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Completed Equity
Multifamily
CF Norterra Canyon Multifamily, DST
North Las Vegas, NV
INVESTMENT STRATEGY
INVESTMENT TYPE
Equity
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100% funded
Offered By Cantor-Fitzgerald Investors, LLC & Hamilton Zanze
%* TARGET IRR %-%
5.0%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 10 years
Estimated First Distribution
*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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Overview
1031 eligible DST offering featuring a 92% leased multifamily property that was built in 2007. Managed by an Institutional Real Estate Company.
Property At A Glance
Year Built 2007
Number of Units 426
February 2018 Occupancy 92%
Leverage 45.0% Loan-to-Purchase/ 50.3% Loan-to-Cost
Parking Ratio 2.00 / unit
Acquisition Price

$59,650,000

Investment Highlights
Joint Venture between Cantor Fitzgerald, an Institutional Real Estate Company, and Hamilton Zanze, an experienced Operator which currently operates 83 apartment properties totaling approximately 18,500 apartment units across 11 states, and has owned/operated 10 properties in Las Vegas since 2003.
Low leveraged Property (50.29% LTC) with 2.43x debt service coverage ratio based on the Year One proforma.
Conveniently located near Interstate 15 and the Bruce Woodbury Beltway, providing residents access to major retail and employment centers in Downtown Las Vegas (9.0 miles) and the Las Vegas Strip (12.4 miles).
Population of close to 500,000 within a five-mile radius of the Property, with annual growth of 1.7% from 2010-2016.
Management
Cumulative Distributions

Cantor-Fitzgerald Investors, LLC & Hamilton Zanze

The Sponsor is a joint venture between Cantor Fitzgerald, an institutional real estate company, and Hamilton Zanze, an experienced operator which currently operates 83 apartment properties totaling approximately 18,500 apartment units across 11 states, and has owned/operated 10 properties in Las Vegas since 2003. 

Cantor Fitzgerald and its Affiliates are a diversified organization specializing in financial services and real estate services and finance for institutional customers operating in the global financial and commercial real estate markets. As of December 31, 2016, Cantor Fitzgerald and its Affiliates had approximately 10,000 employees operating in most major financial centers throughout the world. Cantor Fitzgerald maintains credit ratings of ‘BBB-’ from Standard & Poor’s and ‘BBB-’ from Fitch.

Cantor Fitzgerald and its Affiliates operate through four business lines: Capital Markets and Investment Banking; Inter-Dealer Brokerage; Real Estate Brokerage and Finance; and Private Equity. The Real Estate Brokerage and Finance business principally consists of commercial real estate brokerage and finance services, conducted by Newmark Grubb Knight Frank (“NGKF”) and Cantor Commercial Real Estate (“CCRE”).

Cantor Fitzgerald is a preeminent capital markets investment bank, recognized for its strengths in the equity and fixed income capital markets, its global distribution model, and for its expanding presence as the leading independent middle market investment bank serving the marketplace with investment banking services, prime brokerage, and commercial real estate financing. Affiliates of Cantor Fitzgerald have been involved with eight (8) real estate programs with similar investment objectives since November 2014. These prior real estate programs involved the purchase of 89 properties for an aggregate purchase price of approximately $456 million. As of July 1, 2017, these prior programs have raised more than $172 million from over 580 investors.*

Hamilton Zanze is a private, San Francisco-based real estate investment company that acquires, repositions, and manages apartment communities throughout the United States. Through affiliated entities, Hamilton Zanze currently has an ownership interest in and operates 83 properties totaling approximately 18,500 apartment units across 11 states. Hamilton Zanze principals have nearly 100 years of combined experience in multifamily real estate investment, finance and operations.

Operating through its integrated professional teams — including transactions, operations, accounting, and executive — Hamilton Zanze has acquired an interest in and managed more than $3.3 billion in multifamily investments since it was founded in 2001. Within the operational group, Hamilton Zanze’s construction management division specializes in value enhancement including unit renovations and overall community improvements. Property management is conducted through its affiliate, Mission Rock Residential. Hamilton Zanze employs a disciplined approach to acquisitions, dispositions, asset management, and construction management and is a Preferred Borrower with Fannie Mae and a Select Sponsor with Freddie Mac.

