
$51,725,000

Bluerock Exchange LLC
Bluerock Exchange, LLC, a Delaware limited liability company, is an affiliate of Bluerock Real Estate, LLC (“Bluerock”), a private equity real estate investment firm having sponsored a portfolio currently exceeding 16 million square feet of primarily apartment and office real estate. Bluerock's senior management team has an average of over 25 years investing experience, has been involved with acquiring over 35 million square feet of real estate worth approximately $10 billion, and has helped launch leading real estate private and public company platforms. The Trust is to be managed by BR Glenwood DST Manager, LLC, a Delaware limited liability company (the “Manager”), an affiliate of Bluerock.
Bluerock Property Management, LLC (the "Property Manager") has subcontracted all day-to-day, on-site management, leasing and related functions for the Property to Greystar Real Estate Partners (the "Property Sub-Manager" or "Greystar"). Greystar has approximately 415,634 units under management and was ranked as the #1 property manager on the National Multifamily Housing Council (NHMC)'s list of top 50 mangers in the nation.*
*Per the Sponsor
Property Name | Location | Property Type | Acquisition Date | # Units | Approximate Acquisition Price |
---|---|---|---|---|---|
Alamance Reserve | Burlington, NC | Apartments | 4.2014 | 240 | $ 23,790,000 |
Ansley Village | Macon, GA | Apartments | 6.2014 | 294 | $ 31,760,000 |
Alexan City Centre | Houston, TX | Apartments | 7.2014 | 340 | $ 83,000,000 |
Alexan Southside | Houston, TX | Apartments | 1.2015 | 270 | $ 49,000,000 |
APOK Townhomes | Boca Raton, FL | Apartments | 11.2016 | 90 | $ 28,900,000 |
Arium Grandewood | Orlando, FL | Apartments | 11.2014 | 306 | $ 44,400,000 |
Arium Palmer-Ranch | Sarasota, FL | Apartments | 1.2016 | 320 | $ 40,300,000 |
Arium Palms Gateway | Orlando, FL | Apartments | 8.2015 | 252 | $ 37,000,000 |
Arium Gulfshore | Naples, FL | Apartments | 1.2016 | 368 | $ 46,000,000 |
Arium Pine Lakes | Port St. Lucie, FL | Apartments | 12.2016 | 320 | $ 38,300,000 |
Arium Westside | Atlanta, GA | Apartments | 7.2016 | 336 | $ 75,500,000 |
Ashton Reserve | Charlotte, NC | Apartments | 1.2016 | 473 | $ 66,550,000 |
Beach House | Jacksonville Beach, FL | Apartments | 4.2016 | 228 | $ 51,570,000 |
Big Creek | Alpharetta,GA | Apartments | 12.2016 | 372 | $ 84,460,000 |
Brooklyn Riverside | Jacksonville, FL | Apartments | 6.2016 | 310 | $ 64,130,000 |
Chace Lake | Birmingham, AL | Apartments | 9.2012 | 264 | $ 25,640,000 |
Clearwater Apartments | Clearwater, FL | Apartments | 9.2015 | 240 | $ 46,250,000 |
City Walk Apartments | Roswell, GA | Apartments | 12.2016 | 320 | $ 76,000,000 |
CoHo House | Atlanta, GA | Apartments | 6.2014 | 128 | $ 20,760,000 |
Crescent Perimeter | Atlanta, GA | Apartments | 12.2016 | 320 | $ 70,000,000 |
Domain Phase I | Garland, TX | Apartments | 12.2015 | 301 | $ 52,590,000 |
Enders Place | Orlando, FL | Apartments | 10.2012 | 198 | $ 25,100,000 |
Flager Village | Fort Lauderdale, FL | Apartments | 12.2015 | 384 | $ 131,790,000 |
