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Completed Equity
Multifamily
El Paso Apartment Portfolio DST
Multiple Locations
INVESTMENT STRATEGY
INVESTMENT TYPE
Equity
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100% funded
Offered By ExchangeRight Real Estate LLC - El Paso DST
%* TARGET IRR %-%
5.75%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 10 years
Estimated First Distribution 3/2018
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Explore this Project
Overview
1031 eligible DST offering featuring two Multifamily properties located in El Paso, TX.
Property At A Glance
Number of Properties 2
Number of Units 393
Current Occupancy 96.2%
Leverage 51% Loan-to-Cost / 60% Loan-to-Purchase
Acquisition Price

$21,343,566

Investment Highlights
Stable and growing market
Value-add upside potential
Portfolio was underwritten at approximately 92.6% occupancy, although it is currently 96.2% occupied
Low Leveraged Portfolio - 51% Loan-to-Cost & 62% Loan-to-Purchase
The Sponsor is allocating $2.1 million of upfront reserves, a significant portion of which will be used to complete the renovation plan, with over $850,000 in excess reserves above the expected replacements over the next 10 years
Management
Cumulative Distributions

ExchangeRight Real Estate LLC - El Paso DST

ExchangeRight is committed to providing 1031-exchangeable DST offerings of value-added multifamily properties and net-leased portfolios. Our multifamily platform targets Class B apartments with stable income and value added upside potential. Our multifamily offerings feature strong cash flow, high debt coverage ratios, conservative underwriting, long-term fixed-rate financing, and the potential to enhance return with value-added strategies.

In addition to intentionally structuring offerings with an alignment of interest with investors, the principals of the company have taken a personal investment position in each DST offering that has been brought to market. Each of our DST offerings provides both 1031 and cash investors with pass-through tax deferral advantages.

 

http://www.exchangeright.com/
  • Warren Thomas, CPA
    Founder and Managing Director
  • David Fisher, CPA
    Managing Member
  • Joshua Ungerecht
    Managing Member
  • Dave Van Steenis
    Chief Financial Officer
Warren Thomas, CPA
Founder and Managing Director

Warren currently serves as a managing member for ExchangeRight Real Estate. He is focused on the securitization, broker dealer, and registered representative relations sides of the business. Warren is the co-founder and president over a number of integrated wealth management and securitized real estate companies with Joshua Ungerecht. Prior to focusing on the securitized 1031 exchange market in 2003, Warren developed an extensive tax practice including estate planning, financial planning, and real estate advisory services. Warren has over 30 years of experience as a CPA and has been an active commercial real estate investor for the past 15 years. He graduated in 1978 from Biola University with a B.S. in Business Administration, specializing in Accounting. He also earned a master's degree in Taxation from Golden Gate University in 1993. He maintains Series 6, 7, 22, 24, 39,63, and 79 Securities Licenses.

David Fisher, CPA
Managing Member

David Fisher enjoyed a successful career in banking and finance for 20 years. He is now focused on the management success of ExchangeRight and on managing his own investments. He began his career with KPMG in the tax department, and then worked in tax, treasury, and acquisitions for Wells Fargo for over nine years. He was North American Head of Asset and Structured Finance for HSBC's Investment Banking division for the last seven years of his banking career. David and his banking teams executed international financings in excess of $4 billion. He has been an active real estate investor for the past 10 years and has interests in over 30 partnerships across nine states. He graduated from the University of Northern Iowa in 1993, Magna Cum Laude in Accounting, and earned national honors with the Elijah Watt Sells Award on the May 1993 CPA exam.

Joshua Ungerecht
Managing Member

Joshua currently serves as a managing member for ExchangeRight Real Estate. He is focused on the operations, investment structuring, and acquisitions aspects of the business. Concurrently, he serves as CEO and Chief Investment Officer over a number of integrated wealth management and securitized real estate companies. He developed one of the industry's leading due diligence platforms in securitized real estate analysis. Together with Warren Thomas, Joshua has overseen the acquisition of over $500 million in real estate since 2003. Joshua graduated from The Master's College, Summa Cum Laude with a B.A. in Theology, Apologetics, and Missions, and is currently on leave from Talbot Graduate School, where he was pursuing an M.A. in Philosophy of Religion and Ethics. He also maintains Series 7, 22, 24, 63, 65, and 79 Securities Licenses and an active California real estate license.

