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Completed Equity
Multifamily
Burlington Court Apartments
Burlington, NJ
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By AION Partners
15.5%* TARGET IRR 14.5%-16.5%
6.9%* TARGET AVG CASH ON CASH
1.94* 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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Overview
Value-add acquisition of a multifamily asset by an experienced, repeat Real Estate Company.
Property at a glance
Year Built 1966 / 1968
# of Units 210
# of Buildings 19
Current Occupancy 95.2%
Parking Ratio 1.91/Unit
Acquisition Price

$12,145,597

Investment Highlights
Experienced Real Estate Company: AION Partners currently operates a $1.5 billion portfolio of office, retail, and multifamily assets.
Attractive Basis: The Real Estate Company is acquiring the Property for $57,836/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
Management
Cumulative Distributions

AION Partners

AION Partners acts as Operating Partner on core-plus, value-add, and opportunistic real estate investments across the U.S. AION operates a $1.5 billion portfolio of office, retail, and multifamily assets located primarily in the New York – Washington D.C. corridor and across the Sunbelt. They target well-located office and retail properties in major gateway markets, and multifamily in the suburban infill locations surrounding them.   AION has participated in institutional equity partnerships with Kushner Companies, NorthStar Realty Finance, Related, The Carlyle Group, Lehman Brothers, C-III Capital Partners, China Orient Asset Management, and Clarion Partners.  The firm has operated continuously since 2001, investing actively during the downturn caused by the 2007-09 financial crisis.

AION’s multifamily investment arm focuses on workforce housing opportunities in close proximity to employment centers and demand drivers.  They typically pursue investments in markets with high populations and job growth, often targeting assets that are non-institutionally managed or neglected by current management.  AION currently owns 9,941 multifamily units with a total capitalization of more than $981MM.

AION operates an in-house construction management team that efficiently identifies, bids, and oversees robust capital improvement projects.  In addition, they have a centralized accounting team that includes two CPAs with experience in fund management accounting, investor reporting, and audits.

http://www.aionpartners.com/
  • Michael Betancourt
    Managing Director
  • Siraj Dadabhoy
    Chairman
  • Victor Cole
    Principal
  • Sean Belfi
    Vice President
Michael Betancourt
Managing Director

Michael Betancourt is a founding partner and Managing Director of AION Partners. Michael heads the Investment Committee of AION and oversees underwriting of all new transactions. He also dedicates his time to AION’s institutional equity relationships and private investors. At AION, he has purchased over $1.5 billion in real estate across multifamily, office, retail, and development deals. Michael began his real estate career with DCD America in 2001. He has also held positions with Prudential Securities and Shearson Lehman Brothers.  Mr. Betancourt is a graduate of Saint Joseph's University with a Bachelor of Science in Finance.

Siraj Dadabhoy
Chairman

Siraj Dadabhoy has over 20 years of experience in finance and real estate investment. He focuses on AION’s overall investment strategy; new real estate opportunities, global marketing, and capital raising. He has a thorough knowledge of the entire investment lifecycle and maintains a high level of attention to detail throughout the process, from the initial structuring of the deal through the development of the investment thesis and design details. He is also the Chairman of AION Global; an owner, operator and developer of real estate in the U.K. Siraj is a 1988 graduate of Indiana University, with a Bachelor of Science in Accounting and Finance. He is also a qualified Certified Public Accountant.

Victor Cole
Principal

Victor Cole is a Principal of AION Partners. Victor heads the Investment Team at AION, focusing on new acquisitions and asset management. He personally oversees several of AION’s large assets in the firm’s portfolio. At AION, Victor has purchased close to $1 billion of real estate in office and multifamily deals.

Prior to joining AION, Victor was a member of JPMorgan's Commercial Mortgage Backed Securities group. He previously worked for NorthMarq Capital where he was involved in debt and equity placement on behalf of real estate investor and developer clients.  Victor received a Bachelor of Science in Business Administration from Bucknell University and a Graduate Certificate in Real Estate from New York University's Real Estate Institute.