During its 17 years of operation, Hamilton Zanze has joint ventured with a number of institutional equity partners and maintains a private capital platform focused on 1031 exchange transactions.*

*Per the Sponsors 

http://www.cantor.com
  • Shawn Matthews
    CEO
  • Kenneth Carpenter
    Managing Director
  • Aaron Wessner
    Managing Director
  • Issac Hera
    CEO
  • Frank Roseen
    Co-Chairman STAR Real Estate Ventures
  • Karen Katsoff
    CFO
Shawn Matthews
CEO

Matthews has served as the Chief Executive Officer of Cantor Fitzgerald & Co. since 2009. He joined Cantor Fitzgerald & Co. in 2005 and served in senior management roles prior to becoming Chief Executive Officer. He has played a significant role in the substantial growth of the company. Mr. Matthews started his career at Wertheim Schroeder & Co in 1990, and since that point has spent the last 25 years in a senior management role having run both desks and departments at several firms. He has also been the managing member of a broker-dealer, West Side Capital, as well as the managing partner of Alchemist Capital Management, a hedge fund. Mr. Matthews is on the board of several entities and is a former board member of the Securities Industry and Finance Markets Association.

Kenneth Carpenter
Managing Director

Mr. Carpenter joined Cantor Fitzgerald in January 2013 with an initial focus on the acquisition, management and financing of net lease properties after being affiliated with a commercial real estate advisory, financing and asset management firm. Immediately prior, Mr. Carpenter was the Head of Americas for Deutsche Bank’s Asset Finance and Leasing group where he had overall responsibility for the strategy and execution of the group’s financing, advisory and principal investing activities (debt and equity) across various asset classes. Prior to joining Deutsche Bank, Mr. Carpenter spent nine years at Wachovia (later Wells Fargo) rising to Managing Director, Global Head of Structured Asset Finance where he led a team in the United States and Europe investing both debt and equity capital in various hard asset classes including commercial real estate. Mr. Carpenter’s commercial real estate acquisition and finance experience spans most property types including office, industrial, retail and healthcare. Prior to joining First Union (later Wachovia), he was a Vice President with Deutsche Bank in their real estate finance group where he originated sale/leaseback and other real estate financing transactions. Prior to Deutsche Bank, Mr. Carpenter worked at Nations Bank providing strategic advisory and financing solutions, including commercial loans, syndicated bank debt, subordinated debt, and mergers and acquisitions, to middle market corporations.

Aaron Wessner
Managing Director

Mr. Wessner has more than 14 years of institutional commercial real estate investment, capital markets and advisory experience. Mr. Wessner joined Cantor Fitzgerald in 2011 to assist with the development of Cantor Commercial Real Estate, where he held senior positions on the Capital Markets and Corporate Finance teams. Mr. Wessner also was a senior member of the Real Estate Acquisitions team, focused on net lease transactions in the United States. Prior to joining Cantor Fitzgerald, Mr. Wessner was a co-founder of Park Bridge Financial, a privately-held commercial real estate debt and equity advisory firm headquartered in New York, where he provided strategic advisory services to real estate owners and lenders on distressed debt and equity matters. Prior to Park Bridge, Mr. Wessner was a member of Merrill Lynch’s Global Commercial Real Estate Group, where he was an offering manager on a team responsible for issuing commercial real estate debt securities. While at Merrill Lynch, Mr. Wessner also focused on the distribution of commercial real estate debt via the sale of whole-loans, B-notes and mezzanine positions. Prior to Merrill Lynch, Mr. Wessner was a credit analyst within the CMBS group at Fitch Ratings and worked within Ernst & Young LLP’s Structured Finance Advisory practice.