Dave Van Steenis
Chief Financial Officer

Dave currently serves as Chief Financial Officer for ExchangeRight Real Estate. He is focused on financial reporting and acquisitions for the Company. Dave began his career with KPMG in the financial services audit practice, and most recently was with Kaufman Jacobs Real Estate Investments were he was involved in the investment acquisition, capital markets, and financial reporting aspects of the business. Dave graduated from Trinity Christian College with highest honors with a B.S. in Accounting and a Finance concentration. Dave is a CPA and is also a CFA Level III candidate.

Track Record

Completed Prior Programs
Offering Description Targeted Annualized Return Actual Annualized Return*
Net-Leased Preferred Equity Fund 1 Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Range of 12-20%** Average
Annualized
Fund
Return of
14%
Acquisition Notes Company that issues short term debt capital to the Sponsor to acquire and sell net-leased assets. Performing as expected. Range of 12-14%** 12%
Current Programs
Offering Description Targeted Annualized Return Actual Annualized Return*
Net-Leased Preferred Equity Fund 2 Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Performing as expected. Range of 8-12%** 10%
Net-Leased Preferred Equity Fund 3 Shorter-term fund to acquire and sell net-leased assets for the Sponsor. Performing as expected. 8.25% 8.25%
Acquisitions Notes II Company that issues short term debt capital to the Sponsor to acquire and sell net-leased assets. Performing as expected. Range of 8-
12%**
10%
Acquisition Notes 3 Company that issues short term debt capital to the Sponsor to acquire and sell assets. Performing as expected. 8.25% 8.25%
Net-Leased Portfolio 1 Portfolio of two long-term net-leased properties leased to Family Dollar. One of the two properties sold in January, 2015 at a 10.59% annualized  net profit to investors. Current remaining property return shown in chart and is exceeding expectations. 7.25% 7.39%
Net-Leased Portfolio 2 Portfolio of seven long-term net-leased properties leased to Family Dollar (6) and Dollar General (1). Performing as expected. 7.45% 7.45%
Net-Leased Portfolio 3 Portfolio of nine long-term net-leased properties leased to Family Dollar (8) and Dollar General (1). Performing as expected. 7.30% 7.30%
Net-Leased Portfolio 4 Portfolio of eleven long-term net-leased properties leased to Family Dollar (8), Dollar General (1), Aaron's (1) and Advance Auto Parts (1). Performing as expected. 8.10% 8.10%
Net-Leased Portfolio 5 Portfolio of fourteen long-term net- leased properties leased to Family Dollar (5), Dollar General (4), Advance Auto Parts (2), AutoZone (1), Sherwin Williams (1) and The Christ Hospital (1). Performing as expected. 7.53% 7.53%
Net-Leased Portfolio 6 Portfolio of sixteen long-term net- leased properties leased to Family Dollar (3), Dollar General (8), Advance Auto Parts (1), AutoZone (1), CVS (1), Dollar Tree (1) and Tractor Supply  (1). Performing as expected. 7.51% 7.51%
Net-Leased Portfolio 7 Portfolio of sixteen long-term net- leased properties leased to Family Dollar (4), Dollar General (8), Advance Auto Parts (1), CVS (1), Napa Auto Parts (1), and O'Reilly Auto Parts (1). Performing  as expected. 7.75% 7.75%
Net-Leased Portfolio 8 Portfolio of thirteen long- term net- leased properties leased to Advance Auto Parts (3), AutoZone (2), CVS (1), Dollar General (2), Family Dollar (1), Franciscan Alliance (1), Ross Stores (1) and Tractor Supply (2). Performing as expected. 7.32% 7.32%
Net-Leased  Portfolio 9 Portfolio of twenty-two long- term net- leased properties leased to Advance Auto Parts (4), AutoZone (4), CVS (1), Dollar General (9), Hobby Lobby (1), Napa Auto Parts (2) and TCF National Bank (1). Performing  as expected. 7.14% 7.14%
Net-Leased Portfolio 10 Portfolio of twenty-two long-term net- leased properties leased to Advance Auto Parts (3), AutoZone (1), CVS (1), Dollar General (5), Dollar Tree (1), Family Dollar (4), Napa Auto Parts (2), O'Reilly Auto Parts (2), PNC Bank (1) and Tractor Supply (2). Performing as expected. 7.06% 7.06%