Grand at the Dominion | San Antonio, TX | Apartments | 9.2017 | 320 | $ 51,725,000 |
Helios | Atlanta, GA | Apartments | 6.2015 | 285 | $ 50,900,000 |
James on South First | Austin, TX | Apartments | 11.2016 | 250 | $ 36,750,000 |
Land Four Corners | Davenport, FL | Apartments | 2.2016 | 270 | $ 38,850,000 |
Marquis at the Cascades I | Tyler, TX | Apartments | 6.2017 | 328 | $ 44,650,000 |
Marquis at the Cascades II | Tyler, TX | Apartments | 6.2017 | 254 | $ 28,500,000 |
Marquis at Crown Ridge | San Antonio, TX | Apartments | 6.2017 | 352 | $ 39,500,000 |
Marquis at Stone Oak | San Antonio, TX | Apartments | 6.2017 | 335 | $ 55,350,000 |
Marquis at TPC | San Antonio, TX | Apartments | 6.2017 | 139 | $ 20,850,000 |
Park at Chapel Hill | Chapel Hill, NC | Apartments | 2.2011 | 198 | $ 8,400,000 |
Park & Kingston | Charlotte, NC | Apartments | 3.2015 | 168 | $ 31,250,000 |
Plaza Gardens | Overland Park, KS | Apartments | 8.2008 | 200 | $ 25,500,000 |
Pres. Henderson Beach | Destin, FL | Apartments | 3.2016 | 340 | $ 53,700,000 |
Preston View | Morrisville, NC | Apartments | 2.2017 | 382 | $ 59,500,000 |
Sonoma Pointe | Kissimmee, FL | Apartments | 8.2017 | 216 | $ 44,530,000 |
Sorrel Phillips Creek | Frisco, TX | Apartments | 11.2015 | 252 | $ 52,050,000 |
Sovereign Apartments | Fort Worth, TX | Apartments | 11.2015 | 322 | $ 47,650,000 |
Stonebrook | Nashville, TN | Apartments | 12.2011 | 320 | $ 18,250,000 |
The Brodie | Austin, TX | Apartments | 12.2016 | 324 | $ 48,900,000 |
The Nevadan | Atlanta, GA | Apartments | 10.2016 | 480 | $ 68,250,000 |
Valley Townhomes | Puyallup, WA | Apartments | 7.2008 | 220 | $ 42,570,000 |
Vickers | Roswell, GA | Apartments | 12.2016 | 79 | $ 30,880,000 |
Villages of Cypress Creek | Houston, TX | Apartments | 9.2017 | 384 | $ 40,700,000 |
Villages at Lake Boone | Raleigh, NC | Apartments | 1.2016 | 240 | $ 40,000,000 |
Wesley Village | Charlotte, NC | Apartments | 3.2017 | 301 | $ 58,000,000 |
West Morehead | Charlotte, NC | Apartments | 1.2016 | 287 | $ 60,000,000 |
Whetstone | Durham, NC | Apartments | 5.2015 | 204 | $ 35,600,000 |
Cummings Research Park I | Huntsville, AL | Office | 11.2007 | - | $ 58,460,000 |
Cummings Research Park II | Huntsville, AL | Office | 11.2007 | - | $ 63,990,000 |
Cummings Research Park III | Huntsville, AL | Office | 11.2007 | - | $ 57,210,000 |
Summit at Southpoint | Jacksonville, FL | Office | 12.2006 | - | $ 37,400,000 |
Town & Country | St. Louis, MO | Office | 6.2008 | - | $ 51,790,000 |
Applebee's | Jonesboro, GA | Retail | 4.2013 | - | $ 2,850,000 |
Dollar General | Hartford, CT | Retail | 4.2013 | - | $ 1,800,000 |
Dollar General | Jacksonville, FL | Retail | 4.2013 | - | $ 1,550,000 |
TCF Bank | Chicago, IL | Retail | 4.2013 | - | $ 3,060,000 |
Walgreens | Haltom City, TX | Retail | 4.2013 | - | $ 4,390,000 |
Walgreens | Abilene, TX | Retail | 4.2013 | - | $ 5,040,000 |
TOTAL | 14,460 | $2,633,135,000 |
Property Name | Location | Property Type | Acquisition /Sale Date | Approximate Purchase Cost | Approximate Equity Invested | Total Gross Return | Gross IRR |
---|---|---|---|---|---|---|---|