Issac Hera
CEO

Mr. Hera serves as Chief Executive Officer of STAR. Prior to joining STAR, Mr. Hera served as CEO of Brack Capital Real Estate USA, the United States subsidiary of a publicly traded international real estate development firm. During his 16 years at Brack Capital, Mr. Hera was responsible for Brack Capital’s overall business and operations in the United States. Mr. Hera oversaw real estate transactions with an aggregate value of over $5 billion, and was responsible for real estate acquisitions, asset and Property management, debt financing, sales, and development functions of a real estate portfolio of over 8 million square feet. Issac is a Certified Public Accountant and holds a B.A. in Law from Tel Aviv University.

Frank Roseen
Co-Chairman STAR Real Estate Ventures

Co-Chairman, Star Real Estate Ventures. Mr. Roseen serves as Co-Chairman of STAR. Mr. Roseen has more than 30 years of business, real estate and financial experience. Mr. Roseen worked for GE Capital Real Estate for 13 years where he held various senior management roles including CEO for Germany and Eastern Europe. Mr. Roseen currently serves as an Advisory Board Member of Aroundtown Property Holdings, a publicly traded real estate company on the Frankfurt Stock Exchange and Euronext Paris. Mr. Roseen holds an M.B.A. from Stockholm University.

Karen Katsoff
CFO

Ms. Katsoff serves as Chief Financial Officer of STAR. Ms. Katsoff joined STAR from Tishman Speyer Properties, an international owner, developer, operator and fund manager of real estate. While there she served for eight years as Regional Finance Director and Asset Manager and oversaw iconic assets such as Rockefeller Center. Ms. Katsoff began her career in Public Accounting at Richard A. Eisner & Co. and Arthur Andersen, and subsequently worked at DRA Advisors and Morgan Stanley. Ms. Katsoff holds a B.S. in Accounting from the University of Delaware and an M.B.A. from New York University Stern School of Business. Ms. Katsoff is a Certified Public Accountant.

Track Record

Currently Owned DST Portfolio - Cantor Fitzgerald
Program Locations Property Type Property Count % Equity Financed % Debt Financed
WG DST 1 AR, IA, KS & OH Single Tenant 8 34% 66%
WG DST 2 IN, MO & TN Single Tenant 9 34% 66%
WG DST 3 KY, MO & WI Single Tenant 8 34% 66%
WG DST 4 AL, AR, TN & WI Single Tenant 8 35% 65%
WG DST 5  MI, MS, MT, OK, SD & WV Single Tenant 8 35% 65%
CF Retail Properties DST VI CT, OH, OK, PA & SD Single Tenant 12 40% 60%
CF Net Lease Portfolio DST 7 FL, KY, LA, MN, NE, SD & TN Single Tenant 19 42% 58%
CF Net Lease Portfolio DST 8 AZ, CO, TX, WI & WY Single Tenant 17 42% 58%
CF Net Lease Portfolio DST 9 IN, IA, KS, LA & WI Single Tenant 10 42% 58%
Total     99    

*The above was provided by the Sponsor and has not been verified by Realty Mogul.

 
Business Plan

On February 15, 2018 CF Arrow Canyon Multifamily DST acquired the Property from a third-party seller. The Trust was formed by CFHZ Arrow Canyon, LLC (the "Sponsor") which is a joint venture between affiliates of Cantor Fitzgerald Investors, LLC and Hamilton Zanze & Company. The Property is master leased by the Trust to CF Arrow Canyon Master Tenant, LLC ("Master Lessee" or "Master Tenant"), an affiliate of the Sponsor. The Master Tenant sub-leases the apartment units to the end-user tenants pursuant to residential leases. The Trust is a passive owner of the Property and will not be involved in any manner in the active management of the Property. CF Arrow Canyon Manager, LLC (the "Manager") has been appointed to manage the Trust pursuant to the Trust Agreement. Concurrently with the acquisition of the Property, the Trust obtained a loan from Cantor Commercial Real Estate Lending, L.P., an affiliate of the Sponsor.

The Trust expects to provide the Beneficial Owners a return on their investment in two primary ways: (i) in the form of monthly cash distributions to the Beneficial Owners; and (ii) upon any disposition of the Property. The Trust intends to dispose of all of the assets in the Trust in a single sale of the Property. This strategy is anticipated to provide investors with the opportunity to perform a 1031 exchange following the disposition.

