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.
Zenda Properties
Zenda Properties ("Zenda"), based in Montreal, Quebec, was formed by Gerald Levy in 1992. Gerald Levy is also a lawyer, licensed to practice in both the province of Quebec and the state of Arizona. Mr. Levy has over 30 years of experience as owner, manager and advisor, both in Canada and the United States.
Zenda was formed to invest in and manage real estate in its own name, with partners and with investors. Over the last 30 years, Zenda has earned a successful track record in all facets of commercial office, retail and industrial real estate development and management. They have developed extensive expertise in establishing and managing co-investment relationships. Zenda has been acquiring and managing commercial real estate properties in the US and Canada for over 30 years and has acquired over $125 million of properties in the last 10 years. Zenda currently owns and manages over 815,000 rentable square feet of retail, office, and industrial properties across the US and Canada.
Zenda has the experience and acumen required to deal with the cyclical nature of the real estate market. Whether the issue is a potential investment or finding a solution to an existing real estate problem, Zenda has the necessary hands-on expertise and tools to take the right course of action. The experience gained as owners, developers, investors, lawyers, managers and consultants gives Zenda a unique perspective and a broader viewpoint of real estate issues and opportunities.
This is the second opportunity for Realty Mogul investors to invest alongside this management team.
http://www.zenda.ca/-
Gerald Levy - President of Zenda Properties -
William Levy - Vice President of Zenda Properties
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Michael Levy - Vice President of Asset Management
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Poliana Dutu – Controller
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Maria Rupnik – Manager
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Jorge Runciman - Accounting Bookkeeper
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Taline Kilejian – Administrator
At A Glance
| Investment Strategy: | Buy and Hold |
| Hold Period: | 5-10 years |
| Total Project Budget: | $9,200,000 |
| Property Type: | Retail |
| Net Rentable Area: | 39,779 square feet |
| Distributions to Realty Mogul 12, LLC: | 8% preferred return with excess cash flow and appreciation shared 75/25 |
| Purchase Cap RatePurchase Cap Rate: In-place annual income divided by purchase price.: | 8.44% |
Investment Details
Zenda Properties ("Zenda")plans to acquire Waterside Commons Shopping Center ("Waterside Commons"),a 39,779 square feet, Ace Hardware-anchored center located in the southwest area of the Houston metropolitan area at the southeast corner of Mason Road and the Grand Parkway (Highway 99) in Richmond, Texas. Waterside Commons is shadow anchored by a freestanding Bank of America and a Sonic drive-thru restaurant.
Realty Mogul investors are being afforded the opportunity to invest in Realty Mogul 12, LLC. Realty Mogul 12, LLC, will be making an investment in Zenda Waterside Commons U.S. Limited Partnership, which will hold title to the Waterside Commons Shopping Center.
Zenda will handle all aspects of the investment including acquiring the property and ultimately selling the asset. Zenda will be responsible for negotiating lease renewals and leasing up the remaining vacant space with a dedicated local leasing agent and focused property management team. Zenda and Realty Mogul plan on holding the property for 5-10 years before exiting the investment but the hold period may be longer or shorter. Realty Mogul investors have the opportunity to participate as equity stakeholders and earn a share of the cash-flow and appreciation. Investors can expect to receive quarterly updates and quarterly distributions, with the first distribution expected in month four (4) after the purchase of the property.
Waterside Commons represents a unique opportunity to invest in a shopping center in a high-growth corridor that continues to have future growth prospects. The property has existing, in-place cash flow while also offering investors value-add potential through a lease-up program aimed at bringing rental rates up to market values upon rollover.
Investment Highlights
- Highly Occupied and Stabilized Property with Diversified Tenant Base: Built in 2008, Waterside Commons is currently 93% leased and occupied by a diversified service-oriented tenant base that includes 13 tenants. The property is anchored by Ace Hardware (over 4,700 locations) and is occupied by other well-known tenants, including Subway, Nationwide Insurance, Edward Jones Investments, Shipley Do-Nuts (over 190 locations), and Snap Fitness (over 1,400 locations worldwide).
- First Property at Freeway Exit With Freeway Visibility and Large Retailers in the Immediate Area: The property borders the Grand Parkway (Highway 99) and is the first property off the Mason Road exit just south of the freeway with traffic counts of over 30,000 vehicles per day. The retail center was constructed in a "reverse-L shape" to maximize retailer visibility from the highway. The property is shadow anchored by Bank of America and Sonic and is also across the street from Walgreens. Other large retailers within a block of the property include Kroger, Wells Fargo, and Chase.
- Potential Upside Due to Under Market Rents: Waterside Commons provides the opportunity to acquire a property with below-market rental rates in the high-growth southwestern Houston area retail market. Houston has one of the strongest regional economies in the United States, and the retail market there has experienced net absorption of approximately 2.2 million square feet in the 12 months ending March 2013. Almost all of the tenants at Waterside Commons were signed to leases during the recent recession, and Zenda believes that current rental rates at the property are approximately 30% below market rents in the area. Zenda plans to renew these tenants at the higher market rate upon rollover, which would increase the cash flow and the value of the property.