Woodlands | Hauppauge, NY | Office | 04/2013 - 05/2006 | 16,900,000 | 5,000,000 | 6,480,000 | 9.9% |
The Ashford | Atlanta, GA | Apartments | 11/2009 - 09/2011 | 19,750,000 | 2,040,000 | 4,190,000 | 47.9% |
Lynd Portfolio Subtotal | Apartments | 21,900,000 | 6,340,000 | 12,090,000 | 17.5% | ||
- Mesa Ridge | San Antonio, TX | Apartments | 12/2008 - 03/2011 | 6,550,000 | 2,010,000 | 4,810,000 | |
- Meadows | Austin, TX | Apartments | 02/2008 - 10/2011 | 3,450,000 | 1,040,000 | 2,470,000 | |
- Stratford | San Antonio, TX | Apartments | 12/2008 - 10/2012 | 11,190,000 | 3,290,000 | 4,810,000 | |
Tech Ridge | Austin, TX | Apartments | 02/2010 - 08/2012 | 17,190,000 | 6,030,000 | 13,170,000 | 42.5% |
Note 16 | Nashville, TN | Apartments | 03/2012 - 06/2013 | 11,300,000 | 1,420,000 | 2,510,000 | 53.1% |
Hillsboro | Nashville, TN | Apartments | 09/2010 - 09/2013 | 31,600,000 | 3,900,000 | 8,560,000 | 33.1% |
Meadowmont | Chapel Hill, NC | Apartments | 04/2010 - 09/2013 | 37,000,000 | 4,700,000 | 11,330,000 | 32.0% |
The Stratford | Cary, NC | Apartments | 06/2012 - 12/2013 | 20,300,000 | 5,290,000 | 7,980,000 | 38.8% |
Arbor Terrace | Marietta, GA | Apartments | 05/2011 - 03/2014 | 15,500,000 | 7,890,000 | 10,010,000 | 10.2% |
Creekside Village | Chattanooga, TN | Apartments | 03/2010 - 03/2014 | 14,250,000 | 1,820,000 | 4,130,000 | 26.4% |
Landmark | St. Louis, MO | Office | 03/2007 - 07/2014 | 26,030,000 | 7,500,000 | -24.5% | |
Estates at Perimeter | Augusta, GA | Apartments | 09/2010 - 11/2014 | 24,950,000 | 1,930,000 | 2,410,000 | 6.5% |
Grove at Waterford | Hendersonville, TN | Apartments | 04/2012 - 11/2014 | 27,880,000 | 4,670,000 | 6,250,000 | 17.3% |
23Hundred Berry Hill | Nashville, TN | Apartments | 10/2012 - 01/2015 | 33,670,000 | 4,440,000 | 8,350,000 | 59.4% |
Villas at Oak Crest | Chattanooga, TN | Apartments | 04/2012 - 09/2015 | 15,520,000 | 2,900,000 | 3,730,000 | 15.5% |
North Park Towers | Southfield, MI | Apartments | 12/2005 - 10/2015 | 36,900,000 | 11,430,000 | 2,830,000 | -12.2% |
Artisan on 18th | Nashville, TN | Apartments | 06/2013 - 10/2015 | 22,300,000 | 1,000,000 | 2,120,000 | 35.2% |
Indian Springs | El Paso, TX | Apartments | 09/2011 - 10/2015 | 12,350,000 | 2,740,000 | 2,690,000 | -0.5% |
Springhouse | Newport News, VA | Apartments | 12/2009 - 08/2016 | 29,500,000 | 6,890,000 | 16,560,000 | 17.4% |
Mesa Ridge | San Antonio, TX | Apartments | 03/2011 - 11/2016 | 10,940,000 | 5,160,000 | 8,070,000 | 9.8% |
EOS | Orlando, FL | Apartments | 07/2014 - 12/2016 | 36,960,000 | 11,090,000 | 19,630,000 | 41.2% |
Village Green | Ann Arbor, MI | Apartments | 09/2012 - 02/2017 | 58,000,000 | 8,190,000 | 18,430,000 | 24.2% |
Lansbrook | Palm Harbor, FL | Apartments | 03/2014 - 04/2017 | 58,500,000 | 16,510,000 | 30,530,000 | 27.2% |
Fox Hill | Austin, TX | Apartments | 04/2015 - 04/2017 | 38,150,000 | 11,920,000 | 19,310,000 | 25.8% |
MDA City | Chicago, IL | Apartments | 12/2012 - 06/2017 | 54,870,000 | 9,760,000 | 22,680,000 | 24.3% |
Total | 693,180,000 | 150,510,000 | $243,840,000 |
*Figures do not reflect any fees that may have been associated with the transaction.