Property
Property Details

The Property is a 426-unit Class B+ multifamily apartment community located in the North Las Vegas submarket with an average household income of $125,880 in a one-mile radius (per the CBRE appraisal). The Property was constructed in 2007 and is wood frame construction. Occupancy was 92% as of February 6, 2018. The unit mix consists of 180 one-bedroom units, 192 two-bedroom units, and 54 three-bedroom units. Average in-place monthly rents are $949 per unit, per the Property appraisal completed by CBRE. 

The Property is a gated community and currently offers numerous amenities including include two pools, bocce ball, built-in BBQ’s, picnic areas, putting green, and a fitness center. 

Unit amenities include a full appliance package including a gas range/oven, vent-hood, frost-free refrigerator, garbage disposal, dishwasher, and select units have a built-in microwave oven. Additionally, each unit features wood cabinets with granite countertops and vinyl or faux wood flooring in the kitchen area. Additionally, all units include a private patio or balcony area with an exterior storage room. All units feature side by side washer dryer combinations located in the storage closet located on the balcony.

Unit Mix
Unit Type - Floorplan # of Units Avg SF/Unit Avg Rent/Unit Avg Rent/SF
1 BR / 1 BA - Canyon 72 750 $835 $1.11
1 BR / 1 BA - Belmore with Den 37 995 $867 $0.87
1 BR / 1 BA - Windsor with Den 71 1,007 $896 $0.89
2 BR / 2 BA - Sable 27 1,057 $936 $0.89
2 BR / 2 BA - Sable 57 1,069 $942 $0.88
2 BR / 2 BA - Upton 36 1,188 $981 $0.83
2 BR / 2 BA - Upton 72 1,218 $988 $0.81
3 BR / 2 BA - Glendale 16 1,367 $1,136 $0.83
3 BR / 2 BA - Glendale 32 1,398 $1,162 $0.83
3 BR / 2 BA - Arden 2 1,554 $1,247 $0.80
3 BR / 2 BA - Arden 4 1,590 $1,287 $0.81
Total 426 1,076 $949 $0.90
Comparables

Rental Comparables
  Centennial at 5th Broadstone Indigo The Preserve Azure Villas Colonial Grand Los Cabos Villas Averages Subject
# of Units 428 186 455 312 341 410 355 426
Year Built 2009 2008 2007 2007 2007 1996/1998 2006 2007
Occupancy 94% 95% 93% 94% 96% 91% 94% 92%
Average Rental Rate (Per Unit) $1,080 $1,008 $1,033 $1,013 $1,332 $979 $1,074 $949
Distance from Subject 2.0 miles 1.7 miles 2.0 miles 1.8 miles 1.7 miles 0.7 miles 1.7 miles -

Source: CBRE Appraisal dated February 15, 2018

Sales Comparables
  Cimarron Apartments Willows at Spring Valley Palms at Peccole Ranch Alicante Apartments Tierra Bella Avondale Apartments Averages Subject
Date Aug-17 Aug-17 Jun-17 Feb-17 Dec-16 Apr-16 - Feb-18
# of Units 240 168 404 232 98 560 284 426
Year Built 2000 1998 1996 2001 2003 1995 1999 2007
Occupancy 96% 97% 95% 95% 94% 95% 95% 92%
Purchase Price $35,100,000 $24,000,000 $62,000,000 $35,500,000 $12,467,500 $88,250,000 $42,866,250 $59,650,000
$/Unit $146,250 $142,857 $153,465 $153,017 $127,219 $157,589 $146,733 $140,023
Cap Rate 5.3% 6.1% 5.6% 5.5% 5.5% 5.5% 5.6% 5.2%

Source: CBRE Appraisal dated February 15, 2018

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

Location

The Property is conveniently located near Interstate 15 and the Bruce Woodbury Beltway, providing residents access to major retail and employment centers in Downtown Las Vegas (approximately 9.0 miles from the Project) and the Las Vegas Strip (approximately 12.4 miles from the Project). Major employers in the area include Cannery Casino & Hotel (approximately 0.9 miles from the Project), VA Southern Nevada Hospital (approximately 3.8 miles from the Project), and Nellis Air Force Base (approximately 4.5 miles from the Project).