- Strategically Located For Future Growth: The Greater Houston Area is the nation's 4th most populated city (with over 6 million residents) and Houston is only 2 of America's Top 20 metropolitan areas that has regained all the jobs it lost during the recession. Houston ranks only 2nd to New York City with 25 Fortune 500 headquarters and is expected to experience strong growth in the years ahead. The property is strategically located to benefit from this future growth and borders the Grand Parkway (Highway 99), a highway that is currently under expansion to meet the needs of future population growth.
- Very Experienced Management: Zenda has been acquiring and managing commercial real estate properties in the US and Canada for over 30 years and has acquired over $125 Million of properties in the last 10 years alone. They currently own and manage over 815,000 leasable square feet of retail, office, and industrial properties across the US and Canada.
Risks and Risk Mitigation*
- Lease-up of Vacant Space: Given that the retail center is currently 93% leased, there is a risk that the property will be difficult to fully lease. Zenda will partially mitigate this risk by utilizing a dedicated local leasing agent and a focused property management team.
- Nearby Construction: The Grand Highway (Highway 99) remains under construction. Although access to the shopping center is not obstructed and the portion under construction is scheduled to open soon, there is a risk that construction will be delayed.
*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.
| Address: | 9825 South Mason Road Richmond, Texas 77469 |
| Year Built: | 2008 |
| Current Occupancy: | 93.0% |
| Net Rentable Area: | 39,779 square feet |
| Parking: | 166 spaces 4.2 spaces per 1,000 square feet of rentable area |
| Access: | From both Mason Rd. and Lewisville Dr. via three (3) points of access |
| TENANT NAME | SQUARE FOOTAGE CURRENTLY LEASED |
|---|---|
| Ace Hardware | 10,112 |
| Las Mananitas Restaurant | 4,847 |
| Strong Martial Arts | 4,681 |
| Waterside Dental | 2,850 |
| Friendship Animal Hospital | 2,554 |
| Snap Fitness | 2,066 |
| Shipley Do-Nuts | 1,750 |
| Classic Cleaners | 1,450 |
| Zena Salon | 1,433 |
| Nationwide Insurance | 1,425 |
| Subway | 1,400 |
| Model Nails | 1,400 |
| Edward Jones & Co. | 1,069 |
Waterside Commons Shopping Center was built in 2008 and was constructed in a "reverse-L" configuration in order to give tenants enhanced visibility from the street and highway. The center consists of one building situated on approximately 3.9 acres of land.
Major Tenants
Ace Hardware is an international chain of local hardware stores with over 4,700 locations. It is the anchor tenant at Waterside Commons with a total space of over 10,000 sq. ft. It is currently under lease until 2019. Included in its premises is a Benjamin Moore Paints under similar lease terms.
Subway is the world’s largest submarine sandwich chain with more than 39,000 locations worldwide. It is currently leasing 1,400 sq. ft. at Waterside Commons and is under lease until 2018.
Edward Jones Investments is a full-service brokerage firm with over 7 million investor clients and 12,000 investment advisors throughout the USA. It currently lease 1,069 sq. ft. at Waterside Commons and are under lease until mid-2014 when it is expected to exercise its 5-year option to renew.
Nationwide Insurance is a Fortune 500 company. It is currently leasing 1,425 sq. ft. of space at Waterside Commons. Its lease expires in 2018.
Shipley Do-Nuts is a regional donut shop that currently has over 190 stores in 6 states. It is currently leasing 1,750 sq. ft. at Waterside Commons and is under lease until 2018.
Snap Fitness is a small format fitness center. The company has 1,400 clubs worldwide. The tenant is currently leasing 2,066 sq. ft. at Waterside Commons and is under lease until October 2014. We anticipate the tenant renewing at lease expiry.
A current rent roll, aerial, and neighborhood map are attached below the map on the right hand side of this page.
Waterside Commons is strategically located at the southeast corner of Mason Road and the Grand Parkway (Highway 99) in Richmond, Texas. It is located at a signalized intersection in Waterside Estates, a section of the Waterside subdivision that features small lakes and upscale housing. The Grand Parkway (Highway 99) is currently under construction and is scheduled to become the next outer loop major highway around the Houston metropolitan area. The main lane, running from Waterside Commons to Interstate 10 and Highway 290, is scheduled for completion at the end of this year and should stimulate growth in the area. Mason Road is a major north/south thoroughfare. Though not currently contiguous, when it is completed, it will connect the section that already runs north to the Westpark Tollway and Interstate 10 to the section of Mason Road that runs adjacent to Waterside Commons and south to connect with Highway 359.