Sean Belfi
Vice President

Sean Belfi focuses on new acquisitions and asset management responsibilities across AION’s portfolio. He also structures and oversees equity and debt partnerships. Prior to joining AION, Sean was a Vice President at Citi Private Bank. At Citi, he worked with High Net Worth clients and Institutional clients investing in real estate development projects and real estate funds. Prior to Citi, Sean practiced law in New York. Sean received a Juris Doctor from Brooklyn Law School and a Bachelor of Arts from Georgetown University. He received a Professional Certificate in Real Estate Investment and Finance from New York University Schack Institute of Real Estate. He also holds a Chartered Financial Analyst designation.

Track Record

Currently Owned Assets
Investment Name City State Units Acquisition Date Total Capitalization NOI at Acquisition T12 NOI NOI Increase
Cityside at Huntington Metro Alexandria VA 569 5/20/2011 $93,000,000 $4,497,435 $5,775,328 28%
Adams Run/Park Waverly Philadelphia PA 498 7/1/2013 $45,770,324 $2,489,832 $3,083,801 24%
Carroll Park Middle River MD 157 7/28/2014 $9,860,935 $638,169 874,610 37%
Morningside Park Middle River MD 128 7/28/2014 $9,781,778 $644,867 $793,631 23%
Essex Park Essex MD 229 7/28/2014 $19,498,241 $1,110,146 $1,280,903 15%
Woodlane Crossing Edgewater Park NJ 276 12/10/2015 $20,303,791 $1,246,352 $1,409,389 13%
The Willows Barrington NJ 347 12/10/2015 $19,005,514 $1,145,335 $1,432,180 25%
Chateau Ridge Pine Hills NJ 255 12/10/2015 $12,244,329 $750,144 $881,818 18%
Fox Ridge Hi-Nella NJ 246 12/10/2015 $15,287,058 $909,688 $1,086,015 19%
Joralemon Belleville NJ 62 12/10/2015 $5,221,798 $284,569 $402,166 41%
Woodbury Arms Deptford NJ 99 12/10/2015 $5,560,653 $382,721 $417,133 9%
Prides Court Newark DE 297 12/10/2015 $19,626,142 $1,083,781 $1,377,724 27%
University Village Newark DE 136 12/10/2015 $11,129,054 $657,965 $698,802 6%
Brook at Colonial Park Harrisburg PA 626 12/10/2015 $46,708,136 $2,619,249 $2,842,602 9%
Chelsea Village Leola PA 238 12/10/2015 $21,335,838 $1,330,610 $1,439,015 8%
Whispering Hills Allentown PA 220 12/10/2015 $15,435,682 $954,178 $1,138,802 19%
Oakwood Village Flanders NJ 1224 1/20/2016 $205,727,153 $10,281,153 $11,242,599 9%
The Harrison New Brunswick NJ 316 9/29/2016 $60,841,766 $2,893,218 $3,380,034 17%
Franklin Commons Bensalem PA 703 11/30/2016 $103,151,413 $5,266,677 $5,715,530 8.5%
Valley Park Apartments Bethlehem PA 276 11/30/2016 $32,973,480 $1,780,653 $1,817,388 2.1%
Mulberry Station Apartments Harrisburg PA 100 11/30/2016 $9,310,339 $477,170 $574,681 20.4%
Canterbury Court Apartments Philadelphia PA 173 11/30/2016 $19,245,367 $1,016,196 $1,110,490 9.3%
Kingsrow Apartments Lindenwold NJ 208 11/30/2016 $15,591,012 $997,528 $1,035,083 2.8%
Holly Court Apartments Pitman NJ 188 11/30/2016 $20,449,396 $1,069,252 $1,110,837 3.9%
Residences of South Hills Pittsburgh PA 1,050 3/30/2017 $62,545,549 $3,928,728 - -
Greens at Forest Park Baltimore MD 190 5/11/2017 $15,031,252 $841,942 - -
Hunters Crossing Newark DE 680 6/1/17 $66,555,922 $3,341,053 - -
Subtotal     9,491   $981,191,382     16%
Sold Assets
Investment Name City State Units Acquisition Date Total Capitalization NOI at Acquisition T12 NOI NOI Increase Date Sold
The Montana Phoenix AZ 134 11/24/2012 $12,595,000 $609,781 $781,469 28% 9/29/2015
Maplewood Apartments Maplewood NJ 9 12/10/2015 $1,768,450 $109,947 $134,484 22% 3/22/2016
Serrano West Palm Beach FL 192 3/10/2015 $21,600,000 $1,208,528 $1,491,953 24% 6/1/2016
Park Plaza Miami FL 234 3/10/2015 $20,800,000 $1,315,618 $1,669,202 27% 8/15/2016
Subtotal     1,364   $122,159,916     25%  
                   