Market Overview

Clark County is located in the southern tip of Nevada.  According to the U.S. Office of Management and Budget, Clark County is part of the Las Vegas MSA.  The Project is located within the Las Vegas MSA.  According to the Appraisal, the Las Vegas MSA had an estimated 2017 population of 2,211,000, which represented an average annual increase of 2.6% over the 2016 census of 2,155,700.  The population is projected to increase at a 2.5% average annual rate from 2018 to 2022. 

As shown below, the 2016 population within a 3-mile radius of the Project was 196,341.  The average number of households within a 3-mile radius for the same period was 89,548.  Population in the area has grown since the 2010 census, and this trend is projected to continue through 2021.  According to the Appraisal, compared to the Las Vegas MSA overall, the population within a 3-mile radius is projected to grow at a slower rate.  CBRE further noted that the 2016 median household income within a 3-mile radius was $68,188, which was higher than the median household income for the Las Vegas MSA.  Income levels in the immediate areas surrounding the Project were generally higher than income levels in the rest of the Las Vegas MSA. 

Demographic Information

Demographics
Distance from Property 1 Mile 3 Miles 5 Miles
Population      
      2021 Total Population 24,829 214,009 540,294
      2016 Total Population 22,497 196,341 495,182
      2010 Total Population 20,074 177,191 447,580
      2000 Total Population 16,644 163,264 416,217
      Annual Growth 2016 - 2021 1.99% 1.74% 1.76%
      Annual Growth 2010 - 2016 1.92% 1.73% 1.70%
      Annual Growth 2000 - 2010 1.89% 0.82% 0.73%
Households      
      2021 Total Households 14,204 97,284 241,983
      2016 Total Households 12,994 89,548 222,249
      2010 Total Households 11,795 81,595 202,231
      2000 Total Households 9,878 77,148 188,154
      Annual Growth 2016 - 2021 1.80% 1.67% 1.72%
      Annual Growth 2010 - 2016 1.63% 1.56% 1.59%
      Annual Growth 2000 - 2006 1.79% 0.56% 0.72%
Income      
      2016 Median Household Income $80,233 $68,188 $66,105
      2016 Average Household Income $125,880 $121,573 $115,869
      2016 Per Capita Income $72,348 $55,741 $52,451
2016 Population 25+ College Graduates 13,180 80,302 197,403
Age 25+ Percent College Graduates - 2016 73.8% 58.4% 56.8%

Demographic information above was obtained from the PPM and ESRI via the Appraisal

According to the Appraisal, total employment in the Las Vegas MSA was estimated at 979,500 jobs as of 2017.  Between 2013 and 2017, employment rose by 130,100 jobs, equivalent to a 15.3% increase over the entire period.  There were gains in every year over the 5-year period.  According to the Appraisal, the table below illustrates a predominantly upper middle-income employment profile of the Project’s apartment submarket, with much of the population holding accommodation, retail trade and entertainment-related jobs.  

According to the Appraisal, CBRE projected that recovery for the Las Vegas MSA as job growth accelerates.  In CBRE’s opinion, in the long-term, the Las Vegas MSA’s attractive quality of life and affordable living costs will bring about robust population growth and ensure above-average employment trends.  CBRE noted that the Project’s neighborhood currently has a middle-income demographic profile with an average household income of $121,573 within a 3-mile radius.  The outlook for the neighborhood is for cautious improved performance over the near term.  In CBRE’s opinion, the demand for existing developments is expected to trend upward provided the economy continues its bid for recovery.

CBRE noted 6 competing apartment rentals located within a 2-mile radius of the Project as of the date of the Appraisal, including (i) Centennial at 5th, (ii) Broadstone Indigo, (iii) The Preserve, (iv) Azure Villas, (v) Colonial Grand at Palm Vista and (vi) Los Cabos Villas.  