**These returns were provided by and calculated by the Sponsor
On September 8, 2017 the Sponsor acquired the Property from a third-party seller. Concurrently with the acquisition of the Property, the Trust obtained a loan from KeyBank under the Fannie Mae DUS program. The Property is master leased by the Trust to BR Grand Dominion Leaseco, LLC ("Master Lessee" or "Master Tenant") an affiliate of the Sponsor. The Master Tenant sub-leases the apartment units to the end-user tenants pursuant to residential leases. The Trust is a passive owner of the Property and will not be involved in any manner in the active management of the Property. BR Grand Dominion DST Manager, LLC (the "Manager") has been appointed to manage the Trust pursuant to the Trust Agreement.
The Trust expects to provide the Beneficial Owners a return on their investment in two primary ways: (i) in the form of monthly cash distributions to the Beneficial Owners; and (ii) upon any disposition of the Property. The Trust intends to dispose of all of the assets in the Trust in a single sale of the Property. This strategy is anticipated to provide investors with the opportunity to perform a 1031 exchange following the disposition.
The Property is a 320-unit Class A Multifamily apartment community located in one of the most affluent suburbs of San Antonio, TX with a average household income of $190,732 per the appraisal. The Property was built in 2015 and is currently 96% occupied. The unit mix consists of 140 one-bedroom units, 132 two-bedroom units, and 48 three-bedroom units. Average in-place monthly rents are $1,274 per unit ranging from $1,035 to $1,881.
The Property currently offers numerous amenities including a resort-style pool with cabanas, a full-scale state-of-the-art fitness center with cardio machines, free weights, a yoga studio, and spin bikes, a large indoor golf simulator, a two-story club house with billiards and shuffleboard, covered outdoor fireplace and lounge, catering kitchen, and a business center.
Unit amenities include granite countertops in the kitchen and baths, master baths with oval, garden bus and separate walk-in showers, wood-style blinds, flooring and designer carpeting, full-size washers & dryers/connections in all units, oversized walk-in closets, oversized patio/balconies with storage closets, double stainless steel sinks with gooseneck faucets, GE Energy Star appliances, custom wood cabinetry, and spacious pantries.
Unit Type | # of Units | Avg SF/Unit | Avg Rent/Unit | Avg Rent/SF |
---|---|---|---|---|
1 BR / 1 BA | 140 | 790 | $1,035 | $1.32 |
2 BR / 2 BA | 120 | 1,125 | $1,348 | $1.20 |
2 BR / 2.5 BA | 12 | 1,468 | $1,881 | $1.28 |
3 BR / 2 BA | 48 | 1,304 | $1,632 | $1.25 |
Total | 320 | 1,018 | $1,274 | $1.26 |
Park at Rialto | Ascent Cresta Bella | Tribute at the Rim | Abbey at Dominion Crossing | Enclave At The Dominion | Total / Averages | Subject | |
---|---|---|---|---|---|---|---|
# of Units | 274 | 322 | 380 | 334 | 275 | 317 | 310 |
Year Built | 2017 | 2017 | 2017 | 2016 | 2016 | 2017 | 2015 |
Average SF (Per Unit) | 893 | 1,023 | 915 | 1,064 | 980 | 976 | 838 |
Average Rental Rate (Per Unit) | $1,277 | $1,571 | $1,625 | $1,552 | $1,441 | $1,507 | $1,296 |
Average Rent PSF | $1.46 | $1.57 | $1.81 | $1.45 | $1.49 | $1.54 | $1.55 |
Source: Newmark Knight Frank Appraisal dated August 18, 2017
Peanut Factory Lofts | 327 Sunset Alamo Heights |
Vantage at Alamo Ranch |
Boardwalk at Medical Center |
Crown Ridge | Total / Averages | Subject | |
---|---|---|---|---|---|---|---|
Date | December-16 | November-16 | September-16 | September-16 | March-17 | - | September-17 |
# of Units | 102 | 312 | 288 | 276 | 352 | 266 | 320 |
Year Built | 2016 | 2016 | 2016 | 2011 | 2009 | 2013 | 2015 |
Occupancy | 91.0% | 93.0% | 92.0% | 92.0% | 92.0% | 92.2% | 96.0% |
Purchase Price | $16,200,000 | $56,750,000 | $36,000,000 | $35,550,000 | $39,500,000 | $40,182,105 | $51,725,000 |
$/Unit | $158,824 | $181,891 | $125,000 | $128,804 | $112,216 | $138,346 | $161,641 |
Cap Rate | 5.30% | 5.25% | 5.45% | 5.59% | 5.27% | 5.37% | 5.10% |
Class | A | A | A | A | A | - | A |
Source: Newmark Knight Frank Appraisal dated August 18, 2017
Property Appraisal available upon request. Please email investor-help@realtymogul.com.
