The team at our affiliated broker-dealer, RM Securities, conducts diligence on of the issuer, including detailed background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to screening for any criminal background, we may also turn down sponsors due to poor reference checks, even if the background and criminal checks are satisfactory.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent.* When an investor makes an investment with such sponsors using the RealtyMogul platform, the investor’s money is transferred directly into a third-party escrow account. All closing conditions in connection with a sponsor’s contingency offering need to be met before the third-party escrow agent will approve releasing investor funds to the issuer or general partner. For example, if an issuer or general partner plans to use funds for a real estate acquisition that does not ultimately transact, the third-party escrow agent will not transfer investor funds to the issuer or general partner, and funds will be returned to investors.
* Unless otherwise disclosed, escrow accounts are not required for some investments that accommodate 1031 investments where the property is already acquired.
Our processes typically includes visiting certain properties (or a subset of properties if it's a fund) to confirm the real estate is what and where the real estate is supposed to be. For certain properties that accommodate 1031 exchange investments, the team will review third-party prepared due diligence reports in lieu of a site visit.
We have formalized processes and checklists for every private placement deal listed on the platform.
Redline Property Partners
Redline Property Partners, LP ("Redline") is a recently-formed privately owned commercial real estate investment, management and advisory firm with concentration in office, industrial and retail properties. Redline’s projects are sized between $10 million and $35 million. Additionally, on behalf of their institutional clients, Redline will pursue certain core-plus transactions sized over $30 million. On behalf of its investors and clients, Redline specializes in the acquisition and management of real estate projects located in select primary and secondary U.S. markets, as well as providing corporate real estate advisory services for its clients. Initially, Redline is only targeting Minneapolis, the Southeast, Central Florida, Atlanta and Chicago, all cities where the Principals have in-depth market knowledge, substantial relationships and a history of successful performance. With over 75 years of combined experience including over $5 billion of transactions, Redline’s Principals maintain expertise in identifying underperforming real estate assets and executing successful turn-around strategies. Additionally, neither Redline, nor its Principals, have ever had an asset lost to foreclosure or exited an investment resulting in an investor loss.
Wedgwood Commerce Center represents RealtyMogul.com's second transaction with Redline. The first was 2 Sun Court which closed in August 2017.
http://www.redlinepropertypartners.com/Property | Location | Product Type | Total SF | Year Acquired | Total Investment |
---|---|---|---|---|---|
2 Sun Court | Norcross (Peachtree Corners), GA | Office | 98,040 | 2017 | $13,841,111 |
Total | 98,040 | $13,841,111 |
*Sponsor information and track record were provided by the Real Estate Company and have not been independently verified by RealtyMogul.com.
Property | Location | Product Type | Total SF | Year Acquired | Total Investment |
---|---|---|---|---|---|
Cypress Executive Center | Fort Lauderdale, FL | Office | 140,000 | 2015 | $13,500,000 |
220 Congress Park | Delray Beach, FL | Office | 55,000 | 2014 | $8,500,000 |
Atrium at Broken Sound | Boca Raton, FL | Office | 97,000 | 2016 | $17,500,000 |
Mill Place | Minneapolis, MN | Office | 90,000 | 2016 | $13,250,000 |
One Corporate Center | Edina, MN | Office | 110,000 | 2016 | $11,580,000 |
6101 Congress | Charlotte, NC | Office | 100,000 | 2016 | $27,700,000 |
International Plaza | Minneapolis, MN | Office | 290,000 | 2006 | $38,000,000 |
Gulfstream Plaza | West Palm Beach, FL | Office | 80,000 | 2014 | $9,400,00 |
Total | 962,000 | $139,430,000 |
*Sponsor information and track record were provided by the Real Estate Company and have not been independently verified by RealtyMogul.com. Track record includes past transactions of Andrew Webb at prior firms and not Redline Property Partners.
In this transaction, RealtyMogul.com investors are to invest in Realty Mogul 98, LLC, which is to subsequently invest in WCC Partners, LP, a limited partnership that will hold title to the Property.
