$14,530,750
Leasing office with full public kitchen, swimming pool, clubhouse, children's play area, a public mail center, public laundry center and 24 hour emergency on-site maintenance.
Comunidad Realty Partners
Comunidad Realty Partners (CRP) is a dynamic real estate investment firm specializing in multifamily apartment communities in densely-populated Hispanic neighborhoods. Core to its investment strategy is creating culturally-relevant, inclusive communities that are tailored to the various ethnicities living at its communities. CRP owns and manages over $286 million in multifamily assets overall, comprising approximately 4,800 units.
CRP specializes in acquiring and repositioning apartments in infill locations and implementing its proprietary cultural management platform which includes specific cultural upgrades and community-oriented resident services and programs. CRP uses its multifamily lifestyle brand “Buena Vida Community” at its properties to represent its mission of delivering an unparalleled experience of enhanced multifamily living by providing more than just a home but a lifestyle. The firm was founded on a simple principle: enrich lives through enhancing communities while creating value for all stakeholders involved. The firm takes a holistic approach to its investments through symbiotic stakeholder integration of residents, staff, vendors, the greater community, the environment, and investors in order to truly maximize economic and social returns. Its investment philosophy is predicated on fostering innovative lifestyle improvements that align with its residents wants and needs and differentiate the living experience in order to create long-term value for residents and communities in a socially responsible way. Additionally, the firm is focused on “green” environmental improvements that reduce its properties’ energy footprint while reducing utility costs for residents.
RealtyMogul has invested in six prior transactions with the Real Estate Company (Tuscany Apartments, Plano Portfolio, Gazebo Park, Villas de Serenada, Villas del Cabo & Villas de Santa Fe, and Villas de la Colonia). Villas de la Colonia (formerly Metrocrest Village) was acquired in Q2 2014, went full cycle in Q2 2017, and resulted in an IRR to RealtyMogul investors that exceeded pro forma. The renovation program at Villas de la Colonia pushed average leased rents up 20.1%, from $730 per unit to $877 per unit, and reduced the property's expense ratio from 56.8% to 37.3%. Net operating income increased by 32.4% at Villas de la Colonia over the hold period.
http://www.comunidadpartners.com/-
J. Antonio MarquezManaging Partner -
Santiago Rivera TorresManaging Director
J. Antonio Marquez serves as Principal and Managing Partner of Comunidad Realty Partners, a Quez Capital company. He is responsible for strategic planning, capital raising efforts, and sourcing acquisition opportunities for the firm. He is involved in business plan formation on new acquisitions, value-add strategy implementation, and Hispanic marketing efforts. Mr. Marquez has 15 years of experience with his family’s group of companies targeting the Hispanic demographic. He has been involved in over $130 million in commercial/multifamily real estate transactions working with GE Capital, Goldman Sachs, and Principal Real Estate Investors. He has over 10 years of experience managing his family’s commercial portfolio totaling over 1.5 million square feet of office, retail, and industrial space and valued over $110 million. Mr. Marquez graduated cum laude from California Polytechnic – San Luis Obispo and attended the University of Southern California’s Lusk Center for Real Estate where he focused his postgraduate studies in urban real estate with emphasis in affordable/workforce housing through the Stan Ross Program in Real Estate.
Santiago Rivera Torres is a Managing Director at Comunidad Realty Capital. He oversees day to day operations across the portfolio including capital improvement projects, ancillary income services and cultural services & programs implementation. He also is involved in establishing and developing the firm’s commercial partnerships and strategic alliances as well as supporting capital raising efforts and investor relations. Mr. Rivera Torres has worked in the Real Estate and Construction sector in Mexico and U.S. for the last 12 years; his experience ranges from working on family-owned projects on beachfront developments in Baja to residential and low income housing projects in Northern Mexico and retail development in Cabo San Lucas. The Rivera Torres family has been involved in $3 billion USD in housing (400,000 units), hotels & resorts, industrial parks, retail/mall development, and infrastructure development throughout Mexico. In addition, he headed the sales effort for GlobalSolar, a Mexican green technology company specializing in energy-efficient and environmentally sustainable equipment for housing developments throughout Mexico. While he led the sales effort, the company quickly grew to become the largest provider of green technologies to the construction sector in Northern Mexico. Mr. Rivera Torres has a long lineage of real estate experience joined Quez Capital Interests in the early summer of 2012 after learning of their philosophy and Hispanic based multi-family business model.