San Antonio is the county seat for Bexar County, located within the Central-South region of the state of Texas. Currently, the city is 7th largest in the United States. The Property is located in Northwest San Antonio, Texas, in the central Texas Hill Country, approximately 20 miles from downtown San Antonio.
[[{"fid":"49133","view_mode":"media_original","type":"media","link_text":null,"attributes":{"height":885,"width":980,"class":"media-element file-media-original"}}]]
Market Overview
The Property is located in San Antonio, Texas in the San Antonio Metropolitan Statistical Area in South-Central Texas, along Interstate 10, just northwest of Highway 1604, approximately 20 miles northwest of downtown San Antonio. The San Antonio Metro is comprised of approximately 2,394,156 residents. The City of San Antonio is the 7th largest city in America. The San Antonio Metro’s population grew by 11.7% from 2010-2016 and projected to increase an additional 8.1% by 2021. The San Antonio Metro population grew by 25.17% from 2000-2010. According to the Bureau of Labor Statistics, job growth in San Antonio-New Braunfels, TX Metro Area was 1.9% in July 2017, reflecting 18,900 jobs added during a 12-month period. The metro job growth figure was above the national number of 1.5%. Axiometrics forecasts San Antonio-New Braunfels, TX Metro Area's job growth to be 1.9% in 2018, with 19,493 jobs added. Job growth is expected to average 1.7% from 2019 to 2021, with an average of 18,138 jobs added each year. On the supply side, permits for 3,095 multifamily units were issued in the 12 months ending in July 2017, up 96 units from the prior year's sum. In terms of total residential housing, 10,563 units were permitted in the 12 months ending July 2017, an increase of 778 units from the prior year's total.
Submarket Overview
The Property is located in the Texas Hill Country, an area of rolling hills in contrast to the plains in east Texas where residents enjoy proximity to nearly 1.8 million square feet of shopping, ample recreation opportunities, and multiple Fortune 500 companies. Specifically, the Property is located in the Dominion, an exclusive country club and one of San Antonio’s most affluent areas. The average household income within a one mile radius is $139,2362 and the median single-family home price in the immediate area is approximately $575,000. The Property’s neighborhood is suburban with significant development occurring within the area. Land uses are primarily residential with some commercial development along the I-10 corridor. The majority of the vacant land is attributed to either Camp Bullis Military Base or the Friedrich Wilderness Park. Just north of the I-10/Loop 1604 intersection are San Antonio’s top shopping and retail destinations: the Rim and Shops at La Cantera. The Property’s location offers abundant nearby recreational opportunities including Dominion Country Club (adjacent), Éilan Hotel & Spa, Westin La Cantera Resort, Palmer Course at La Cantera, Eisenhower Park, Cedar Creek Golf Course, Friedrich Wilderness Park, and Six Flags Fiesta Texas.
Market and Submarket Overview information above was obtained from Axiometrics, Costar and the Appraisal.
Demographic Information
Distance from Property | 1 Mile | 3 Miles | 5 Miles |
Population | 4,286 | 20,201 | 38,617 |
Population Projection (2022) | 4,802 | 22,554 | 42,992 |
Average Age | 41.0 | 39.0 | 39.0 |
Median Household Income | $139,236 | $137,114 | $119,500 |
Average Household Size | 2.8 | 2.9 | 2.7 |
Median Home Value | $575,823 | $410,548 | $379,802 |
Owner Occupied Households | 1,369 | 6,368 | 11,066 |
Renter Occupied Households | 159 | 583 | 3,147 |
Population Growth 2017 -2022 | 12.00% | 11.70% | 11.60% |
Demographic information above was obtained from CoStar and Census.gov
This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.