Portfolio Total     9,190   $956,368,198     20%  

The Real Estate Company's bio and track record were provided by the Real Estate Company and have not been verified by RealtyMogul or NCPS.

Business Plan

In this transaction, RealtyMogul.com investors are to invest in Realty Mogul 90, LLC, which is to subsequently invest in AP Burlington Court Venture, LLC, a limited liability company that will, through a 100% owned subsidiary, hold title to the Property. The Real Estate Company is purchasing the Property for $12,145,597 ($57,836/unit), and the total project cost is $15,480,248 ($73,199/unit).

Upon acquisition, the Real Estate Company plans to implement interior and exterior renovations to increase value. The Real Estate Company's capital improvement budget is approximately $2.72 million ($12,975/unit), which is to be allocated as follows: (1) $881,998 ($8,400/unit) for interior renovations on 50% of the units; (2) $893,625 ($4,255/unit) for deferred maintenance; (3) $583,500 ($2,779/unit) for general property enhancements; and (4) $365,664 ($1,741/unit) for soft costs, construction management, and a contingency. 75% of the interior renovations are capitalized to the transaction, while the remainder will come from operating cash flow. Unit interior upgrades will include new cabinets and countertops, plumbing and electrical fixtures, vinyl flooring and carpets (in select units), and new appliances (in select units). Exterior and amenity improvements will consist of painting, carpentry, landscaping, a dog park, playground, paving, roofing, and a new signage package. The Real Estate Company plans to renovate 105 units (50% of the Property) over 36 months (2.91 units / month), which they state is a comfortable pace given their track record and in-house construction team. An average rent premium of approximately $156/unit/month is being estimated for renovated units, which includes a premium for the renovated finishes as well as moving rents to market. Per the rent roll, current net effective rent at the Property is $830, while the stabilized unit mix is underwritten to average $987.

CapEx Budget
Exteriors Cost Cost/Unit
Signage $40,000 $190
Exterior Reserve $258,500 $1,231
Pool Demolition $50,000 $238
Laundry Room Enhancment $50,000 $238
Dog Run $15,000 $71
Playground $30,000 $143
Leasing Office Enhancements $15,000 $71
Base Building Capital / Deferred Maintenance Items Cost Cost/Unit
Roofs $300,000 $1,429
Aluminum wiring $46,000 $219
Stab-lok replacements $131,250 $625
Paving $75,000 $357
Hardscape repairs $100,000 $476
HVAC Reserve $50,000 $238
Balcony Reserve $39,375 $188
Water Infiltration, Termites $152,000 $724
Unit Interiors Cost Cost/Unit
Cabinets, counters, plumbing, electrical, flooring, carpet, appliances $881,998 $4,200
     
Soft Costs/Contingency $365,664 $1,741
Total $2,724,787 $12,975
 
Debt is planned to come from Freddie Mac, a lender that the Real Estate Company has worked with previously.
 