Net-Leased Portfolio 11 Portfolio of seventeen long-term net- leased properties leased to Advance Auto Parts (3), CVS (1), Dollar General (5), Family Dollar (2), Hobby Lobby (1), Napa  Auto Parts (3), Sherwin- Williams (1) and Walgreens (1). 6.75% 6.75%
Net-Leased Portfolio 12 Portfolio of nineteen long-term net- leased properties leased to Advance Auto Parts (3), Dollar General (9), Family Dollar (1), Fresenius Medical Care (1), Kroger (1), Napa Auto Parts (2), Tractor Supply (1), and Walgreens (1). 6.15% 6.30%
Net-Leased Portfolio 13 Portfolio of twenty long-term net- leased properties leased to Advance Auto Parts (1), CVS, (1), Dollar General (5), Family Dollar (4), Hobby Lobby (1), Napa Auto Parts (1), Sherwin Williams (4), Tractor Supply (1) and Walgreens (2). 6.64% 6.80%
Net-Leased Portfolio 14 Portfolio of seventeen long-term net- leased properties leased to Advance Auto Parts (1), Athletico Physical Therapy (1), Dollar General (6), Fresenius Medical Care (2), MedSpring (1), Napa Auto Parts (1), O’Reilly Auto Parts (1), Tractor Supply (1) and Walgreens (3). 6.50% 6.57%
Net-Leased Portfolio 15 Portfolio of sixteen long-term net- leased properties leased to Advance Auto Parts (2), CVS (1), Dollar General (6), Family Dollar (1), Fresenius Medical Care (1), Goodwill (1), Hobby Lobby (1), Indianapolis Osteopathic Hospital (1) and Walgreens (2). 6.51% 6.51%
Net-Leased Portfolio 16 Portfolio of nineteen long-term net- leased properties leased to Advance Auto Parts (3), Dollar General (7), Family Dollar (1), Hobby Lobby (1), Sherwin Williams (1), Tractor Supply (2) and Walgreens (4). 6.78% 6.78%
Net-Leased Portfolio 17 Portfolio of sixteen long-term net- leased properties leased to Advance Auto Parts (1), Dollar General (7), Goodwill (1), Pick ‘n Save (Kroger Guarantee) (1), Napa Auto Parts (1), Tractor Supply (2), Verizon Wireless (1) and Walgreens (2) . 6.84% 6.84%
Net-Leased Portfolio 18 Portfolio of seventeen long-term net- leased properties leased to Advance Auto Parts (1), CVS (1), Dollar General (6), Fresenius Medical Care (1), Hobby Lobby (1), Napa Auto Parts (1), Tractor Supply (2) and Walgreens (4). 6.62% 6.62%
Multifamily 1 - Van Mark Creek Apartments One (1) apartment community consisting of 144 units. Performing as expected. 7.21% 7.21%
Mira Bella  and San Martin One (1) apartment community consisting of 378 units. Performing as expected. 6.71% 6.71%
Lakeside at Arbor Place Apartments One (1) apartment community consisting of 246 units. Performing as expected. 6.54% 6.54%
North Austin Apartment Portfolio Three (3) apartment communities consisting of 422 units. Performing as expected. 6.48% 6.48%
Crystal Lake Florida Apartments One (1) apartment community consisting of 224 units. Performing as expected. 6.35% 6.35%

 

*These returns were provided by and calculated by the Sponsor

**These investment opportunities are open-ended (i.e. Investors come into the fund at different times) resulting in a range of returns

Business Plan

The Trust acquired the apartment portfolio with 393 units commonly known as the El Paso Apartment Portfolio (the "Properties" or "Portfolio") on January 30, 2018 from third parties unaffiliated with the Sponsor. Concurrently with the acquisition of the Properties, the Trust obtained a loan from Barclays Bank PLC. The Properties are master leased by the Trust to El Paso Apartment Portfolio Master Lessee, LLC ("Master Lessee" or "Master Tenant") an affiliate of the Sponsor. The Master Tenant will pay rent to the Trust and sub-lease the apartment units to tenants pursuant to residential leases. The Trust is a passive owner of the Properties and will not be involved in any manner in the active management of the Properties. The Master Lessee is to enter into a property management agreement with SunRidge Management Group, Inc., an unaffiliated third party (the "Property Manager") to manage the day-to-day operations of the Properties.