Sources of Funds | Cost |
---|---|
Debt | $33,670,000 |
Equity | $23,228,729 |
Total Sources of Funds | $56,898,729 |
Uses of Funds | Cost |
Purchase Price | $51,725,000 |
Acquisition Fee | $1,034,500 |
Financing and Other Closing Costs | $1,262,572 |
Selling Commissions and Fees | $2,148,657 |
Lender Controlled Reserves | $128,000 |
Trust Controlled Reserves | $600,000 |
Total Uses of Funds | $56,898,729 |
The Property has existing debt:
- Loan Origination Date: 9/8/2017
- Lender: KeyBank Fannie Mae DUS
- Loan Proceeds: $33,670,000
- Loan to Cost: 58.9%
- Interest Rate: 3.960% Fixed
- Amortization: 30-year amortization
- Interest Only: 5-year interest-only
- Recourse: Non-recourse to the Trust, but recourse to the Trust and principals of the Sponsor for certain (i) "bad acts", and (ii) environmental indemnification
- Term: 10 years
- Prepayment Penalty: 9.5 year Yield Maintenance period
The Sponsor is to make distributions directly to investors who own a beneficial interest in the DST on a pro-rata basis.
Distributions are expected to start for each investor within 45 days of the completion of that investors purchase of beneficial interest in the DST. Distributions are targeted to continue on a monthly basis thereafter. These distributions are at the discretion of the Sponsor and made directly by the Sponsor, neither Realty Mogul Co. nor any of its affiliates have any control or discretion on the timing or amount of distributions.
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 | $1,034,500 | Sponsor | Capitalized Equity Contribution | 2.0% of Purchase Price. |
Sales Commissions | 6.00% | Broker Dealers | Capitalized Equity Contribution | Paid to North Capital(1) or other licensed broker-dealers that are Selling Group Members based on the amount of equity capital raised. Surplus fees retained by Sponsor. |
Marketing & Due Diligence Fee | 1.25% | Broker Dealers | Capitalized Equity Contribution | 1.25% based on the amount of equity invested by investors through RealtyMogul.com, third-party Broker Dealers (including North Capital(1)) are entitled to additional fees based on equity they originate. Surplus fees retained by Sponsor. |
Managing Broker-Dealer Fee | 1.40% | Broker Dealers | Capitalized Equity Contribution | Managing Broker-Dealer will receive a fee up to 1.4% of the Total Sales, which it may at its sole discretion partially re-allow to Selling Group Members for non-accountable marketing expenses in addition to any other allowances. |
Disposition Fee | 3.50% | Sponsor | Sale Proceeds | 3.5% of Sales Price |
Type of Fee | Amount of Fee | Received By | Paid From | Notes |
---|---|---|---|---|
Asset Management Fee | 0.20% of Purchase Price | Manager | Operating Cash Flow | |
Property Management Fee | 3.00% of Effective Gross Income | Property Manager | Operating Cash Flow | Property Manager will be NRP Management, an unaffiliated third-party. |
Master Lease Operating Profit | N/A | Master Lessee | Operating Cash Flow | The Master Lessee will retain net operating revenues from the Property that exceed the total rent payable to the Trust under the Master Lease. |
Notes:
(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.
The above presentation is based upon information supplied by the Sponsor or others. Realty Mogul, Co. along with its respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.
This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.
Review of PPM
Before making any investment decision, potential investors should carefully review the Private Placement Memorandum prepared by Sponsor (the "PPM"), including but not limited to, the Risk Factor section of the PPM and all exhibits of the PPM. The PPM contains additional risk factors and information regarding the DST that are not contained herein.
Real Estate Investment Risk
Any investment in real estate carries certain inherent risks, and there is no guaranty as to the future occupancy of the Property or operating results. Factors which might influence outcome include:
- Changes in national or local economic conditions
- Changes in the local market, including the entry of new competitors
- Changes in the financial condition of the major tenant or tenants
- The occurrence of casualties or natural disasters
- The enactment of unfavorable laws
1031 Risk
Although it is intended that interests will be acquired on a tax-deferred basis under Code Section 1031, each investor must satisfy a number of technical requirements to qualify for tax deferral under Section 1031. Also, no assurance can be given that investors will be able to complete a qualifying Section 1031 exchange in the future when the Property is sold.