| Property Name | Location | Asset | Units | Cost Basis | Occupancy |
|---|---|---|---|---|---|
| Villas de la Luz Apartments | Austin, TX | MF | 240 | $10,865,000 | 89% |
| Villas de la Cascada Apartments | San Antonio, TX | MF | 268 | $18,265,000 | 94% |
| Villas del Zocalo Phase 1 | Dallas, TX | MF | 206 | $5,344,828 | 96% |
| Villas del Zocalo Phase 2 | Dallas, TX | MF | 192 | $4,810,345 | 95% |
| Villas del Zocalo Phase 3 | Dallas, TX | MF | 224 | $5,344,828 | 98% |
| Villas de Estancia Apartments | Irving, TX | MF | 206 | $12,667,724 | 95% |
| Villas de Serenada Apartments | Euless, TX | MF | 208 | $13,625,000 | 96% |
| Villas del Encanto Apartments | San Antonio, TX | MF | 334 | $15,580,000 | 95% |
| The Vive Apartments | Dallas, TX | MF | 248 | $14,836,104 | 90% |
| Cantera Creek Ph. 1 Apartments | Dallas, TX | MF | 200 | $11,038,800 | 90% |
| Cantera Creek Ph. 2 Apartments | Dallas, TX | MF | 272 | $15,012,768 | 90% |
| The Lantern Apartments | Dallas, TX | MF | 340 | $20,943,660 | 90% |
| Villas de Santa Fe Apartments | San Antonio, TX | MF | 208 | $13,172,676 | 90% |
| Azura Apartments | Phoenix, AZ | MF | 387 | $24,000,000 | 93% |
| Colinas Ranch Apartments | Irving, TX | MF | 160 | $10,418,000 | 98% |
| Villas del Solamar | Dallas, TX | MF | 212 | $5,800,000 | 96% |
| Villas del Cabo | San Antonio, TX | MF | 272 | $19,613,324 | 93% |
| Parkview on Hollybrook | Longview, TX | MF | 209 | $31,588,000 | 80% |
| Gazebo Park Apartments | Acworth, GA | MF | 216 | $17,540,840 | 96% |
| Tuscany Apartments | San Antonio, TX | MF | 190 | $16,046,556 | 93% |
| Total | 4,792 | $286,513,453 |
| Property Name | Location | Asset | Units | Cost Basis | Occupancy |
|---|---|---|---|---|---|
| Villas de Sendero Apartments | San Antonio, TX | MF | 209 | $8,750,000 | 97% |
| Villas de las Colinas Apartments | Austin, TX | MF | 178 | $4,700,000 | 98% |
| Villas del Sol Apartments | Austin, TX | MF | 294 | $9,650,000 | 93% |
| Villas de Palmas Apartments | Houston, TX | MF | 659 | $22,425,687 | 98% |
| Villas de la Colonia Apartments | Carrollton, TX | MF | 143 | $6,055,000 | 99% |
| The Current Apartments | Austin, TX | MF | 302 | $22,650,000 | 95% |
| Total | 1,785 | $74,230,687 |
The above track record information was provided by the Sponsor and has not been independently verified by RealtyMogul.
In this transaction, RealtyMogul investors are to invest in Realty Mogul 109, LLC ("The Company"), which is to subsequently invest in Villas Del Mar Partners 29, LLC ("The Target"), a limited liability company that will hold title to the Property. Comunidad Realty Partners (the "Real Estate Company") is under contract to purchase the Property for approximately $14.5 million ($55,250 per unit) and the total project cost is expected to be approximately $16.2 million ($61,468 per unit).