Market Overview information above was obtained from the PPM.

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
Sources of Funds Cost
Debt $30,000,000
Equity $38,780,000
Total Sources of Funds $68,780,000
Uses of Funds Cost
Purchase Price $59,650,000
Closing Costs $608,309
Lender and Loan Expenses $434,901
Reserves $2,129,919
Amount Retained by Depositor $2,195,375
Selling Commissions $2,326,800
Marketing and Due Diligence $387,800
Placement Fee $678,650
Organizational & Offering Costs $293,246
Due Diligence Expenses $75,000
Total Uses of Funds $68,780,000
Debt Assumptions

The Property has existing debt: 

  • Lender: Cantor Commercial Real Estate Lending, L.P.
  • Loan Proceeds: $30,000,000
  • Loan to Cost: 50.3%
  • Interest Rate: 4.55% Fixed
  • Interest Only: Full Term
  • Recourse: Non-recourse to the Trust, but recourse to the Trust and principals of the Sponsor for certain (i) "bad acts", (ii) environmental indemnification, and (iii) springing recourse events
  • Term: 10 years
  • Defeasance: The Loan may be defeased at any time after the Permitted Release Date and prior to January 6, 2028
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 purchase of beneficial interest in the DST. Distributions are targeted to continue on a monthly basis thereafter. These distributions are at the discretion of the Sponsor and made directly by the Sponsor, neither Realty Mogul Co. nor any of its affiliates have any control or discretion on the timing or amount of distributions.

Fees

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

One-Time Fees:
Type of Fee Amount of Fee Received By Paid From Notes
Selling Commission 6.00% of offering proceeds Broker Dealers Capitalized Equity Contribution Paid to North Capital (1) or other licensed broker-dealers that are Selling Group Members based on the amount of equity capital raised. An Affiliate of the Real Estate Company is also a broker-dealer who is eligible to get paid this fee.
Marketing and Due Diligence Fee 1.00% of offering proceeds Broker Dealers Capitalized Equity Contribution 1.00% 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 the Real Estate Company.
Placement Fee 1.75% of offering proceeds Broker Dealers Capitalized Equity Contribution Managing Broker-Dealer will receive a fee up to 1.75% of the Total Sales, which it may at its sole discretion partially re-allow to Selling Group Members for non-accountable marketing expenses in addition to any other allowances.
Organization and Offering Expenses $293,246 Sponsor Capitalized Equity Contribution The Sponsor and its affiliates will be entitled to reimbursement for Organization and Offering Expenses, on an accountable basis, estimated at $293,246.
Disposition Fee 2.50% Sponsor Sale Proceeds 2.50% of Sales Price 
Recurring Fees:
Type of Fee Amount of Fee Received By Paid From Notes
Construction Management Fee 5.0% of Total Costs HZ DST Asset Management, Inc Operating Cash Flow HZ DST Asset Management, Inc. is an affiliate of the Sponsor.
Trust Manager Fee $90,000 annually Trust Manager Operating Cash Flow Trust Manager is an affiliate of the Sponsor.
Property Management Fee 3.0% of Effective Gross Income Property Manager Operating Cash Flow Property Manager is an affiliate of the Sponsor.
Property Revenues in Excess of Rent N/A Master Lessee Operating Cash Flow The Master Tenant will retain revenues from the Property that exceed the total rent payable to the Trust under the Master Lease.
Financing Fee 1% of loan amount Trust Manager Operating Cash Flow In the event the Property is refinanced the Trust Manager will receive a financing fee equal to 1% of the principal amount of the new loan.

Notes:

(1) Certain employees of Realty Mogul, Co. are registered representatives of, and are paid commissions by, North Capital Private Securities Corp., a Delaware corporation ("North Capital"). In addition, North Capital pays a technology provider services fee to Realty Mogul, Co. for licensing and access to certain technology, reporting, communications, branding, entity formation and administrative services performed from time to time by Realty Mogul, Co., and North Capital and Realty Mogul, Co. are parties to a profit sharing arrangement.

