Georgetown Partners and Red Starr Investments
The Sponsorship is a partnership between Georgetown Partners ("Georgetown") and Red Starr Investments ("Red Starr").
Georgetown Partners (www.gtownpartners.com) is a private real estate investment company focused on real estate in the Washington, DC Metro area. Founded in 2016, they target both stabilized and value-add opportunities. The principals of Georgetown Partners have over 20 years of commercial real estate experience, working with institutional clients to deliver results. They are a fully integrated company that handles all asset, leasing, and property management in-house or with strategic partners that are aligned with the investment.
Red Starr Investments, LLC (www.red-starr.com) is an opportunistic real estate investor with expertise as both a capital provider and an operator of varied property types. Red Starr has extensive investment experience throughout the capital stack – including high-yield senior loans, preferred equity, mezzanine loans and common equity. Red Starr’s primary investment mandate is to preserve investor capital while striving to achieve strong returns. The Red Starr team is comprised of professionals in New York and New Jersey with expertise in acquisitions, asset management, construction, sales, financing and property management expertise.
The Red Starr partners have actively developed, owned, managed, and sold more than 5 million square feet of commercial real estate and over 1,000 residential units. Red Starr’s existing real estate portfolio includes office, retail, industrial, and both for-sale and rental residential properties throughout the United States. Since December 2017 Red Starr has been actively acquiring Virginia real estate including an 800+ bed student housing property and a 400 unit townhouse rental community.
Mario Levine is a co-founder and Managing Director of Georgetown Partners. Prior to forming Georgetown Partners, Mario was the Director of Real Estate for Maplewood Healthcare and Allegiance Realty Corporation (joint venture partners) where he contributed to the development and asset management of a conventional and medical office portfolio. Maplewood Healthcare, LLC is an integrated medical office and healthcare developer and real estate partner for health systems, hospitals, medical groups and academic medical facilities. At Allegiance, Mario was responsible for the asset management of a 2 million square feet portfolio of CBD offices across the nation. Allegiance is a private real estate investment company providing compelling alternatives to conventional investment vehicles for family offices, RIAs and high-net-worth individuals. Headquartered in Charlotte, North Carolina, the company has acquired over 7 million square feet of commercial real estate and invested over $150 million of self-raised equity. The company’s current portfolio is valued in excess of $400 million and consists of 3.5 million square feet of commercial real estate.
Prior to that experience, Mario was Director of Real Estate for Trigild, Inc. He was the portfolio manager for Trigild’s Mid-Atlantic, Southeast, and Northeast portfolio of performing and non-performing assets valued at $500 million. He assisted CMBS special servicers (CW Capital, LNR, C3, Torchlight/ING), balance sheet lenders (GE Capital, Wells Fargo, Bank of America, Keybank, Varde), and FDIC in the re-positioning and disposition of assets through various loan workout strategies. He has experience across all asset classes from office, retail, industrial, multifamily, single family, and fractured condo developments and has assisted in the acquisition and disposition of over 35 assets totaling $300 million.
Corban Tomlinson is a Managing Director and Co-Founder of Georgetown Partners. Prior to forming Georgetown Partners, Corban was Director of Acquisitions for Maplewood Healthcare and Allegiance Realty Corporation (joint venture partners). There, he sourced, underwrote and structured acquisition and development of conventional and medical office opportunities. His experience included opportunistic, value-add and core-plus/stabilized opportunities. Deals were sourced both on and off market and were creatively structured and financed to best suit the needs of small businesses, private healthcare practices, national and credit tenancy. Corban was also responsible for the project and portfolio level financial analysis, budgeting and business strategy at the firm. At Allegiance/Maplewood, Corban was involved in the acquisition of over $100 million of conventional office and other real estate assets and the development of over 250,000 square feet ($150 million) of medical office assets.
Prior to his time at Maplewood and Allegiance, Corban worked at Sabal Financial (a wholly owned subsidiary of Oaktree Capital) as an asset manager, acquisitions associate and underwriter. His asset management portfolio consisted of owned real estate assets and non-performing loans located nationwide that were collateralized by commercial real estate, single family homes, land (in various stages of development), swap agreements, personal guarantees and commercial and industrial assets. His acquisition duties included the underwriting of asset pools ranging from $20-200 million in value and was involved in the acquisition of over $3 billion of distressed assets. Corban also served as an underwriter on Sabal’s bridge lending platform which included the underwriting and structuring of a $55 million bridge loan which was originated to provide capital to a regional investor developer for the an eight-phased renovation and improvement of a 150,000 square foot waterfront, mixed-use development.
