oklahoma City, OK   Multifamily  2016 $10,750,000
 Vistas at Lake Worth   Ft. Worth, TX   Multifamily  2016 $17,100,000
 Windsor House   San Antonio, TX   Multifamily  2016 $36,500,000
 Cottonwood Creek   Dallas, TX   Multifamily  2016 $21,000,000
 The Linear   Dallas, TX   Multifamily  2016 $22,500,000
 University Village   Austin, TX   Multifamily  2016 $131,500,000
 Spice Creek   San Antonio, TX   Multifamily  2016 $12,100,000
 Total Portfolio        $557,315,000

Note: The management overview and track record detailed above was provided by the Sponsor and has not been verified by RealtyMogul.com or NCPS.

Business Plan

In this transaction, RealtyMogul.com investors are to invest in Realty Mogul 91, LLC, which is to subsequently invest in Travertine North Park Investors, LLC, a limited liability company that will hold title to the Property. The Real Estate Company purchased the Property for $19,500,000 ($56,851 / unit) and the total project cost is expected to be $25,113,803 ($73,218 / unit).

The Real Estate Company’s business plan is to implement a value-add strategy by completing interior and exterior renovations at the Property. Unit interior upgrades will include new appliances, granite counters, painted cabinetry with new handles, chrome / nickel ceiling fans, and new lighting packages. Exterior / amenity improvements will consist of painting, carpentry, new landscaping and drainage, a dog park, renovating pools, resealing parking lots, and a new signage package.

The Real Estate Company plans to renovate all 343 units over 36 months (nine and a half units / month), which they state is a comfortable pace given their track record and in-house construction team, however the pro forma financials in the Issuer Document Package attached to this offering assume only eight renovations are completed per month. The pro forma financials assume that renovated units will be able to achieve rental premiums of $142 / unit per month upon completion.  

Serendipity - Capital Expenditures Budget
CapEx Item $ Amount Per Unit
Interior Rehab ($6,220 each for 343 units) $2,133,460 $6,220
Paint and Carpentry $274,400 $800
Landscaping and Drainage $100,000 $292
Pool Renovation $100,000 $292
Toilets $90,038 $263
Parking Lot Repairs $70,000 $204
Clubhouse $50,000 $146
Signage Replacement $49,010 $143
Logistics $30,000 $87
Gym $25,000 $73
Exterior Lighting $21,780 $63
Concrete Work $20,000 $58
Gate Repairs $20,000 $58
Add Dog Park $12,500 $36
Other $47,934 $140
Contingency 5% $151,959 $443
Subtotal $3,196,081 $9,318
Construction Management Fee 10% $303,919 $886
Total $3,500,000 $10,204
 

Stabilized Unit Mix

 Unit Type   # of Units   % of Total   Unit (SF)   Total SF   Rent (Mon.)   Mo Rent/SF   Annual Rents   Rent Increases 
 Studio  17 5% 368 6,256 $589 $1.60 $120,115 $71
 1 Bed, 1 Bath  61 18% 486 29,646 $705 $1.45 $515,840 $122
 1 Bed, 1 Bath  10 3% 525 5,250 $751 $1.43 $90,090 $174
 1 Bed, 1 Bath  16 5% 528 8,448 $739 $1.40 $141,926 $148
 1 Bed, 1 Bath  30 9% 544 16,320 $751 $1.38 $270,259 $152
 1 Bed, 1 Bath  80 23% 558 44,640 $753 $1.35 $723,168 $152
 1 Bed, 1 Bath  23 7% 640 14,720 $832 $1.30 $229,632 $206
 1 Bed, 1 Bath  24 7% 654 15,696 $818 $1.25 $235,440 $199
 2 Bed, 1 Bath  28 8% 720 20,160 $878 $1.22 $295,142 $148
 2 Bed, 1 Bath  5 1% 784 3,920 $941 $1.20 $56,448 $213
 2 Bed, 2 Bath  35 10% 900  31,500 $1,062 $1.18 $446,040 $278
 2 Bed, 2 Bath  14 4% 916  12,824 $1,053 $1.15 $176,971 $268
 Totals/Averages  343 100% 610 209,380 $275,089 $1.31 $3,301,073 $168
            $802/Unit    

 

Property

RealtyMogul.com, along with Presidium Group (the "Real Estate Company"), is providing the opportunity to invest in the acquisition of 8780 Park Lane (the "Property"), a 343-unit multifamily asset located in a gentrifying neighborhood of Dallas, TX.