The Real Estate Company’s business plan is to implement a value-add strategy by completing interior and exterior renovations at the Property, while also installing low-flow water fixtures throughout the Property to lower utility expenses and beginning to bill back a portion of utility expenses to tenants of the Property. Unit interior upgrades are expected to include a combination of black-on-black appliances, faux-wood flooring, and new light fixtures. A summary of all capital expenditures planned by the Real Estate Company for the Property may be found in the table below.
| CapEx Item | $ Amount | Per Unit |
|---|---|---|
| Interior Rehab ($3,200 each for 113 units) | $361,600 | $1,375 |
| Utility Water Reduction Program | $147,200 | $560 |
| Parking Lot Seal Coat and Striping | $25,000 | $95 |
| Leasing Clubhouse Upgrades | $25,000 | $95 |
| Signage | $25,000 | $95 |
| Solar Screen Installations | $20,000 | $76 |
| Immediate Repair Items | $17,188 | $65 |
| Security Upgrades | $15,000 | $57 |
| Carpentry and Exterior Paint | $10,000 | $38 |
| Grill and Bench Installation | $10,000 | $38 |
| Upgrading Existing Playground | $10,000 | $38 |
| Exterior LED Light Installation | $9,000 | $34 |
| Tree Trimming | $7,500 | $29 |
| Dog Park | $7,500 | $29 |
| Sewer Hydrojet Cleaning | $1,650 | $29 |
| Contingency 10.0% | $71,681 | $273 |
| Construction Management Fee 10.0% | $71,681 | $273 |
| Total | $860,000 | $3,270 |
The seller of the Property has already completed interior renovations on 150 of the 263 units at the Property. The Real Estate Company plans to renovate the remaining 113 currently unrenovated units, achieving an average post renovated net effective rent of $908 per unit, and to sell the Property in five (5) years at a 7.00% cap rate. The pro forma financials included in the Issuer Document Package attached to the Financials tab of this offering anticipate a net yield to investors in the Company of 6.6% in Year One of the hold period, increasing to 12.3% in Year Two.
RealtyMogul has invested in six prior transactions with the Real Estate Company (Tuscany Apartments, Plano Portfolio, Gazebo Park, Villas de Serenada, Villas del Cabo & Villas de Santa Fe, and Villas de la Colonia). Villas de la Colonia (formerly Metrocrest Village) was acquired in Q2 2014, went full cycle in Q2 2017, and resulted in an IRR to RealtyMogul investors that exceeded pro forma. The renovation program at Villas de la Colonia pushed average leased rents up 20.1%, from $730 per unit to $877 per unit, and reduced the property's expense ratio from 56.8% to 37.3%. Net operating income increased by 32.4% at Villas de la Colonia over the hold period.
Built in 1968, the Property consists of one, two and three-bedroom floor plans combining to 263 units, 35 buildings, 437 parking spaces (1.66 per unit), and 274,213 square feet. As of December 2017, the Property was 94% occupied. The weighted average unit size and in-place net effective rent per unit is 1,043 square feet and $876 ($0.84 per square foot), respectively (per the December 2017 rent roll). Amenities across the Properties include a swimming pool, clubhouse, children's play area, a public mail center, a public laundry center, 24 hour emergency on-site maintenance, and a leasing center with full public kitchen.