The Manager anticipates performing full unit upgrades up to approximately 132 units at Villa Sierra and 77 units at Wyndchase representing 53% of the total units. Such upgrades shall be minor non-structural modifications to the Properties as permitted under the Trust Agreement, including, but not limited to, repairs to ceiling fans and fixtures, lighting, hardware, carpet, vinyl and tile flooring, cabinets and countertops, mini-blinds and drapes, interior repainting, appliance replacements (including refrigerators, ranges and microwaves, dishwashers, garbage disposals, clothes washers and dryers, and hot water heaters). Villa Sierra has received full renovations to 23 units over the past two years while Wyndchase has received full renovations to 22 units. The Manager’s renovation plan includes renovations costs of approximately $4,615 per unit at each property, representing a total of interior renovation upgrades of approximately $963,500. These upgrades, along with the updates and improvements to the common amenities of the properties, are underwritten to increase rents by approximately $69 per month at Villa Sierra and $52 per month at Wyndchase over a three-year renovation time frame in addition to any market rent growth.

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 Properties. The Trust intends to dispose of all of the assets in the Trust in a single sale of the Properties. This strategy is anticipated to provide investors with the opportunity to perform a 1031 exchange following the disposition.

Property

Investors are being offered the opportunity to invest in the acquisition of a 393-unit Class B Multifamily portfolio (the "Properties"), which consists of two properties: a 243-unit Class B Multifamily property (Villa Sierra Apartment Homes) and a 150-unit Class B Multifamily property (Wyndchase Apartment Homes), both located in El Paso, TX. The Properties were constructed in 1969 and 1970, and are currently 96.2% occupied.

El Paso Apartment Portfolio DST, a Delaware Statutory Trust ("DST" or "Trust"), owns the Properties, and El Paso Apartment Portfolio, LLC an entity wholly-owned and managed by ExchangeRight Real Estate, LLC (the "Sponsor"), is offering beneficial interests in the DST to investors. The Sponsor is retaining at least a 1.0% ownership interest in the Property and is offering up to 99.0% of the beneficial interests in the DST to accredited investors ("Beneficial Owners"). 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 Properties.

The total offering amount is $25,130,653, of which $12,230,003 is equity and $12,900,650 is long-term fixed-rate financing. 

This offering is designed for two types of investors. "Existing 1031 Investors" who have already sold or are planning to sell an existing property that is 1031 eligible and want to invest in this offering to complete their 1031 exchange.  As well as "Cash Investors" who are investing with funds that are not part of an existing 1031 exchange but want the option for future sales to be 1031 exchange eligible. Existing 1031 Investors may invest for a minimum of $100,000; Cash Investors may invest for a minimum of $25,000.

Property Details

Villa Sierra Apartment Homes is located at 2435 McKinley Avenue in El Paso, TX. The Property was built in 1969 and is currently 97% occupied. The 243 units consist of 168 one-bedroom one-bathroom, 48 two-bedroom two-bathroom units, seven large two-bedroom two-bathroom units and 20 three-bedroom two-bathroom. In-place rents average $683 per unit and range from $624 to $977. The Property offers amenities which include two swimming pools, a business center, a fitness center, a fire pit, a pet park, a community playground, a picnic area, a clubhouse and laundry facilities. Standard unit interiors at the Property include air conditioning, ceiling fans, kitchen appliances, fireplaces, walk-in closets and private patios or balconies. Some units feature washer/dryer hookups and faux hardwood floors. 