DST Risk
IRS established seven prohibitions over the powers of the DST Trustee, which include the following:
- Once the offering is closed, there can be no future equity contribution to the DST by either current or new co-investors or beneficiaries
- The DST Trustee cannot renegotiate the terms of the existing loans, nor can it borrow any new funds from any other lender or party
- The DST Trustee cannot reinvest the proceeds from the sale of its investment real estate
- The DST Trustee is limited to making capital expenditures with respect to the property to those for a) normal repair and maintenance, (b) minor non-structural capital improvements, and (c) those required by law
- Any liquid cash held in the DST between distribution dates can only be invested in short-term debt obligations
- All cash, other than necessary reserves, must be distributed to the co-investors or beneficiaries on a current basis, and
- The Trustee cannot enter into new leases or renegotiate the current leases
Risks of Investing in Multifamily Rental Properties; Competition
The rental of multifamily residential space is a highly competitive business. Ownership of the Property could be adversely affected by competitive properties in the real estate market, which could affect the operations of the Property and the ultimate value of the Property. Success in owning the Property, therefore, will depend in part upon the ability of the Master Tenant, the Property Manager and the Property Sub-Manager (i) to retain current tenants at favorable rental rates; (ii) to attract other quality tenants upon the termination of existing leases if the existing tenants fail to renew or as otherwise needed; and (iii) to provide an attractive and convenient living environment for the tenants.
Competition from Apartment Communities in the Surrounding Geographic Area
A number of apartment communities of similar size and amenities are located in the Property’s immediate apartment sub-market. See “Market and Location Overview – Competitive Properties” in the PPM. There are a number of Class A apartment communities in the surrounding region that may be more attractive to renters. Competing apartment communities may reduce demand for the Property, increase vacancy rates, decrease rental rates and impact the value of the Property itself. There may also be additional real property available in the general vicinity of the Property that could support additional multifamily properties. An analysis of Axiometrics data as of Q2 2017 on all existing, planned, and under construction apartment communities in the Property’s submarket vicinity reveals that there are a total of seven Class A apartment communities comprising approximately 2,384 units currently in lease up and an additional three communities comprising approximately 1,000 units under construction. Further, there is one additional project comprising 401 units in the planning stages. If newer housing is built, it may siphon demand away from the Property, as newer housing tends to be more attractive to prospective tenants. It is possible that tenants from the Property will move to existing or new apartment communities in the surrounding area, which could adversely affect the financial performance of the Property. Competition from nearby apartment communities could make it more difficult to attract new tenants and ultimately sell the Property on a profitable basis. The Property could also experience competition for real property investments from individuals, corporations and other entities engaged in real estate investment activities. Other properties and real estate investments may be more attractive than the Property. There is no assurance that the Property Manager or the Property Sub-Manager will be able to attract residents to the Property given these facts.
The Property is Subject to Risks Relating to its Local Real Estate Market
Weakness or declines in the local economy and real estate market could cause vacancy rates at the Property to increase and could adversely affect the Trust’s ability to sell the Property under favorable terms. The factors which could affect economic conditions in the market generally include business layoffs, industry slowdowns, relocations of businesses, changing demographics, infrastructure quality and any oversupply of or reduced demand for real estate. Declines in the condition of the market could diminish your investment in and value of the Property.
Interest-Only Loan Period
The loan used to acquire the Property is expected to have an interest-only period for the first 60 months of the loan term, which means there will be no reduction in the principal balance during that interest-only period.
Performance of the Master Tenant Under the Master Lease
The ability of the Trust to meet its obligations is dependent upon the performance of the Master Tenant and its payment of Rent and other payments required under the Master Lease.
The Master Tenant Has a Limited Right to Defer Rental Payments Under the Master Lease
Under the Master Lease, if the Property’s operating cash flow is insufficient to pay all of the associated expenses of the Property (not including the Asset Management Fee), the full Base Rent, then in such event, the Master Tenant has a limited right to defer and accrue a portion of the Additional Rent and Supplemental Rent payments due under the Master Lease (but not any portion of the Base Rent required to make debt service payments due under the Loan Documents). Because the Master Tenant may accrue a portion of the Additional Rent and Supplemental Rent, it will not be required to call the demand note from Bluerock in order to make up such a shortfall. In such an instance, Purchasers may receive less or more varied distributions than they would have if the Master Tenant were required to call the demand note to fund any such Rent shortfall. Furthermore, if future cash flow from the Property or disposition proceeds are insufficient to pay the accrued Rent and Bluerock is unable to fund the demand note when called, then the Trust may never receive the full amount of any such accrued Rent, which could materially and adversely affect the returns to the Purchasers. Additionally, in the event that the Master Tenant elects to defer payment of a portion of the Rent, although the issue is not completely settled under existing law, under Section 467 of the Code, Beneficial Owners may be required to report and pay tax on rent in accordance with the rent schedule attached to the Master Lease, even though the Master Tenant may have elected to defer the payment of a portion of such rent. As a result, Beneficial Owners may be required to recognize rental income even though rent is not being fully paid, and therefore Beneficial Owners may have to use funds from other sources to pay tax on such income. See “Summary of the Master Lease.”