Corban is a 2018 Level II Candidate in the CFA Program and holds a bachelor’s degree from the University of San Diego, where he double majored in Real Estate and Finance.
Jared is a co-founder and Managing Principal of Red Starr Investments, LLC. Red Starr was created as a real estate investment platform which acts as both real estate operator and capital provider. Prior to forming Red Starr, Jared was a founding Principal of Latus Partners, a real estate opportunity fund which launched in early 2007. At Latus, he was responsible for sourcing, underwriting, closing and asset management for a variety of investment opportunities. While at Latus, Jared formed a venture in Puerto Rico with DVCO Inc. and GDM Development Corp., both Puerto Rico based operators, to acquire distressed real estate projects throughout the Island. The Venture acquired its first two projects between the third quarter of 2010 and the second quarter of 2011 and both were largely sold out by the end of 2011.
From 2004 through 2007, Jared worked in the Real Estate Investment Group of Ritchie Capital, a $3 Billion multi-strategy hedge fund. His responsibilities there included financial modeling, underwriting, and structuring in connection with all proposed acquisitions, and managing assets after closing. His responsibilities also included budgeting, profit and loss reporting, and track record analysis for the real estate portfolio. Prior to joining Ritchie Capital, Jared was a Development and Acquisition Analyst in Puerto Rico for TJAC, Inc., the largest commercial real estate developer in the Caribbean. At TJAC, Jared analyzed and underwrote TJAC’s expansion and new development opportunities throughout the Caribbean and the United States.
Prior to joining TJAC, Inc. Jared worked at PMI/Southeast Regional Management Co., Inc, the management arm of TJAC, as an Accountant and Leasing Supervisor, where he helped property manage over 5 million square feet of commercial property. Prior to joining PMI, Jared spent two years with Weiss Peck & Greer Investments, where, in the hedge fund department, he managed the accounting software that he helped develop at a previous position. He also worked closely with clients and fund managers to produce custom capital statements and partner reports.
Jared received a B.S. in Finance from the Kelly School of Business at Indiana University.
William Rukin is a Founder and Principal of Red Starr Investments, LLC. Contemporaneously with his work at Red Starr, William is the Vice President of SLX Capital Management, Ltd., a family office. At SLX, where William has been working since 2004, he oversees the management of investment portfolios, funds of funds (including hedge funds, private equity, real estate opportunity and venture capital funds), various investment accounts, private company investments and a significant real estate portfolio. William has managed the SLX real estate portfolio assets including dispositions, development (build to suit and spec ground up development) and property management of residential, office, industrial and retail buildings. Prior to his work at SLX Capital, William held various management positions at Valley National Bank (NYSE: VLY) from 1998 through 2004. William graduated with a BS from Cornell University.
|Single Family Development||Exited||Puerto Rico||Equity||September-10|
|Single Family Development||Exited||Puerto Rico||Equity||July-12|
|Single Family Development||Exited||Puerto Rico||Equity||September-12|
|Single Family Development||Exited||Puerto Rico||Equity||June-13|
|Condominium||Exited||Puerto Rico||Senior Loan||July-13|
|Shopping Center||Exited||Puerto Rico||Senior Loan||July-13|
|Single Family Development||Exited||Puerto Rico||Equity||November-13|
|Single Family Development||Exited||Puerto Rico||Equity||March-14|
|Residential Land Development||Exited||Georgia||Equity||July-15|
|Multifamily Development||Exited||New York||Preferred Equity||June-13|
|Multifamily Development||Exited||New Jersey||Senior Loan||January-16|
|Student Housing||Exited||Alabama||Preferred Equity||June-15|
|Shopping Center||Active||Puerto Rico||Mezzanine Loan||July-13|
|Office Park||Active||North Carolina||Preferred Equity||October-14|
|Residential Land Development||Active||North Carolina||Equity||November-14|
|Single Family Home||Active||New Jersey||Senior Loan||September-15|
|Multifamily Development||Active||North Carolina||Preferred Equity||February-17|
|Single Family Rental Portfolio||Active||GA, FL, MI, TN||Mezzanine Loan||September-17|
*The track record above is for Red Starr Investments. It was provided by the Real Estate Company and has not been independently verified by RealtyMogul.