Unit Mix
Unit Type # of Units Avg SF/Unit Avg Rent/Unit Avg Rent/SF
1 Bed / 1 Bath 168 785 $624 $0.79
2 Bed / 2 Bath 48 1,050 $770 $0.73
2 Bed / 2 Bath (L) 7 1,570 $977 $0.62
3 Bed / 2 Bath 20 1,450 $930 $0.64
Total / Average 243 915 $683 $0.77


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Wyndchase Apartment Homes is located at 1601 McRae Blvd in El Paso, TX. The Property was built in 1970 and is currently 95% occupied. The 150 units consist of 55 one-bedroom one-bathroom, 20 two-bedroom one-bathroom units, 24 two-bedroom two-bathroom units, 46 two-bedroom 1.5-bathroom and five three-bedroom 2.5-bathroom. In-place rents average $743 per unit and range from $644 to $1,068. The Property offers amenities which include a swimming pool, a fitness center, a playground, a pet park, a fire pit, three laundry facilities, a clubhouse and a picnic area. Standard unit interiors at the Property include ceiling fans, dishwashers, refrigerators, ceramic tubs and backsplashes, oversized closets and breakfast bars. Some units feature front and back doors, large open kitchens and patios. 

Unit Mix
Unit Type # of Units Avg SF/Unit Avg Rent/Unit Avg Rent/SF
1 Bed / 1 Bath 55 760 $644 $0.85
2 Bed / 1 Bath 20 1,065 $752 $0.71
2 Bed / 2 Bath 24 1,080 $781 $0.72
2 Bed / 1.5 Bath 46 1,200 $811 $0.68
3 Bed / 2.5 Bath 5 1,700 $1,068 $0.63
Total / Average 150 1,018 $743 $0.75


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Comparables

Rental Comparables
  Subject Arbors Citadel Desert Ridge La Plaza Apartments Las Casitas Total / Averages
# of Units 393 56 261 52 129 127 125
Year Built 1969/1970 1971 1974 1969 1969 1970 1971
Average SF (Per Unit) 954 1,161 986 957 1,009 992 1,021
Average Rental Rate (Per Unit) $710 $768 $776 $725 $778 $712 $752
Average Rent PSF $0.74 $0.66 $0.79 $0.76 $0.77 $0.72 $0.74

Source: BBG Appraisal 

Sales Comparables
  Subject El Pavon Mesa Village The Preserve at Mesa Hills Spring Park Foxglove Total / Averages
Date Jan-18 Feb-17 Dec-16 Apr-16 Mar-16 Feb-16 -
# of Units 393 116 160 248 180 176 176
Year Built 1969/1970 1978 1973 1985 1990 1983 1982
Average SF (per Unit) 954 1,062 868 732 773 927 872
Purchase Price $20,807,500 $5,850,000 $8,975,000 $14,000,000 $10,550,000 $8,445,500 $9,564,100
$/Unit $52,945 $50,431 $55,094 $56,452 $58,611 $47,986 $53,715
Cap Rate 6.64% 7.04% 6.60% 5.75% 7.33% 7.39% 6.82%
Occupancy at Sale 96% 90% 91% 92% 95% 96% 93%

Source: BBG Appraisal ​

Property Appraisal available upon request. Please email investor-help@realtymogul.com.

Location

Market Overview

Per the U.S. Census Bureau, the El Paso MSA had a population of 837,918 in 2016, which placed it 68th in the United States. The region is the headquarters of Western Refining, a Fortune 500 company, and three publicly traded companies. It is also home to the Medical Center of the Americas, the only medical research and care provider complex in west Texas and southern New Mexico, and the University of Texas at El Paso, which has an enrollment of over 23,000 students. Additionally, El Paso has a strong federal and military presence as William Beaumont Army Medical Center, Biggs Army Airfield, Fort Bliss, DEA domestic field 7, El Paso Intelligence Center and Joint Task Force North all call it home. El Paso City has been ranked in the top three safest large cities in the U.S. every year since 1997 by Congressional Quarterly. According to Axiometrics, rent growth has averaged ~1.2% per year from 2010 through 2017; however, rent is projected to increase ~2.5% per year from 2018 through 2022.

Market Overview information above was obtained from Axiometrics, Costar and the Appraisal.