| Unit Type | # of Units | % of Total | Unit (Square Feet) | Total Square Feet | Rent Per Unit | Rent Per Square Foot |
|---|---|---|---|---|---|---|
| 1 Bedroom | 44 | 17% | 860 | 37,840 | $785 | $0.91 |
| 2 Bedroom | 162 | 61% | 1,011 | 163,854 | $846 | $0.84 |
| 3 Bedroom | 57 | 22% | 1,272 | 72,519 | $1,031 | $0.81 |
| Totals/Averages | 263 | 100% | 1,043 | 274,213 | $876 | $0.84 |
| Tradewind I & II | Sonoma Apartments | French Colony | Hampton Terrace | Falls and Oak Village | Averages | Subject | |
|---|---|---|---|---|---|---|---|
| Date | February 2017 | August 2017 | August 2016 | December 2016 | January 2017 | February 2018 | |
| # of Units | 308 | 60 | 94 | 244 | 408 | 223 | 263 |
| Year Built | 1967 | 1964 | 1963 | 1969 | 1977 | 1973 | 1968 |
| Purchase Price | $16,700,000 | $3,510,000 | $5,100,000 | $14,150,000 | $26,000,000 | $13,092,000 | $14,530,000 |
| $/Unit | $54,221 | $58,500 | $54,255 | $57,992 | $63,725 | $57,739 | $55,250 |
| Cap Rate | 6.69% | 6.50% | 6.45% | 5.40% | 5.40% | 6.09% | 5.83% |
| El Ranchito West | Bella Terra | Westlake Gardens | El Jardin Apartments | Parkside Apartment Homes | Chilsolm Trail Townhomes | Averages | Subject (Post-Renovation) | |
|---|---|---|---|---|---|---|---|---|
| # of Units | 68 | 200 | 180 | 93 | 170 | 168 | 147 | 263 |
| Year Built | 1968 | 1970 | 1984 | 1965 | 1973 | 1982 | 1974 | 1968 |
| Occupancy | 92% | 93% | 95% | 95% | 89% | 97% | 94% | 94% |
| Average SF | 1,046 | 921 | 740 | 1,098 | 819 | 1,068 | 949 | 1,043 |
| Average Rental Rate | $906 | $824 | $834 | $1,104 | $881 | $878 | $905 | $908 |
| Average $/SF | $0.87 | $0.89 | $1.13 | $1.01 | $1.08 | $0.82 | $0.97 | $0.87 |
| Distance (miles from subject) | 0.1 | 0.7 | 0.7 | 1.9 | 1.9 | 0.4 | 1.0 |
Lease and Sale Comparable information provided by Property appraisal.
Located off of Las Vegas Trail, the Property offers easy access to I-30, Loop 820, TX State Highway 183, US Highway 377, and Chilsom Trail Parkway. and TX-151. It is in close proximity to several shopping, dining and entertainment options including Westover Marketplace, Ingram Park Mall, and Walmart Supercenter (less than one mile away).
Per CoStar, from an employment standpoint, Southwest Fort Worth's healthcare and government/defense jobs are key drivers of demand. The Southwest Fort Worth Submarket has dozens of healthcare facilities, including six hospitals, which employ more than 2,500 people. And the majority of Southwest Fort Worth's apartments are close to these hospitals. The submarket is also home to many defense sector employers, like Lockheed Martin, which recently won a nearly $1 billion contract for its Fort Worth facility and will add 1,800 jobs there. Such companies employ more than 3,000 people and occupy almost three million square feet in this submarket. The elephant in the room in terms of employment, though, is the proximity of Southwest Fort Worth to employment in Downtown Fort Worth and the economic headwinds associated with sustained low energy prices. However, while Fort Worth has not seen the type of exceptional job and population growth that the Dallas side of the metroplex has, it's still adding jobs at a faster clip than the national average. In a notable recent deal, WeWork announced it will take 44,000 SF at the Offices at Clearfork in 2018. That space will have enough room to accommodate more than 800 workers.
Per CoStar, Texas Christian University (TCU) also provides consistent apartment demand for the submarket. It is a strong demand driver in Southwest Fort Worth because of all the TCU students and graduates who work in Fort Worth. Its proximity to downtown Fort Worth gives it an appealing live/work/play environment. The school enrolls over 10,000 students, which creates a strong demand for apartments in the area, whether from students moving off campus or those who want to remain in the area and work in downtown Fort Worth after graduation.
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Market Overview
Per Axiometrics, annual effective rental growth rate in the Fort Worth-Arlington market was 4.4% in 2017. Annual effective rent growth is forecast to be 3.2% in 2018, and average 2.8% from 2019 to 2021. Annual effective rent growth has averaged 4.9% since the beginning of 2011. The market's annual rent growth rate was above the national average of 2.3%. Out of the 120 markets ranked by Axiometrics nationally, Fort Worth-Arlington, TX Metro Division was 50th for quarterly effective rent growth, and 29th for annual effective rent growth for 4Q17. The market's occupancy rate decreased from 95.3% in 3Q17 to 94.6% in 4Q17, and was down from 95.5% a year ago. The market's occupancy rate was below the national average of 94.7% in 4Q17. For the forecast period, the market's occupancy rate is expected to be 94.8% in 2018, and average 94.8% from 2019 to 2021. The market's occupancy rate has averaged 94.2% since the beginning of 2011.