In this transaction, RealtyMogul investors will invest in Realty Mogul 112, LLC ("The Company"). The Company will subsequently invest in RGRM CMOB, LLC ("The Target"), the entity that will directly or indirectly hold title to the Property. Georgetown Partners and Red Starr Investments (collectively, the "Real Estate Company") are under contract to purchase the Property for $4,650,000 ($115 per square foot).
The Real Estate Company believes that the upside potential of this investment is the result of two large tenants in the building who will be vacating in 2018. Given that the market is highly occupied and current rents are below comparable medical office properties in the area, the Real Estate Company plans to implement a capital improvement program in order to achieve a medical office aesthetic and re-lease the vacant suites at market rates.
The Real Estate Company's business plan focuses on improving the building's common areas, including a lobby renovation, renovation of the second and third floor common areas, common area bathrooms, new lighting and artwork to achieve a medical office aesthetic. Included in the scope of the improvements are new landscaping and signage, as well as HVAC replacement and repairs. As the building's departing tenants leave, the Real Estate Company plans to spend up to $50 per square foot in tenant improvements and utilize a focused professional leasing team to re-lease the spaces at market rates. The Real Estate Company has budgeted $548,000 for common area and base building improvements, and $1,847,000 for tenant improvements and leasing costs.
The Property will be managed by CBRE, an international management firm who has significant experience with the Property and market. The Real Estate Company plans to complete the business plan and exit the investment in approximately three years.
RealtyMogul.com, along with Georgetown Partners and Red Starr Investments (collectively, the "Real Estate Company"), is providing the opportunity to invest in the acquisition and ownership of a a Class A, 40,303 square foot medical office building located in the West End Medical District of Richmond, VA (the "Property").
The primary objective of this investment is to acquire the Property, implement a capital plan to improve common areas and vacant tenant suites, re-lease vacant space that will be created by departing tenants at market rates, and sell the Property within approximately three (3) years.
The Real Estate Company believes that the unique reasons causing a few of the tenants to vacate are an anomaly given the strength of the market and the Property's historical occupancy, and views this as an opportunity to add value to the Property.
Built in 1987, the Property is a Class A, 40,303 square foot medical office building located in the West End Medical District of Richmond, VA. The Property contains eight suites spread across three stories. The lobby features marble floors with carpet in the corridors and two common area restrooms per floor. The Property has 174 parking spaces, or 4.3 spaces per 1,000 rentable square feet.
|Suite||Tenant||Square Feet||Lease End Date||Rent Per Square Foot|
|100||MCV Physicians (VCU Health)||6,380||12/31/2021||$21.31|
|200||Virginia Eye Institute*||8,640||4/30/2018||$22.48|
|250||Commonwealth Financial Services||1,496||5/31/2018||$22.81|
|*Assumed to vacate|
|Reynolds MOB II||Reynolds MOB II||Bon Secours Heart Institute||Billy Renolds Jr. Building||Billy Renolds Jr. Building||Reynolds Commons||Total / Averages||Subject|
|Tenant||Virginia Eye Institute||Dermatology Associates of Virginia||Bon Secours||Bon Secours||VCU Health||The Sheltering Arms Hospital||-||-|
|Term||144 Months||144 Months||90 Months||120 Months||60 Months||120 Months||113||84 - 120|
|Rent per SF||$24.00||$24.00||$22.54||$15.75||$15.00||$20.00||$20.22||$17.00 - 18.00|
|Distance from Subject (mi.)||0.8||0.8||0.5||0.9||0.9||1.0||0.8||-|
|Advanced Othopaedics||Virginia Women's Center||St. Francis Cancer Center||Bon Secours Heart Institute||Total / Averages||Subject|
|Distance from Subject (mi.)||2.2||13.2||19.7||0.8||9.0||-|
* Based on Year 1 projected income. T12 cap rate is 11.9%.
The Property is located in the West End Medical District of Richmond, Virginia, in close proximity to three major hospitals. Henrico Doctors' Hospital, a 340-bed community hospital that is operated by HCA Virginia, is less than half a mile away. Other nearby hospitals include Bon Secours St. Mary's, which is 2.3 miles from the Property, and Parham Doctors Hospital, which is 3.0 miles away from the Property.
Henrico Doctor’s Hospital is a 340-bed hospital with the latest in advanced technology specializing in women’s health and heart and stroke care, cancer, and ground-breaking diagnostic imaging. It’s long successful operation as a leading hospital in Richmond, owned and operated by the largest hospital system in the county, makes Henrico Doctor’s Hospital a stable and major driver in Richmond’s West End.