The business plan is to acquire the Property, lease vacant space and bring the rolling leases up to market rates while performing various renovations to the common areas totaling $550,000. The capital improvements to the Property are to include updating the overall feel of the building with more with more modern finishes and furniture, as well as the creation of much needed amenities. The previous owner completed minor renovations but did not fully realize the Property's potential. For example, the previous owner did not remove the dated green and brown marble and installed less than desirable furniture. Additionally, the Real Estate Company is exploring the possibility of taking half of the currently vacant space on the first floor off-line and creating an amenity space which could include food service, a fitness center and conference center. Another benefit of taking space offline for the amenities will be an increase in the parking ratio. The Real Estate Company sees this investment as an opportunity to acquire a well-located office asset that, upon renovation, has upside potential due to above market vacancy and below market rents in-place.
This investment will be RealtyMogul.com's second transaction with the Real Estate Company.
RealtyMogul.com, along with Redline Property Partners ("Real Estate Company"), is providing the opportunity to invest in the acquisition of Wedgwood Commerce Center ("Property" and “Transaction”), an 85,404 SF, Class A midrise office building in Maple Grove, MN, a suburb of Minneapolis. Included in the investment group are principals of Blackwood Partners, a Canada-based real estate investment firm with approximately $2 billion of real estate currently under ownership/management.
The primary objective of this investment is to acquire the Property at an attractive going-in yield and basis, implement exterior and interior capital improvements, increase rental rates while maintaining occupancy, and sell the Property within four years.
The Property is an institutional quality, Class A midrise office building located in the Wedgwood Business Park development in Maple Grove, Minnesota. Originally built in 1987, the Property is currently 76% leased to 13 tenants at a below-market average rate of $13.53 PSF.
The Property is of institutional quality and should continue to draw and retain larger, creditworthy tenants. It boasts efficient 20,000 SF floor plates that are attractive to users of all sizes and space layouts. The appeal of the floor plates is demonstrated by the broad range of sizes (1,400 SF to 11,200 SF) and industries currently in occupancy. The broad appeal enables Wedgwood Commerce Centre to accommodate most space requirements and places the landlord in an advantageous position in the marketplace. The Property is located in the heart of highly affluent Maple Grove, Minnesota, home to both high ranking executive decision makers and the skilled work force that is sought after by employers. The surrounding area includes a large supply of executive and working-class housing as well as higher-end retail including Arbor Lakes. The average household income is above $123,000 within three-miles of the Property according to CoStar.
Major Tenant Summary
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Established in 1981, Henningson & Snoxell, Ltd. is a prestigious law firm focused on providing outstanding legal representation that is dedicated to understanding the needs of its clients. Today, the firm includes 15 attorneys focusing on an array of practice areas including real estate, litigation, estate planning, personal injury, and family law. In addition, the firm has developed an impressive practice related to nonprofit organizations. The firm has been located at Wedgwood since 2004 and recently expanded and extended its lease through March 2022. (Source: Cushman & Wakefield)
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Grace Management, Inc. was established in 1984 to develop, manage, and market residential communities for seniors and has been responsible for more than 90 Senior and Multifamily Communities. The company has expanded into operational and marketing consulting services and produces operational studies for various housing communities. The company is headquartered at the Wedgwood Commerce Centre, and has regional support staff in eight states. Grace Management moved into Wedgwood Commerce Centre in 2016. (Source: Cushman & Wakefield)