Conflict of Interest Risk
There are various potential conflicts of interest among the Sponsor, the Trust, the Managers, the Master Tenant, the Property Managers, and others engaged in the management and operation of the Property, one or more of whom may be affiliated with the others.
Forward-Looking Statements
The PPM has based these forward-looking statements on its current expectations and predictions about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Property, including, among other things, factors discussed below:
- General economic performance of the local and national economy;
- Required capital expenditures at the Property
- Competition from properties similar to and near the Property
- Adverse changes in local population trends, market conditions, neighborhood values, and local economic and social conditions
- Supply and demand for property such as the Property
- Interest rates and real estate tax rates
- Governmental rules, regulations and fiscal policies
- The enactment of unfavorable real estate, rent control, environmental, zoning or hazardous material laws
- Uninsured losses
- Anticipated market capitalization rates at the time of sale
Limited Transferability of Securities
Each Beneficial Owner will be required to represent that he is acquiring the Interests for investment and not with a view to distribution or resale, that such Beneficial Owner understands the Interests are not freely transferable and, in any event, that such Beneficial Owner must bear the economic risk of investment in the Interests for an indefinite period of time because: (i) the Interests have not been registered under the Act or applicable state “Blue Sky” or securities laws; and (ii) the Interests cannot be sold unless they are subsequently registered or an exemption from such registration is available. There will be no market for the Interests and the Beneficial Owner cannot expect to be able to liquidate their investment in case of an emergency. See “Restrictions on Transferability” in the PPM. Finally, the sale of the Interests may have adverse federal income tax consequences. See “Federal Income Tax Consequences” in the PPM.
Sale of the Property
The proceeds realized from the sale of the Property will be distributed among the Beneficial Owners, but only after satisfaction of the claims of other third-party creditors and Affiliates of the Sponsor. The ability of a Beneficial Owner to recover all or any portion of its investment, accordingly, will depend on the amount of net proceeds realized from such sale and the amount of claims to be satisfied therefrom. There can be no assurance that the Beneficial Owners will realize gains on sale of the Property.
No Representation of Beneficial Owners
Each Beneficial Owner acknowledges and agrees in the Purchase Agreement and Escrow Instructions that legal counsel representing the Trust, the Sponsor, the Manager, the Master Tenant, the Depositor and their Affiliates do not represent, and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing, any or all of the Beneficial Owners.
Environmental Risk
Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at or affecting the Property. The Property has been evaluated for environmental hazards on behalf of the Lender pursuant to a noninvasive Phase I Environmental Site Assessment Report, dated June 27, 2017 prepared by Blackstone Consulting, based on a site visit conducted in June 19, 2017. The Phase I Report revealed no evidence of recognized environmental conditions (“RECs”) in connection with the site and no further investigation was recommended.
Performance of the Master Tenant Under the Master Lease
The ability of the Trust to meet its obligations is dependent upon the performance of the Master Tenant and its payment of Rent and other payments required under the Master Lease.
Trustee and the Manager Have Limited Duties to Beneficial Owners
The Trustee of the Trust and the Manager will not owe any duties to the Beneficial Owners other than those duties set forth in the Trust Agreement. In performing its duties under the Trust Agreement, the Trustee will only be liable to the Beneficial Owners for its own willful misconduct, bad faith, fraud or gross negligence. Similarly, the Manager will only be liable to the Beneficial Owners for its own fraud or gross negligence.
Investor Equity Diluted 1%
The equity that will be utilized for purposes of calculating distributions is stated as $23,463,363, which is $234,634 more than the total equity contribution described in Sources & Uses. 100% of the equity required to close the transaction will be funded by investors, which will be diluted by 1% so that the Sponsor will have a 1% ownership stake for which they will make no cash contribution but will receive cash distributions.
The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Private Placement Memorandum for a discussion of additional risks.
The above presentation is based upon information supplied by the Sponsor and others. Realty Mogul, Co., along with its respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.
This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.