The primary objective of this investment is to acquire the Property, perform modest interior and exterior renovations to capture rental increases, then sell the Property within approximately five (5) years. The Real Estate Company sees this investment as an opportunity to capitalize on a well-located asset, in a gentrifying region, that exhibits high occupancy and favorable fundamentals to support the targeted renovation plan. 

Property Details

Built in 1975, the Property is comprised of studio, one, and two-bedroom floor plans across 343 units and eight buildings totaling ​209,380 rentable square feet. The weighted average size and rent per unit is 610 square feet and $634/unit ($1.04/SF), respectively. Amenities at the Property include a business center, fitness center, sauna, two pools, laundry facilities, picnic areas, and a clubhouse. The Property includes 376 on-site parking spaces (1.10/Unit). 

In-Place Unit Mix

 Unit Type   # of Units   % of Total   Unit (SF)   Total SF   Rent (Mon.)   Mo Rent/SF   Annual Rents 
 Studio  17 5% 368 6,256 $518 $1.41 $105,645
 1 Bed, 1 Bath  61 18% 486 29,646 $583 $1.20 $426,789
 1 Bed, 1 Bath  10 3% 525 5,250 $577 $1.10 $69,195
 1 Bed, 1 Bath  16 5% 528 8,448 $591 $1.12 $113,484
 1 Bed, 1 Bath  30 9% 544 16,320 $599 $1.10 $215,470
 1 Bed, 1 Bath  80 23% 558 44,640 $601 $1.08 $577,289
 1 Bed, 1 Bath  23 7% 640 14,720 $626 $0.98 $172,679
 1 Bed, 1 Bath  24 7% 654 15,696 $618 $0.95 $177,997
 2 Bed, 1 Bath  28 8% 720 20,160 $730 $1.01 $245,328
 2 Bed, 1 Bath  5 1% 784 3,920 $728 $0.93 $43,680
 2 Bed, 2 Bath  35 10% 900 31,500 $784 $0.87 $329,465
 2 Bed, 2 Bath  14 4% 916 12,824 $786 $0.86 $132,000
 Totals/Averages  343 100% 610 209,380 $217,418 $1.04 $2,609,021
            $634/Unit  


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Comparables

Lease Comparables

Lease Comparables East Town The Cambridge Park Beverly Cityscape Dallas La Vita Total / Averages Subject (Post-Reno)
               
Submarket North White Rock North White Rock North White Rock North White Rock North White Rock   North White Rock
# of Units 188 312 145 260 162 213 343
Year Built 1976 1978 1963 1967 1985 1974 1975
Average SF 859 700 584 544 536 649 610
Average $ / Unit $957 $949 $778 $747 $786 $853 $802
Studios
# of Units   90   122 54 89 17
$ / Unit   $795   $657 $719 $716 $589
Average Square Feet   445   408 480 435 368
1 Bedroom x 1 Bathroom
# of Units 124 150 80 22 92 114 244
$ / Unit $785 $923 $707 $773 $791 $809 $754
Average Square Feet 694 629 486 642 529 609 552
2 Bedroom x 1 Bathroom
# of Units   18 65   16 33 33
$ / Unit   $1,045 $864   $987 $917 $888
Average Square Feet   982 703   760 763 888
2 Bedroom x 2 Bathroom
# of Units 64 54   16   45 49
$ / Unit $1,171 $1,213   $1,235   $1,195 $1,060
Average Square Feet 1,077 1,166   838   1,084 905
Distance from Subject 0.6 miles 1.3 miles 1.1 miles 0.5 miles 1.4 miles 1.0 miles  

 

Sale Comparables

Sale Comparables Residences at Lake Highlands Santa Fe Trails Princeton Court East Towne Stratford Hill Tribeca on the Creek Total / Averages Subject
                 