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PartnerRe Ltd. is a leading global reinsurer that provides multi-line reinsurance to insurance companies. The firm offers capital markets products that included weather and credit protection to financial, industrial and service companies. PartnerRe provides reinsurance services for multiple risks including property, casualty, motor agriculture, aviation/space, catastrophe, credit/surety, engineering, energy, marine, specialty property, and specialty casualty. PartnerRe is headquartered in Bermuda and first moved into Wedgwood in 2008. (Source: Cushman & Wakefield)
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McKinstry Essention, Inc. is a full-service design, build, operate and maintain firm with over 1,800 employees across the United States. The firm provides engineering services across multiple disciplines including construction, consulting, energy, and facility services. The firm achieves over $500 million annually in revenue and has 25 offices throughout the country. McKinstry moved into Wedgwood Commerce Centre in 2012. (Source: Cushman & Wakefield)
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Property | Sale Date | Size (SF) | Price | $/Square Foot | Cap Rate | Dist. from Subject (mi.) | |
---|---|---|---|---|---|---|---|
Valley Creek Office Park | Feb-16 | 128,628 | $22,700,000 | $176 | 7.8% | 9.4 | |
Valley Square | Oct-17 | 83,290 | $11,700,000 | $140 | 7.9% | 9.8 | |
City West Financial Center | Nov-16 | 56,652 | $7,000,000 | $124 | 8.0% | 15.4 | |
Crosstown Corporate Center | Mar-17 | 59,487 | $8,175,000 | $137 | 8.1% | 15.5 | |
Rosedale Corporate Plaza | Mar-17 | 149,116 | $18,900,000 | $127 | 8.1% | 17.5 | |
Grandview Square | Oct-15 | 96,248 | $19,000,000 | $197 | 7.4% | 18.2 | |
Average | 95,570 | $16,435,086 | $150 | 7.9% | 14.3 | ||
Subject | 85,404 | $8,420,000 | $99 | 7.3% |
Property | Size (SF) | Avg. Rental Rate | Occupancy | Lease Type | Dist. from Subject (mi.) |
---|---|---|---|---|---|
6885 Sycamore | 33,852 | $16.75 | 76% | NNN | 0.5 |
Bell Tower South | 53,945 | $15.00 | 100% | NNN | 2.5 |
Quadrant Office Building | 103,387 | $12.00 | 85% | NNN | 4.8 |
Atria Corporate Center | 360,119 | $18.50 | 94% | NNN | 5.2 |
Plymouth Woods | 85,232 | $15.00 | 95% | NNN | 5.5 |
Average | 127,307 | $15.45 | 90% | NNN | 3.7 |
Subject (Asking) | 85,404 | $13.00 - $14.00 | 76% | NNN |
The comparables included in the above tables were either sourced from CoStar, Real Capital Analytics or they were provided by the Real Estate Company
The Property is strategically located at the intersection of Interstate 494 and Bass Lake Road and is part of Wedgwood Business Park which includes over 600,000 SF of office, office showroom/flex, retail, medical office and hospitality space. Wedgwood Commerce Centre offers a premier amenity package that includes underground parking, bicycle storage and close proximity to the 2.8 million SF Arbor Lakes retail trade area. The project enjoys efficient access throughout the Twin Cities of Minneapolis and St. Paul via multiple interstates and highway systems. I-494, I-694, I-94, Highway 55, Highway 169, and Highway 610 are all within close proximity to the project. The advantageous transportation options enable tenants at the building to draw from multiple, quality labor pools and service clients throughout the Twin Cities region.
Wedgwood Business Park, a 71-acre master planned business park, contains over 370,000 SF of med/tech space, 185,000 SF of office, 35,000 SF of newly developed retail, 10,000 SF of medical and a recently developed 120-room Hilton Garden Inn. The combination of product types makes Wedgwood Business Park truly unique in the market and elevates it above other business parks.
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Market Overview
The Northwest submarket's office stock is concentrated in Brooklyn Center and Maple Grove, both of which offer good freeway access to I-94 and I-494. Most properties are older, low-rise buildings occupied by local tenants, medical offices, or any user in need of office space near well-to-do suburbs like Maple Grove or Golden Valley. Target made news when it more than doubled its footprint with a 650,000 SF expansion in 2014, cementing its position as the submarket's most important tenant. Now, the construction pipeline is cooling off after a number of large deliveries significantly expanded inventory between 2008 and 2014. Sales volume returned to more typical levels in 2016, after 16 trades in 2015 generated $41 million in sales, a submarket record. While volume has slowed in 2017, pricing remains slightly above the historical average for the submarket. There are currently no plans for new spec development per the Cushman & Wakefield listing broker and the potential JLL leasing team.