Submarket Overview
Per Axiometrics, annual effective rental growth rate in the Southwest submarket of the Fort Worth-Arlington market was 3.5% in 2017. Annual effective rent growth is forecast to be 3.0% in 2018, and average 2.6% from 2019 to 2021. Annual effective rent growth has averaged 4.3% since the beginning of 2011. The submarket's annual rent growth rate was above the national average of 2.3%. Out of the 12 submarkets of the Fort Worth-Arlington market ranked by Axiometrics, the Southwest submarket ranked eighth of 12 for projected effective rent growth for the period 2018 to 2021. Occupancy in the submarket average 95.1% in 2017, equivalent to its average in 2016. For the period from 20181 to 2021 the submarket's projected occupancy averages 95.0%. The submarket's occupancy rate has averaged 94.2% since the beginning of 2011.
Demographic Information
| Distance from Property | 1 mile | 3 miles | 5 miles |
| Population (2017) | 19,768 | 81,282 | 151,049 |
| Population (2022) | 21,476 | 87,809 | 163,155 |
| Average Age | 34 | 36 | 38 |
| Median Household Income | $40,267 | $67,379 | $77,652 |
| Median Household Income | $40,267 | $67,379 | $77,652 |
| Average Household Size | 2.3 | 2.5 | 2.3 |
| Median Home Value | $94,745 | $130,037 | $154,719 |
| Population Growth 2017-2022 | 10.6% | 9.5% | 8.9% |
Demographic information above was obtained from CoStar.
| Sources of Funds | Cost |
|---|---|
| Debt | $12,658,000 |
| Equity | $3,756,102 |
| Total Sources of Funds | $16,414,102 |
| Uses of Funds | Cost |
| Purchase Price | $14,530,750 |
| CapEx Reserve | $860,000 |
| Real Estate Company Acquisition Fee | $217,960 |
| MogulREIT II Acquisition Fee | $48,750 |
| North Capital Broker Dealer Fee | $90,675 |
| Lender Origination Fee | $46,500 |
| Buyer's Broker Fee | $101,717 |
| Working Capital | $50,000 |
| Escrows | $95,000 |
| Closing Costs | $74,750 |
| Cash Flow Reserve | $298,000 |
| Total Uses of Funds | $16,414,102 |
The expected terms of the debt financing are as follows:
- Lender: Arbor Commercial Funding I, LLC (as DUS Lender for Fannie Mae)
- Estimated Proceeds: $12,658,000
- Estimated Rate (Fixed): 10 Year Treasury + 2.07% (4.93% all-in as of February 9, 2018)
- Amortization: 30 years, with three years of interest-only
- Term: 12 years
- Prepayment Penalty: 11.5 years of yield maintenance
- Assumption Fee: 1.0% of outstanding loan principal balance
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.
The Target will make distributions to investors (The Company, MogulREIT II, and Real Estate Company, collectively, the "Members") as follows:
Operating Income, Refinance, and Sales Proceeds
- To the Members, in proportion to, and to the extent of, their accrued but unpaid preferred returns (8.0%).
- To the Members, in proportion to, and to the extent of, their unreturned capital.
- 70.0% / 30.0% (70.0% to Members / 30.0% to the Real Estate Company) of excess cash flows and appreciation to a 16.0% IRR to Members.
- 60.0% / 40.0% (60.0% to Members / 40.0% to the Real Estate Company) of excess cash flow and appreciation thereafter.
Note that these distributions will occur after the payment of the Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).