Date March-17 May-17 November-16 October-16 August-16 December-15   August-17
Transaction Type Sale Refinance Refinance Refinance Refinance Refinance    
Submarket North White Rock North White Rock North White Rock North White Rock North White Rock North White Rock   North White Rock
# of Units 247 178 260 208 232 267 232 343
Year Built 1969 1969 1974 1976 1967 1979 1972 1975
Average SF 803 853   859 914 806 845 610
Purchase Price / Appraised Value $21.1 MM $8.9 MM $14.5 MM $13.3 MM $10.3 MM $13.0 MM $13.8 MM $19.5 MM
$/Unit $85,547 $50,000 $55,769 $63,942 $44,397 $48,689 $59,454 $56,851
Cap Rate 6.10%   5.80%   5.70%      
Distance from Subject 3.1 miles 0.7 miles 1.1 miles 0.6 miles 0.2 miles 1.0 miles 1.1 miles  

*Lease and Sale Comparable information provided by Axiometrics and Real Capital Analytics.

Location

The Property is located in the North White Rock submarket within the greater Dallas-Plano-Irving MSA as defined by Axiometrics. The Property is approximately 1.25 miles away from US Route 75, 8.2 miles from Downtown Dallas, and 3.0 miles from Southern Methodist University. The Property is across the street from Top Golf and the Dallas Equestrian Center, and a few blocks from a Whole Foods and Alamo Drafthouse in buildout. In close proximity are dining and entertainment options, as well as popular retail options including Target, Walmart, Home Depot, and REI. The Property is proximate to Northpark Mall and just over a mile from an ALDI supermarket. Nearby White Rock Creek Greenbelt provides opportunities for outdoor recreational activities. Community services and facilities are readily available in the surrounding area including fire stations, hospitals, police stations, and universities. 

The city’s employment base feeds various industries including retail, transportation, financial and healthcare. With over 100 stores encompassing 12 counties, Wal-Mart has become the region’s largest employer with over 34,000 employees. The region’s second largest employer, American Airlines, who merged with US Airway group in 2013 creating the largest airline in the world, employs approximately 20,000 people. Two of the nation’s top communications companies have strong presence in the region and contribute to the local economy with services and jobs. AT&T, a Fortune 500 Company headquartered in Dallas, employs approximately 17,000. Verizon Communications, though headquartered in New York City, employs approximately 11,000 locally. Toyota relocated its headquarters to Plano with a two million square foot facility, and State Farm’s regional hub in Richardson has reportedly brought 7,000 employees to the market.

Market Overview

Per CoStar, the Dallas-Fort Worth (DFW) apartment market has outperformed over the last few years, thanks to exceptional demand driven by some of the best in-migration and employment growth in the country. While 2017 and 2018 will likely be the peak years of the cycle in terms of supply, the influx of tens of thousands of jobs from the Toyota and Liberty Mutual relocations should give the DFW apartment market a big boost, especially in the northern suburbs along the Dallas North Tollway. Rent growth has cooled from the 2015 peak, but it remains well above the historical average. However, pricey submarkets like Uptown/Park Cities have seen negative rent growth in the face of record supply levels with even more set to deliver soon. Job growth in the market continues to outpace the U.S. average by more than 50%, and the metro continues to set records for in-migration. Month after month, Dallas and Fort Worth are ranked among the highest-growth metros in the country, adding more than 100,000 jobs over the past year combined. And with major corporate relocations or expansions being announced with regularity, the jobs are expected to keep coming. Over the next five years, the 20-34 year-old demographic (probable renters) is expected to increase by close to 100,000, one of the fastest rates in the country. New residents are less likely to purchase a home until they know which neighborhood or suburb they prefer, and this leads many to rent initially.

The market is characterized by affordability, a quality labor pool, major employers moving to the MSA, and job growth and in-migration that outpaces the national average. Growing rents in the core have pushed many renters further out to this supply constrained submarket resulting in rent growth for renovated product. Per Axiometrics, net effective rent growth in the submarket has averaged 4.76% since 2010 with forecast annual growth in excess of 3.0% for 2017-2019, (vs. 4.64% for the market over the same time period). Since 2010, the submarket has averaged 93.2% occupancy with the market averaging 94.3%. Axiometrics estimates occupancy in the market and submarket to average 95% over the next three years. Median household income within 1, 3, and 5 mile radii are $34,143, $62,417, and $59,259 respectively. Population within a 5-mile radius is 407,529.