The above presentation is based upon information supplied by the Sponsor or others.  Realty Mogul, Co. along with its respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein.  The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.

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.  


Real Estate Investment Risk

Any investment in real estate carries certain inherent risks, and there is no guaranty as to the future occupancy of the Property or operating results.  Factors which might influence outcome include:

  • Changes in national or local economic conditions
  • Changes in the local market, including the entry of new competitors
  • Changes in the financial condition of the major tenant or tenants
  • The occurrence of casualties or natural disasters
  • The enactment of unfavorable laws

1031 Risk

Although it is intended that interests will be acquired on a tax-deferred basis under Code Section 1031, each investor must satisfy a number of technical requirements to qualify for tax deferral under Section 1031. Also, no assurance can be given that investors will be able to complete a qualifying Section 1031 exchange in the future when the Property is sold.


DST Risk

IRS established seven prohibitions over the powers of the DST Trustee, which include the following:

  • Once the offering is closed, there can be no future equity contribution to the DST by either current or new co-investors or beneficiaries
  • The DST Trustee cannot renegotiate the terms of the existing loans, nor can it borrow any new funds from any other lender or party
  • The DST Trustee cannot reinvest the proceeds from the sale of its investment real estate
  • The DST Trustee is limited to making capital expenditures with respect to the property to those for a) normal repair and maintenance, (b) minor non-structural capital improvements, and (c) those required by law
  • Any liquid cash held in the DST between distribution dates can only be invested in short-term debt obligations
  • All cash, other than necessary reserves, must be distributed to the co-investors or beneficiaries on a current basis, and
  • The Trustee cannot enter into new leases or renegotiate the current leases

Risks of Investing in Multifamily Rental Properties; Competition

The rental of multifamily residential space is a highly competitive business. Ownership of the Property could be adversely affected by competitive properties in the real estate market, which could affect the operations of the Property and the ultimate value of the Property. Success in owning the Property, therefore, will depend in part upon the ability of the Master Tenant, the Property Manager and the Property Sub-Manager (i) to retain current tenants at favorable rental rates; (ii) to attract other quality tenants upon the termination of existing leases if the existing tenants fail to renew or as otherwise needed; and (iii) to provide an attractive and convenient living environment for the tenants.


Competition from Apartment Communities in the Surrounding Geographic Area

A number of apartment communities of similar size and amenities are located in the Property’s immediate apartment sub-market. See “Risk Factors - Real Estate Risks - Competition” in the PPM. There are a number of Class A apartment communities in the surrounding region that may be more attractive to renters. Competing apartment communities may reduce demand for the Property, increase vacancy rates, decrease rental rates and impact the value of the Property itself. There may also be additional real property available in the general vicinity of the Property that could support additional multifamily properties. If newer housing is built, it may siphon demand away from the Property, as newer housing tends to be more attractive to prospective tenants. It is possible that tenants from the Property will move to existing or new apartment communities in the surrounding area, which could adversely affect the financial performance of the Property. Competition from nearby apartment communities could make it more difficult to attract new tenants and ultimately sell the Property on a profitable basis. The Property could also experience competition for real property investments from individuals, corporations and other entities engaged in real estate investment activities. Other properties and real estate investments may be more attractive than the Property. There is no assurance that the property managers will be able to attract residents to the Property given these facts.


The Property is Subject to Risks Relating to its Local Real Estate Market

Weakness or declines in the local economy and real estate market could cause vacancy rates at the Property to increase and could adversely affect the Trust’s ability to sell the Property under favorable terms. The factors which could affect economic conditions in the market generally include business layoffs, industry slowdowns, relocations of businesses, changing demographics, infrastructure quality and any oversupply of or reduced demand for real estate. Declines in the condition of the market could diminish your investment in and value of the Property.


Interest-Only Loan

The loan used to acquire the Property is expected to have an interest-only period for the entire 120 months of the loan term, which means there will be no reduction in the principal balance during the loan.