The Company will distribute 100% of its share of excess cash flow (after expenses) to the members of The Company (the RealtyMogul investors). Distributions are expected to start in September 2018 and are projected 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.
| Year One | Year Two | Year Three | Year Four | Year Five | |
|---|---|---|---|---|---|
| Effective Gross Revenue | $2,493,314 | $2,897,914 | $2,992,545 | $3,071,008 | $3,143,439 |
| Total Operating Expenses | $1,611,838 | $1,730,148 | $1,775,415 | $1,822,533 | $1,870,701 |
| Net Operating Income | $881,476 | $1,167,767 | $1,217,130 | $1,248,476 | $1,272,739 |
| Year 0 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|---|
| Distributions to Realty Mogul 109, LLC Investors |
($1,875,000) | $120,733 | $222,811 | $248,413 | $189,322 | $185,663 | $2,505,006 |
| Net Earnings to Investor - Hypothetical $50,000 Investment |
($50,000) | $3,220 | $5,942 | $6,624 | $5,049 | $4,951 | $66,800 |
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 | $217,961 | Real Estate Company | Capitalized Equity Contribution | 1.5% of the Property purchase price. |
| Acquisition Fee | $48,750 | RM Advisor, LLC | Capitalized Equity Contribution | RM Advisor, LLC is the Manager of MogulREIT II and a wholly-owned subsidiary of Realty Mogul, Co. |
| Disposition Fee | 1.0% of gross sale proceeds | RM Advisor, LLC | Distributable Cash | RM Advisor, LLC is the Manager of MogulREIT II and a wholly-owned subsidiary of Realty Mogul, Co. |
| Broker-Dealer Fee | $90,675 | North Capital (1) | Capitalized Equity Contribution | 4.875% based on the amount of equity invested by Realty Mogul 109, LLC. |
| Construction Management Fee | 10.0% of costs | Real Estate Company | Capitalized Equity Contribution |
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
|---|---|---|---|---|
| Asset Management Fee | 1.5% of effective gross revenues | Real Estate Company | Operating Cash Flow | |
| Management and Administrative Fee | 1.25% of amount invested in Realty Mogul 109, LLC | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of Realty Mogul 109, 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 The Company, 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.
Forward-Looking Statements
Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated”, “projected”, “forecasted”, “estimated”, “prospective”, “believes”, “expects”, “plans”, “future”, “intends”, “should”, “can”, “could”, “might”, “potential”, “continue”, “may”, “will” and similar expressions to identify these forward-looking statements.
Non-Transferability of Securities
The transferability of membership interests in The Company are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Moreover, the estimated investment holding period described herein is only a projection, and there can be no assurance when or if an investment may be liquidated. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
Conflict of Interest Risk
Mogul REIT II, Inc. (“MogulREIT II”), which is managed by RM Adviser, LLC (“RM Adviser”), an affiliate of The Company’s manager, may also make an investment in the Target. The total investment made by MogulREIT II may be more, less, or equal to the total investment made by The Company. However, RM Adviser may have additional rights and privileges, including more control over the Target, pursuant to the Target's operating agreement. This could give rise to a conflict of interest between The Company and Mogul REIT II, which may limit The Company's ability to have control over certain major decisions concerning the Target, and it may result in a material adverse effect on your investment.
Capital Call Risk
The amount of capital that may be required by the Target from the Company is unknown, and although the Target does not require that the Company and its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or sell additional equity. The Company does not intend to participate in a capital call if one is requested by the Target, and in such event the manager of the Target may accept additional contributions from other members of Target or from new members. In the event that the manager of Target advances any capital on behalf of the Company, it will be deemed to be a manager loan at an interest rate that cannot be determined at this time. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case the Company's interest in Target will potentially suffer a proportionate amount of dilution.
Interest-Only Loan Period
The Target is expected to obtain a senior loan (the “Loan”) to, in part, acquire the apartment community. The Loan is anticipated to have an interest-only period during the first three years of the loan term, which means that there will be no reduction in the principal balance during that interest-only period.
Texas State Environmental Risks
Texas is subject to frequent and sometimes debilitating tornadoes, floods, wild fires, coastal hurricanes, and other environmental factors. More recently, hurricane Harvey caused destruction and massive flooding within the state of Texas. There can be no assurance that frequent hurricanes and flooding within the state, or any other environmental factor, will not cause significant difficulties and disruptions in the daily operation of the Target's business, or that Real Estate Company and Target are properly insured for any such damage caused to the property or its business operations. As a result, the business and financial condition of the Target, and thus the Company and its investors, may be materially adversely affected.
The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Issuer Document Package for a discussion of additional risks. The above presentation is based upon information supplied by the Sponsor and others. Realty Mogul, Co., RM Manager, LLC, and The Company, 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.