Demographic Information

Demographics

Distance from Property 1 Mile 3 Miles 5 Miles
Population (2017) 38,609 157,676 407,529
Expected Growth (2017-2022) 7.30% 5.80% 5.60%
Median Household Income (2017) $34,143 $62,417 $59,259
Median Home Value (2017) $236,060 $359,701 $357,856

*Demographic information was obtained from CoStar.  

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Debt $18,800,000
Equity $6,313,803
Total Sources of Funds $25,113,803
Uses of Funds Cost
Purchase Price $19,500,000
Acquisition Fee $390,000
Broker-Dealer Placement Fee $81,656
Loan Fee $94,000
Closing Costs $200,043
CapEx Holdback $3,500,000
Sr. Loan Performance Earnout (1) $1,200,000
Working Capital $148,103
Total Uses of Funds $25,113,803

(1) The performance earnout has been excluded from the pro forma financials in the Issuer Document Package attached to this offering.

Debt Assumptions

The projected terms of the debt financing are as follows:

• Lender: Legacy Texas Bank
• Loan Type: Bridge
• Recourse: Non-recourse (Standard Carveouts)
• Loan Amount (1): $18,800,000 ($54,810/unit)
• Rehabilitation Holdback: $3,500,000 ($10,204/unit)
• Performance Earnout: $1,200,000 ($3,499/unit)
• Interest Rate (Years 1-3): 4.75%
• Interest Rate (Years 4-5): 5.00%
• Loan-to-Purchase (Net of Future Funding): 72.3%
• Loan-to-Cost: 73.8%
• Term: 36 Months
• Amortization: 30 Years
• Interest Only: 24 Months
• Extension Options: Two 12-month Extensions ($47,000 per Extension)
• Prepayment: 2% in year 1, 1% in year 2, open thereafter.
 

(1) The Lender is advancing $14,100,000 to the Real Estate Company at close, with an additional “conditionally available amount” comprised of (i) a holdback in the amount of $3,500,000 to reimburse Borrower for the Rehabilitation Costs, and (ii) a holdback in the amount of $1,200,000 to reflect increased net operating income realized by Borrower. The $1,200,000 holdback is a performance earnout which was not been has been excluded from the pro forma financials in the Issuer Document Package attached to this offering.

 

*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.

Distributions

Travertine North Park Investors, LLC intends to make distributions of all available cash and capital proceeds to investors (Realty Mogul 91, LLC, MogulREIT II, and Real Estate Company, collectively, the "Members") as follows:

  1. To the Members, pari passu, all excess cash flows and appreciation to a 10% IRR to the Members,
  2. 85 / 15 (85% to the Members / 15% to the Real Estate Company) of excess cash flows and appreciation to a 15% IRR to Realty Mogul 91, LLC, 
  3. 70 / 30 of excess cash flow and appreciation to a 20% IRR to Realty Mogul 91, LLC, and
  4. 50 / 50 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 91, LLC will distribute 100% of its share of excess cash flow (after expenses and fees) to the members of Realty Mogul 91, LLC (the RealtyMogul.com investors). 

Distributions are expected to start in March 2018 and are expected to continue on a quarterly basis thereafter. These distributions are at the discretion of the Real Estate Company, who may decide to delay distributions for any reason, including maintenance or capital reserves. 

Cash Flow Projections
  Year 1 Year 2 Year 3 Year 4   Year 5  
Effective Gross Revenue $3,045,001 $3,384,010 $3,667,674 $3,915,116 $4,080,553
Total Operating Expenses $1,881,276 $1,982,433 $2,046,331 $2,110,357 $2,172,726
Net Operating Income $1,163,725 $1,401,577 $1,621,343 $1,804,759 $1,907,808
Distributions to The Company $92,880 $144,269 $128,552 $147,212 $2,907,777