Demographic Information

Demographics
Distance from Property 1 Mile 3 Miles 5 Miles
Population (2017) 18,314 118,309 260,710
Population Estimates (2022) 18,300 118,022 260,649
Average Age 38.0 38.0 36.5
Median Household Income $43,269 $40,333 $41,979
Average Household Size 2.6 2.8 3.0
Median Home Value $132,523 $119,911 $115,812
Owner Occupied Households 3,679 24,054 51,754
Renter Occupied Households 3,258 17,929 33,863
Population Growth 2017-2022 -0.08% -0.24% -0.02%

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.

Photos
Financials
Sources & Uses

Total Capitalization
Equity   $12,230,000
Debt   $12,900,650
Total Sources of Funds $25,130,650
Purchase Price   $20,807,500
Acquisition Closing Costs   $536,066
Acquisition Fees   $406,972
Broker-Dealer Fee and Marketing Allowance   $978,400
Syndication Costs & Third Party Costs   $95,000
Organizational, Offering Costs, Pre-Paid Taxes & Insurance   $159,092
Reserves   $2,117,045
Sponsorship Costs   $30,575
Total Uses of Funds $25,130,650

 

Debt Assumptions

The Portfolio has existing debt: 

  • Lender: Barclays Bank PLC
  • Loan Origination Date: 01/30/2018
  • Loan Proceeds: $12,900,650
  • Loan to Cost: 51.3%
  • Interest Rate: Fixed (3.851%)
  • Amortization: Full term (10-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: Subject to Yield Maintenance Premium if loan repaid before Lockout Period Date of November 5, 2027
  • Other Senior Lender Provisions:
    • Upfront replacement reserves were withheld from Loan proceeds by Lender and deposited on the Trust’s behalf on the Loan closing in the amount of (A) $1,555,308 to be used for Replacements (the “Upfront Replacement Deposit”); and (B) the Trust shall thereafter deposit $250 per unit per year for replacements and repairs to the Property during the term of the Loan (the “Replacement Reserve Monthly Deposit”) (collectively, the “Replacement Reserve”);
    • Required repair reserve was withheld from Loan proceeds by Lender and deposited on the Trust’s behalf on the Loan closing in the amount of $21,438, which amount equals one hundred twenty-five percent (125%) of the estimated cost for the completion of the Lender’s required repairs at the Property (the “Required Repair Reserve”); and,
    • Taxes and insurance reserve that was funded on the Loan closing in the amount of $134,632 and an on-going tax and insurance reserve shall be funded by the Trust on each Loan payment date in an amount equal to one-twelfth of the tax premiums that the Lender estimates will be payable during the next ensuing twelve (12) months (the “Tax and Insurance Reserve”).
Distributions

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 beneficial interest in the DST. Distributions are expected 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.

Fees

Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:

Type of Fee Amount of Fee Received By Paid From Notes
One-Time Fees:
Acquisition Fee $284,675 Sponsor Capitalized Equity Contribution 2.33% of the offering amount.
Reallowance of Acquisition Fee $122,300 Sponsor Capitalized Equity Contribution 1.00% of the offering amount.
Broker-Dealer Fee 7.0% Broker Dealers Capitalized Equity Contribution Paid to North Capital(1) or other licensed broker-dealers based on the amount of equity capital raised. Surplus fees retained by Sponsor.
Marketing & Due Diligence Fee 1.0% Broker Dealers Capitalized Equity Contribution 1.0% 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.
Syndication Costs $65,000 Sponsor or Third Parties Capitalized Equity Contribution 0.53% of the offering amount.
Organizational & Offering Costs $24,460 Sponsor Capitalized Equity Contribution 0.20% of the offering amount.
Sponsorship Cost $30,575 Sponsor Capitalized Equity Contribution 0.25% of the offering amount. To reimburse Sponsor for accounting, due diligence, marketing, distribution, and other costs.
Disposition Fee 2.0% Manager Disposition Proceeds 2.0% of gross proceeds from disposition of property if disposition price plus reserves is greater than $25,130,650.
Recurring Fees:
Asset Management Fee 1.0% annual gross income actually collected Manager Operating Cash Flow 1.0% of the annual gross income actually collected from tenants at the Properties.
Property Management Fee 3.0% annual gross income actually collected  Third-Party Operating Cash Flow The initial Property Manager will be SunRidge Management Group, an unaffiliated third party property management company.
Trustee Fee $750 annually Third-Party Operating Cash Flow Gregory S. Harrison, an unaffiliated third party.
Master Lease Operating Profit N/A Master Lessee Operating Cash Flow Master Lessee will retain operating revenues from the Properties that exceed the Annual Base Rent and the Annual Bonus Rent due to the Trust under the Master Lease. Master Tenant is entitled to 50% of rental income above the Effective Gross Revenue Benchmark in a given year.