Performance of the Master Tenant Under the Master Lease

The ability of the Trust to meet its obligations is dependent upon the performance of the Master Tenant and its payment of Rent and other payments required under the Master Lease. ​


Conflict of Interest Risk

There are various potential conflicts of interest among the Sponsor, the Trust, the Managers, the Master Tenant, the Property Managers, and others engaged in the management and operation of the Property, one or more of whom may be affiliated with the others. 


Forward-Looking Statements

The PPM has based these forward-looking statements on its current expectations and predictions about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about the Property, including, among other things, factors discussed below:

  • General economic performance of the local and national economy;
  • Required capital expenditures at the Property
  • Competition from properties similar to and near the Property
  • Adverse changes in local population trends, market conditions, neighborhood values, and local economic and social conditions
  • Supply and demand for property such as the Property
  • Interest rates and real estate tax rates
  • Governmental rules, regulations and fiscal policies
  • The enactment of unfavorable real estate, rent control, environmental, zoning or hazardous material laws
  • Uninsured losses
  • Anticipated market capitalization rates at the time of sale

Limited Transferability of Securities

Each Beneficial Owner will be required to represent that he is acquiring the Interests for investment and not with a view to distribution or resale, that such Beneficial Owner understands the Interests are not freely transferable and, in any event, that such Beneficial Owner must bear the economic risk of investment in the Interests for an indefinite period of time because: (i) the Interests have not been registered under the Act or applicable state “Blue Sky” or securities laws; and (ii) the Interests cannot be sold unless they are subsequently registered or an exemption from such registration is available. There will be no market for the Interests and the Beneficial Owner cannot expect to be able to liquidate their investment in case of an emergency. See “Restrictions on Transferability” in the PPM. Finally, the sale of the Interests may have adverse federal income tax consequences. See “Federal Income Tax Consequences” in the PPM.


Sale of the Property

The proceeds realized from the sale of the Property will be distributed among the Beneficial Owners, but only after satisfaction of the claims of other third-party creditors and Affiliates of the Sponsor. The ability of a Beneficial Owner to recover all or any portion of its investment, accordingly, will depend on the amount of net proceeds realized from such sale and the amount of claims to be satisfied therefrom. There can be no assurance that the Beneficial Owners will realize gains on sale of the Property.


No Representation of Beneficial Owners

Each Beneficial Owner acknowledges and agrees in the Purchase Agreement and Escrow Instructions that legal counsel representing the Trust, the Sponsor, the Manager, the Master Tenant, the Depositor and their Affiliates do not represent, and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing, any or all of the Beneficial Owners.​


Environmental Risk

Federal, state and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product releases at or affecting the Property. The Property has been evaluated for environmental hazards on behalf of the Lender pursuant to a noninvasive Phase I Environmental Site Assessment Report, dated January 19, 2018 prepared by AEI Consultants, based on a site visit conducted on December 7, 2017. The Phase I Report revealed no evidence of recognized environmental conditions (“RECs”) in connection with the site and no further investigation was recommended.


Performance of the Master Tenant Under the Master Lease

The ability of the Trust to meet its obligations is dependent upon the performance of the Master Tenant and its payment of Rent and other payments required under the Master Lease. ​


Trustee and the Manager Have Limited Duties to Beneficial Owners

The Trustee of the Trust and the Manager will not owe any duties to the Beneficial Owners other than those duties set forth in the Trust Agreement. In performing its duties under the Trust Agreement, the Trustee will only be liable to the Beneficial Owners for its own willful misconduct, bad faith, fraud or gross negligence. Similarly, the Manager will only be liable to the Beneficial Owners for its own fraud or gross negligence.


No Realty Mogul Site Visit

The Property has not been physically inspected by a representative of Realty Mogul or any of its affiliates.


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. To receive a copy of the Private Placement Memorandum please contact your Investor Relations Representative.

The above presentation is based upon information supplied by the Sponsor and others. Realty Mogul, Co., along with its respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.

This content does not constitute an offer to sell or a solicitation of an offer to buy any securities. RealtyMogul.com and North Capital Private Securities are in the process of screening, performing due diligence, and verifying information for the offering. The content is presented to gauge interest only and is subject to change without notice.

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