Stabilized Unit Mix
Unit Type # of Units % of Total Unit (SF) Total SF Rent/Unit Rent/SF
1 Bed, 1 Bath 158 75% 600 94,800 $935 $1.56
2 Bed, 1 Bath 52 25% 825 42,900 $1,143 $1.39
Totals/Averages 210 100% 656 137,700 $987 $1.52

This will be RealyMogul.com's second investment with the Real Estate Company.  The first investment was in Greens at Forest Park, a multifamily property in Baltimore, MD.

Property

RealtyMogul.com, along with AION Partners (the "Real Estate Company"), is providing the opportunity to invest in the acquisition of 870 E Route 130 (the "Property"), a 210-unit multifamily asset located in a gentrifying neighborhood of Burlington, NJ.

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

The Property consists of one (158 units) and two (52 units) bedroom floor plans situated across 19 buildings with a combined rentable area of 137,700 square feet. The Property is comprised of five lots totaling 16.32 acres and reportedly built in two phases; The east half (Phase I) was reportedly constructed in 1966; and the west half (Phase II) was reportedly constructed in 1968.
 
A leasing office occupies one of the apartment units and laundry facilities are accessible to residents in the common area. Apartment unit finishes include painted gypsum board walls and ceilings, carpet and sheet vinyl flooring, metal bifold and painted hollow core interior doors, and horizontal mini-blinds. The kitchens are provided with wood cabinets with plastic laminate countertops, refrigerator/freezers, electric range/ovens, dishwashers, and single basin stainless steel sinks. Bathrooms are provided with vanity base cabinets and laminated countertops with drop-in vitreous china sinks, floor-mounted vitreous china toilets with flush tanks, enameled steel bathtubs, and ceramic tile shower surrounds.
 
In-Place Unit Mix
Unit Type # of Units % of Total Unit (SF) Total SF Rent/Unit Rent/SF
1 Bed, 1 Bath 158 75% 600 94,800 $785 $1.31
2 Bed, 1 Bath 52 25% 825 42,900 $968 $1.17
Total/Average 210 100% 656 137,700 $830 $1.27
Comparables

Lease Comparables
Rental Comparables Chateau Apartments Northgate Village Orchard Park Total/Averages Subject (Post Renovation)
Occupancy 92% 97% 93% 94% 94%
Units (#) 376 307 276 320 210
Year Built 1969 1963 1976 1969 1968
Average Rental Rate $1,120 $1,013 $1,089 $1,074 $961
Rents (1BD) $1,000 $960 $1,050 $1,003 $910
Rents (2BD $1,240 $1,275 $1,205 $1,240 $1,118
Location Comparabl Comparabl Superior    
Amenities Comparable Superior Superior    
Distance from Subject 2.5 mi 1.5 mi 3.0 mi 2.3 mi  

 

Sale Comparables
Sale Comparables Woodlane Crossing Northgate Village Croydon Station Creek Village The Regency Total/Averages Subject
Date Dec-15 Mar-14 Nov-15 Jun-17 Dec-15 - -
# of Units 276 307 93 180 253 222 210
Year Built 1964 1966 1968 1962 1973 1967 1968
Average SF (per unit) 775 813 435 736 760 704 656
Purchase Price $19,325,000 $17,480,500 $6,550,000 $6,464,495 $19,750,000 $13,913,999 $12,145,597
$/Unit $70,018 $56,940 $70,430 $35,914 $78,063 $62,273 $57,836
Cap Rate 6.64% 6.00%       6.32% 5.78%
Distance from Subject 3 mi 1.5 mi 3.6 mi 5.6 mi 5.9 mi 4 mi -

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

Location

The Property is located within the Northeast corner of the historic city of Burlington, NJ near the border of Burlington Township. The heart of Burlington is a historic district centered around High Street. The city is serviced by two different light rail stations. As one of the few towns in the southern part of NJ with a walkable downtown and waterfront, Burlington is in the process of undergoing a resurgence with new restaurants and mixed-use development. The Property is approximately 0.3 miles away from Burlington Pike, 2.9 miles from interstate 295, and 15.9 miles south of Trenton, NJ located on Route 130.