Sample Targeted Cash Flows - Hypothetical $50,000 Investment

  Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Targeted Distributions to Investor ($50,000) $2,756 $4,281 $3,815 $4,368 $86,284
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 $390,000 Real Estate Company (50%) & RM Advisor, LLC (50%) Capitalized Equity Contribution 2.0% of Purchase Price. RM Advisor, LLC is the Manager of MogulREIT II and a wholly-owned subsidiary of Realty Mogul, Co.
Disposition Fee 1.0% of Gross Sale Proceeds RM Advisor, LLC Distributable Cash RM Advisor, LLC is the Manager of MogulREIT II and a wholly-owned subsidiary of Realty Mogul, Co.
Broker-Dealer Fee $81,656 North Capital (1) Capitalized Equity Contribution  
Recurring Fees
Property Management Fee 4.0% of Effective Gross Income Presidium Property Management, a wholly owned subsidiary of the Real Estate Company Operating Cash Flow  
Construction Management Fee 10.0% of Construction Costs Presidium Construction Management, a wholly owned subsidiary of the Real Estate Company Capitalized CapEx Budget  
Management and Administrative Fee 1.25% of amount invested in Realty Mogul 91, LLC RM Manager, LLC Distributable Cash RM Manager, LLC is the Manager of Realty Mogul 91, 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 abo​ve presentation is based upon information supplied by the Real Estate Company or others.  Realty Mogul, Co., RM Manager, LLC, RM Advisor, LLC, and Realty Mogul 91, 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.

Disclaimers
Disclaimers

Forward-Looking Statements

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 91, 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.


Credit Risk

Realty Mogul 91, LLC's investment in Travertine North Park Investors, 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 Real Estate Company will be sufficient to assure the full repayment of the Realty Mogul 91, LLC's common equity investment and thus Realty Mogul 91, LLC's ability to provide returns (or even repayment of principal) to investors.


Mortgage Risk

The Real Estate Company 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 Real Estate Company controlled capital escrow account.


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.


Management Risk

Investors will be relying solely on the Real Estate Company for the execution of its business plan. The Real Estate Company may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of Travertine North Park Investors, LLC (including Realty Mogul 91, 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 Real Estate Company has significant operating experience, Travertine North Park Investors, LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 91, LLC is pursuing a venture capital strategy through its investment in Travertine North Park Investors, LLC, and the manager of Realty Mogul 91, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.


Manager of Realty Mogul 91, LLC Will Participate in The Real Estate Company's Promote Interest

The manager of Realty Mogul 91, LLC will 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 91, 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 Travertine North Park Investors, LLC from Realty Mogul 91, LLC is unknown, and although Travertine North Park Investors, 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 91, LLC does not intend to participate in a capital call if one is requested by Travertine North Park Investors, LLC, and in such event the manager of Travertine North Park Investors, LLC may accept additional contributions from other members of Travertine North Park Investors, LLC. Amounts that the manager of Travertine North Park Investors, LLC advances on behalf of Realty Mogul 91, 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 91, LLC's interest in Travertine North Park Investors, LLC will suffer a proportionate amount of dilution.


Real Estate Market Risk

Travertine North Park Investors, LLC's economic performance and value, and thus the value of investors’ investment in Realty Mogul 91, 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 91, LLC, is subject to such risks, all of which are beyond the control of both Realty Mogul 91, LLC and Travertine North Park Investors, LLC.


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 the Real Estate Company Entity to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Lease-up Risks

The Property currently has a 95% occupancy level, and the Real Estate Company intends to implement a capital improvement plan in its effort to maintain and/or increase that occupancy level. There can be no assurance that such renovations will be consummated on a timely basis, that such work will not materially adversely affect other aspects of the operation of the Property, or that the plan will result in the Property maintaining its occupancy level at rental rates in line with those projected. Any delays or adverse effects of such work could adversely affect the Property’s financial results or business operations and thus the value of the Company’s investment. Although the Real Estate Company believes that comparable properties are currently achieving rental rates that are in line with those expected from the Property, there can be no assurance that such 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.


Conflict of Interest Risk

Mogul REIT II, Inc., which is managed by an affiliate of the manager intends to make an investment in Travertine North Park Investors, LLC. MogulREIT II’s investment in Travertine North Park Investors, LLC may be significantly greater than the investment by Realty Mogul 91, LLC, giving MogulREIT II and its manager more control and certain rights in the operating agreement of Travertine North Park Investors, LLC. This could give rise to a conflict of interests of Realty Mogul 91, LLC and Mogul REIT II that may have a material adverse effect on your investment.


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 Real Estate Company and others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 91, 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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