Waterside Commons is shadow anchored by a freestanding Bank of America and a Sonic drive-thru restaurant. On the southwest corner of Mason Road and the Grand Parkway is a Walgreens free-standing building. Directly across the Grand Parkway from Walgreens is the 169,000 square foot Waterside Marketplace Shopping Center, which is anchored by a 124,000 square foot Kroger Marketplace grocery store, the largest store in Texas when constructed in 2008. Waterside Marketplace Shopping Center also includes a Kroger gas station as well as Chase Bank and Wells Fargo - both located on pad sites fronting the Grand Parkway. Other retailers in the area include the newly constructed 22-screen Palladium Theater, McDonald’s, and Jack in the Box.
Houston Area Overview
Houston is the fourth most populous city in the United States, and the metropolitan area has over 6 million people. More than 17 million people live within 300 miles of the city. The metropolitan area consists of ten counties - Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto and Waller. Houston has thrived on expansive and modern infrastructure facilities, affordable living costs, a young and well educated workforce, and vital energy and healthcare industries. The area weathered the global recession and economic volatility better than most of the nation's largest employment bases, and Houston has the distinction of being only one of two of the country's top 20 metropolitan areas to regain all the jobs lost in the recession. In 2012, Houston added over 118,000 jobs across a wide array of sectors.
The city now has a well diversified economy. In 1986 80% of the local economy was tied to the petroleum, natural gas, and chemical industries, but today that number has been reduced to approximately 48%. Houston is home to the largest medical center in the world and its companies are leaders in high-tech sectors as biomedical technology, electronics, computers, software, aerospace, integrated power, and plastics manufacturing. Houston ranks second only to New York in the number of Fortune 500 companies with headquarters there, and more than half of the world's largest foreign corporations have non-retail operations in Houston. The Port of Houston is also one of the few American port facilities to have both import and export traffic.
Houston's employment base is experiencing consistent expansion with over 118,000 new jobs added in 2012 and similar additions expected in 2013 and on. Houston was ranked #1 in the nation for annual job gains in 2012 and is expected to continue with that ranking over the next few years. Job growth is expected to be fueled by continued expansion in both traditional and alternative energy sectors, as well as significant personnel needs in industries such as healthcare, education, trade, transportation, and professional and business services.
According to Rice University's Kinder Institute for Urban Research, Houston was the nation's fastest growing metropolitan area for the decade ending in 2010, adding more than 1.2 million new residents. Future forecasts are similarly strong, estimating that the Houston area will add a further 1.0 million people by 2020 and an additional 2.4 million between 2020 and 2030.
Fort Bend County Overview
Waterside Commons is located Fort Bend County, located southwest of Houston. The county is characterized by a pro-business climate, strong economy, award-winning master planned communities, educated residents, and diverse workforce - all factors that make it an ideal place to do business. Fort Bend was recently named the “Best Place to Get Ahead” by Forbes Magazine. Of the 255 counties in the United States with over 250,000 residents, Fort Bend County was the seventh fastest growing in the decade ending 2009, growing by more than 55% in that time period. Between 2007 and 2009, Fort Bend County grew by more than 72,000 residents, or 20%, the fifth-highest rate in the country. This recent momentum is anticipated to carry forward with the Texas State Demographer’s office predicting that the county’s population will double to 1.1 million residents by 2025 and growing further to 1.9 million by 2040.
Fort Bend’s strong economic performance is consistently listed among the top in the nation. In August 2012, CNN/Money Magazine ranked Fort Bend 2nd in the U.S. for “Where the Jobs Are”, and Woods & Poole Economics’ projections through 2015 show the county continuing average growth of more than 3% each year. The county’s highly educated diverse workforce also contributes to its economic success. Fort Bend is first in the region for high school graduates and 39% of residents have earned a bachelor’s degree or higher. In 2011, the Texas Tribune ranked the county 4th in the nation for diversity. Fort Bend also celebrates a diversity of industries—technology, energy, education, hospitality, manufacturing and medical sectors are all thriving within the county.
Houston Retail Market Overview
Houston’s robust economy, strong population growth, rising consumer retail sales volumes, and the return of residential development all provide an increasingly favorable setting for retailing and retail real estate. Leasing activity over the past twelve months has been primarily driven by both national and local tenants, as each sought to take advantage of quality space options and attractive asking rental rates.
Ranking first in the nation in absolute employment growth, the regional retail market has responded in kind and witnessed continued strengthening. Driven by expanding research and exploration both domestically and internationally, energy companies have been hiring, fueling strong absorption trends. Reporting net absorption of approximately 2.2 million square feet in the 12 months ending first quarter 2013, there is evidence the trend will be protracted. The massive ExxonMobil campus, currently under development in north Houston, is one of several large-scale associated developments emerging across a variety of property types in that region. The region’s strong economic base and affordable business and living costs continue to attract both new citizens and new businesses to the area, which has led to Houston’s currently healthy retail market fundamentals. Looking forward, Houston’s economy is projected to grow at a steady pace over the next several years fueled by expansion in such core sectors as energy, international trade, health care, technology and leisure/hospitality. This expansion, coupled with projected strong population and wage growth, will continue to benefit Houston’s retail market over the foreseeable future.
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.