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.

Disclaimers/FAQs
Disclaimers

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.  


Portfolio Risk​

DST's are ill equipped to address the untimely and unexpected need to raise capital or to re-tenant a property or to carry a property in the event of excessive vacancies. The Master Lessee is not likely to have the necessary resources to replace tenants as a result of default or untimely turnover. This risk is increased by an investment which includes multiple properties. 


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 Portfolio is sold.


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 Po 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

Interest-Only Loan

The loan being used to acquire the properties is expected to have an interest-only period during the full ten (10) year term of the term, which means that there will be no reduction in the principal balance during that interest-only period.


Master Lease Risk

The Portfolio is subject to a Master Lease to an affiliate of the Sponsor whose only assets and source of revenues will be the underlying Portfolio and which may not be able to meet its obligations as they come due. As with any Master Lease, if there is a significant upswing in rents, that upside accrues to the Master Lessee, but if there is falloff or vacancy, that risk is likely to fall on the investors.  There is a substantial risk that, if the Master Lessee is unable to meet its obligation to pay rent, a default or foreclosure may occur under Portfolio's financing which could result in a substantial or total loss of an investment.


Conflict of Interest Risk

There are various potential conflicts of interest among the Sponsor, the Trustees, the Signatory Trustees, the Master Lessee, the Property Manager, and others engagement in the management and operation of the Portfolio, one or more of whom may be affiliated with the others. 


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

Some of these restrictions are ameliorated in part by the introduction of a Master Lessee, who will have the ability, for example, to enter into or renegotiate leases.  However, the existence of a Master Lessee carries with in its own set of risk factors. In addition, DST Members will have no voting rights, and therefore no control over future decisions regarding sale of the properties or roll-up into a limited liability company.


Forward-Looking Statements

El Paso Apartment Portfolio DST (the "Signatory Trustee") 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 Portfolio, including, among other things, factors discussed below:

  • General economic performance of the local and national economy;
  • Required capital expenditures at the properties
  • Competition from properties similar to and near the Portfolio
  • Adverse changes in local population trends, market conditions, neighborhood values, and local economic and social conditions
  • Supply and demand for properties such as the Portfolio
  • 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 Portfolio

The proceeds realized from the sale of the Portfolio 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 Portfolio.


Loss of Deposit

The Signatory Trustee may on behalf of the Trust retain the deposit of a Purchaser who is in default under the Purchase Agreement. See “Summary of Purchase Agreement and Escrow Instructions - Deposit; Liquidated Damages” in the PPM.​


No Representation of Beneficial Owners

Each Beneficial Owner acknowledges and agrees in the Purchase Agreement and Escrow Instructions that legal counsel representing the Depositor, the Signatory Trustee, the Property Manager 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.​


Receipt of Compensation Regardless of Profitability​

The Sponsor, the Signatory Trustee, the Property Manager and their Affiliates are entitled to receive certain significant fees and other significant compensation, payments and reimbursements from the acquisition and operation of the Portfolio regardless of whether the Portfolio operates at a profit. See “Estimated Use of Proceeds" and “Compensation of the Sponsor and Affiliates” in the PPM. ​


 

No Fiduciary Duty

The Trust, the Signatory Trustee, and the Property Manager and their Affiliates will not have a fiduciary duty to the Beneficial Owners as would be applicable to a limited liability company, partnership, or corporation and, therefore, may take actions that would not be in the best interests of one or more of the Beneficial Owners. As permitted under applicable Delaware law, the Signatory Trustee and the Delaware Trustee have expressly disclaimed all duties to the Beneficial Owner except for the duties expressly contained under the Trust Agreement.


General Economic and Market Risks

While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not rental rates will be achieved or investor sentiment and the capital markets will be favorable to the Portfolio at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the Sponsor.


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.

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