Market Overview

Per CoStar, the education and medical industries remain the metro’s backbone, comprising more than one-fifth of the metro-wide workforce. The segment is even more concentrated within the city limits, representing 12 of Philadelphia’s top 15 employers, including the University of Pennsylvania, Drexel University, Children’s Hospital of Philadelphia, and Thomas Jefferson University Hospital. Vacancy reportedly increased by less than 100 basis points from 1Q16 and there was tightening as the end of 2Q17 neared, with tangibles (outsized employment growth) and intangibles (the city’s continued rebirth as a destination city for work and play) working in tandem to counter supply pressure. Fundamentals in Philadelphia’s urban-core submarkets, where the majority of construction has been occurring and continues to do so, are buoyed by a mixture of affluent eds-and-meds renters, a distinct downsizer cohort, and a growing tech sector.

Submarket Overview

Per CoStar, Upper Burlington County has historically relied upon warehouse/logistics, military spending, and agriculture to drive its local economy. Lockheed Martin, the Fort Dix Army Base, and the McGuire Air Force Base are three of the county's largest employers, and Amazon will make a big splash this fall when it moves into a 615,000 SF fulfillment center in Florence Township. Local economies may also get a boost from the revitalization of Camden, where the state has committed more than $1 billion in tax breaks and incentives to attract employers to fuel economic and demographic growth.
 
Per Axio, effective rent increased 0.2% from $1,209 in 4Q16 to $1,211 in 1Q17. The submarket's annual rent growth rate of 3.4% was above the market average of 2.5%. Out of the 6 submarkets in the market, the Burlington County submarket ranked 5th for quarterly effective rent growth and 3rd for annual effective rent growth for 1Q17. Annual effective rent growth is forecast to be 2.4% in 2018, and average 2.9% through 2018 to 2020. The annual effective rent growth has averaged 3.9% per year since 2Q14.
 
Per Axio, the submarket's occupancy rate increased from 95.2% in 4Q16 to 95.4% in 1Q17, and was up from 95.0% a year ago. The submarket's occupancy rate was below the market average of 95.5% in 1Q17. For the forecast period, the submarket's occupancy rate is expected to decrease to 94.8% in 2018 and average 95.4% from 2018 to 2020. The submarket's occupancy rate has averaged 95.3% since 2Q14. Based on Axiometrics' identified supply of properties under construction, the submarket is not expected to deliver any units in 2017.
 

Demographic Information

Demographics

Distance from Property 1 Mile 3 Miles 5 Miles
Population (2017) 8,481 51,705 154,321
Expected Growth (2017-2022) -0.4% -0.2% -0.1%
Median Household Income (2017) $51,314 $63,006 $63,043
Median Home Value (2017) $184,017 $221,773 $203,214

*Demographic information was obtained from CoStar.  

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Debt $10,000,000
Equity $5,480,248
Total Sources of Funds $15,480,248
Uses of Funds Cost
Purchase Price 12,145,597
Acquisition Fee $121,456
Broker-Dealer Placement Fee $40,000
Loan Fee $206,596
Closing Costs $241,614
CapEx Holdback $2,380,433
Working Capital $344,552
Total Uses of Funds $15,480,248
Debt Assumptions

The projected terms of the debt financing are as follows:

  • Lender: Freddie Mac
  • Loan Type: Permanent / Senior
  • Recourse: Non-recourse (Standard Carveouts)
  • Loan Amount: $10,000,000 ($47,619/unit)
  • Lender Reserves: $2,380,433 ($11,335/unit)
  • Interest Rate: 2.25% + 1-Month LIBOR
  • Loan to Value: 82.3%
  • Loan to Value (Net of Future Funding): 62.7%
  • Loan To Cost: 64.6%
  • Term: 120 Months
  • Amortization: 30 Years
  • Interest Only: 24 Months
  • Prepayment: 12-month lockout, 1% thereafter

*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

AP Burlington Court Venture, LLC intends to make distributions of all available cash and capital proceeds to investors (Realty Mogul 90, LLC, Other LP Equity, and Real Estate Company, collectively, the "Members") as follows:

  1. First, to all Members with unreturned Capital Contributions pro rata (in proportion to their relative unreturned Capital Contributions), until such time as aggregate distributions provide Members a nine percent (9%) annual return, compounded monthly, on their unreturned Capital Contributions;
  2. second, to all Members with unreturned Capital Contributions pro rata (in proportion to their unreturned Capital Contributions) until the Members have received a return of the aggregate amount of their Capital Contributions; and
  3. third, (A) twenty-four and four-tenths percent (24.4%) to the Manager, (B) six tenths of one percent (0.6%) to RM Manager, and (C) seventy-five percent (75%) to all Members pro rata (in proportion to their relative Capital Percentage)

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 90, LLC will distribute 100% of its share of excess cash flow (after expenses and fees) to the members of Realty Mogul 90, 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 $2,075,263 $2,330,176 $2,470,711 $2,595,213 $2,677,597
Total Operating Expenses $1,321,822 $1,355,794 $1,386,914 $1,418,144 $1,448,716
Net Operating Income $753,440 $974,382 $1,083,797 $1,177,068 $1,228,881
Distributions to Realty Mogul 90, LLC Investors $66,677 $114,343 $64,993 $89,976 $2,187,279

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) $2,545 $4,364 $2,481 $3,434 $83,484
Fees

One-Time Fees
Type of Fee Amount of Fee Received By Paid From Notes
Acquisition Fee $121,456 Real Estate Company Capitalized Equity Contribution 1.0% of Property purchase price
Broker-Dealer Fee $40,000 North Capital 1 Capitalized Equity Contribution  

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.

Recurring Fees
Type of Fee Amount of Fee Received By Paid From Notes
Property Management Fee 3.0% of Effective Gross Income AION Management Distributable Cash Real Estate Company Affiliate
Construction Management Fee 5.0% of Hard Costs Real Estate Company Capitalized CapEx Budget  
Asset Management Fee 1.25% of Effective Gross Income Real Estate Company Distributable Cash  
Management and Administrative Fee 1.0% of amount invested in Realty Mogul 90, LLC RM Manager, LLC Distributable Cash RM Manager, LLC is the Manager of Realty Mogul 90, LLC and a wholly-owned subsidiary of Realty Mogul, Co.1

1) Fees may be deferred to reduce impact to investor distributions.

The above presentation is based upon information supplied by the Real Estate Company or others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 90, 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 90, 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 90, LLC's investment in AP Burlington Court Venture, 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 90, LLC's common equity investment and thus Realty Mogul 90, 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 AP Burlington Court Venture, LLC (including Realty Mogul 90, 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, AP Burlington Court Venture, LLC is a newly formed company and has no operating history or record of performance. Realty Mogul 90, LLC is pursuing a venture capital strategy through its investment in AP Burlington Court Venture, LLC, and the manager of Realty Mogul 90, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.


Manager of Realty Mogul 90, LLC Will Participate in Real Estate Companys' Promote Interest

The manager of Realty Mogul 90, 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 90, 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 AP Burlington Court Venture, LLC from Realty Mogul 90, LLC is unknown, and although AP Burlington Court Venture, 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 90, LLC does not intend to participate in a capital call if one is requested by AP Burlington Court Venture, LLC, and in such event the manager of AP Burlington Court Venture, LLC may accept additional contributions from other members of AP Burlington Court Venture, LLC. Amounts that the manager of AP Burlington Court Venture, LLC advances on behalf of Realty Mogul 90, 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 90, LLC's interest in AP Burlington Court Venture, LLC will suffer a proportionate amount of dilution.


Real Estate Market Risk

AP Burlington Court Venture, LLC's economic performance and value, and thus the value of investors’ investment in Realty Mogul 90, 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 90, LLC, is subject to such risks, all of which are beyond the control of both Realty Mogul 90, LLC and AP Burlington Court Venture, 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 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 is approximately 95% occupied, 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.


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 90, 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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