Demographic Information
Demographics | 1 Mile | 3 Miles | 5 Miles |
---|---|---|---|
Population (2017) | 6,864 | 61,610 | 182,032 |
Population Growth (2010-2017) | 9.1% | 14.7% | 10.0% |
Population Growth (2017-2022) | 5.1% | 5.9% | 5.2% |
Average Household Income (2017) | $94,362 | $122,997 | $103,169 |
Source: CoStar
Sources of Funds | Cost |
---|---|
Debt | $7,066,816 |
Equity | $3,555,555 |
Total Sources of Funds | $10,622,371 |
Uses of Funds | Cost |
Purchase Price | $8,420,000 |
Real Estate Company Acquisition Fee | $84,200 |
Broker Dealer Fee | $64,000 |
Capital Expenditures | $550,000 |
TI/LC Reserves | $1,216,858 |
Working Capital | $22,250 |
Closing Costs & Fees | $265,063 |
Total Uses of Funds | $10,622,371 |
The terms of the debt financing are as follows:
- Lender: MidwestOne Bank
- Loan Type: Bank
- Proceeds: $7,066,816
- Initial Loan Funding: $5,299,958
- Term: Five (5) years
- Rate: One-Month LIBOR + 275 bps floating; 4.0% rate floor
- Amortization: 25 years
- Interest-Only Period: Two (2) years
- Extensions: None
- Prepayment: 4% in year one, 3% in year two, 2% in year three, 1% in year four, 0% in year five; waived if property is sold
- Recourse: Non-recourse
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.
WCC Partners, LP intends to make distributions of all available cash and capital proceeds to investors (Realty Mogul 98, LLC, Other LP investors and Real Estate Company, collectively, the "Members") as follows:
Operating Cash Flow
- Pro rata share of cash flow
Capital Events (Sale or Refinance)
- Return of capital;
- Pro rata share of cash flow to a 7% annual return, which will take into account previous distributions of Operating Cash Flow
- Excess balances will be split pro rata 70% to Members and 30% to the Real Estate Company
Note that these distributions will occur after the payment of the WCC Partners, LP's liabilities (loan payments, operating expenses and other fees as set forth in the LP agreement, in addition to any member loans or returns due on member loans).
Distributions are expected to start in September 2018 and are targeted 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. Realty Mogul 98, LLC is to distribute 100% of its share of excess cash flow (after expenses and fees) to the Members of Realty Mogul 98, LLC (the RealtyMogul.com investors).
Year 1 | Year 2 | Year 3 | Year 4 | |
---|---|---|---|---|
Effective Gross Revenue | $1,383,534 | $1,543,051 | $1,812,154 | $1,877,522 |
Total Operating Expenses | $773,349 | $797,680 | $826,843 | $848,318 |
Net Operating Income | $610,185 | $745,371 | $985,311 | $1,029,204 |
Year 0 | 2018 | 2019 | 2020 | 2021 | |
---|---|---|---|---|---|
Distributions to Realty Mogul 98, LLC Investors | ($1,620,000) | $136,362 | $160,817 | $183,892 | $2,330,347 |
Net Earnings to Investor - Hypothetical $50,000 Investment | ($50,000) | $4,209 | $4,963 | $5,676 | $71,924 |
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 | $84,200 | Real Estate Company | Capitalized Equity Contribution | 1.0% of the Property purchase price |
Debt Financing Fee | $63,601 | Real Estate Company | Capitalized Equity Contribution | 0.9% of total loan proceeds |
Broker-Dealer Fee | $64,000 | North Capital (1) | Capitalized Equity Contribution | 4.0% of equity raised by RealtyMogul.com ($50,000 minimum) |
Type of Fee | Amount of Fee | Received By | Paid From | Notes |
---|---|---|---|---|
Asset Management Fee | 2.5% of Net Operating Income | Real Estate Company | Distributable Cash | |
Management and Administrative Fee | 1.0% of amount invested in Realty Mogul 98, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of Realty Mogul 98, LLC and a wholly-owned subsidiary of Realty Mogul, Co.2 |
(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.
(2) Fees may be deferred to reduce impact to investor distributions.
The above presentation is based upon information supplied by the Real Estate Company or others. Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 98, 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.
RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe information on this Page is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete and subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.
Risk of InvestmentThis investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.
No Reliance on Forward-Looking Statements; Sponsor AssumptionsSponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.
Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.
No Reliance on Past PerformanceAny description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.
Sponsor’s Use of DebtA substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.
Sponsor’s Offering is Not RegisteredSponsor’s securities offering will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement”). In addition, the offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership interests) are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.
No Investment AdviceNothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
1031 Exchange RiskInternal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.