St. Mary’s Hospital is a 391-bed hospital specializing in pediatric and neonatal care, cancer care, cardiac and stroke care, and joint replacement and orthopaedics, among others. As Bon Secours flagship hospital in the Richmond area, St. Mary’s is highly respected for many of its services. It is regularly voted “Best Place in Richmond to Have a Baby” (Style Magazine) and boasts a state-of-the-art Neonatal Intensive Care Unit (NICU) and a Pediatric Intensive Care Unit (PICU) with 24-hour onsite specialists. St. Mary’s is a key anchor for the Richmond West End economy and community.
In 2016, the Richmond, VA metropolitan statistical area ranked as the 45th largest in the country with a population of 1,281,708 residents (bea.gov). As the capital of Virginia, Richmond has always been the strategic center of commerce, innovation, and decision-making power in the Commonwealth of Virginia. The city offers low business costs, a pro-business climate, robust financial programs, and a smart, creative workforce with solid education and experience in the technical, scientific, and creative professions (Richmond Economic Development Authority).
According to CBRE, Richmond's West End Medical District is the region's preeminent medical submarket with on-campus and off-campus occupancy rates over the past 5 years averaging over 96% (currently 97.2%), despite the addition of nearly 300,000 square feet of new supply. This demand and growth can be attributed to several demand drivers. First, the location is a part of Richmond's affluent and easily accessible West End, which is served by multiple I-64 interchanges and a well-designed road infrastructure making it convenient to the entire Richmond Region. Furthermore, the West End Medical District is anchored by three leading hospitals - Henrico Doctors' Hospital, Parham Doctors' Hospital, and Bon Secours St. Mary's Hospital. This constitutes over 1 million square feet of on-campus medical office with over 500,000 square feet of off-campus medical office buildings. In addition, the West End Medical District also offers numerous hotel and retail amenities for patients and employees. Recent new construction of medical office and retail has created a scarcity of sites for future new supply, which is expected to continue to help push rental growth and occupancy rates in coming years.
CoStar reports steady fundamentals for office product in the submarket, reporting rents that are 4% higher than the metro average, and vacancy rates below the already tight metro average. Furthermore, Costar reports that the submarket's central location is easily accessible from Richmond’s suburbs as well as rapidly growing neighborhoods such as Scott's Addition and Manchester, which contributes to the its steady fundamentals.
|Distance from Property||1 Mile||3 Miles||5 Miles|
|Projected Growth (2017-2022)||3.67%||4.21%||4.49%|
|Median HH Income||$66,827||$62,047||$66,938|
|Average HH Income||$82,494||$84,355||$91,916|
|Median Home Value||$217,400||$240,411||$266,448|
|% of Renter Households||40.7%||43.8%||40.5%|
Demographic information above was obtained from CoStar
|Sources of Funds||Cost|
|Total Sources of Funds||$8,193,542|
|Uses of Funds||Cost|
|Real Estate Company Acquisition Fee||$93,000|
|Broker Dealer Fee||$80,000|
|Capital Improvements, Tenant Improvements, Leasing Costs||$2,361,584|
|Loan Closing Costs and Interest Rate Cap||$125,000|
|Debt Costs and Fees||$169,350|
|Future Interest Reserve||$113,750|
|Undrawn Loan Proceeds||$33,516|
|Total Uses of Funds||$8,193,542|
The expected terms of the debt financing are as follows:
- Lender: Ready Capital
- Estimated Initial Proceeds: $3,022,500
- Maximum Additional Funding: $2,622,500
- Estimated Interest Rate: 1 Month LIBOR + 4.50%
- Interest Only Period: 36 Months
- Amortization Period: N/A
- Loan Term: 36 Months
- Extension Options: Two (2) one-year extension options
- Prepayment Penalty: 24-months minimum interest and 1.0% exit fee
- Interest Rate Cap: 7.00%
- Recourse: No
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 intends to make distributions of all available cash and capital proceeds to investors (The Company, Other LP investors and Real Estate Company, collectively, the "Members") as follows:
- Excess balances will be split pro rata 89.2% to Members and 10.8% to Real Estate Company to a 12% IRR;
- Excess balances will be split pro rata 76.5% to Members and 23.5% to Real Estate Company to a 14% IRR;
- Excess balances will be split pro rata 57.3% to Members and 42.7% to Real Estate Company.
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 operating 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 and fees) to the members of The Company (the RealtyMogul investors).
Distributions are expected to start in June 2021 and are expected 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 1||Year 2||Year 3|
|Effective Gross Revenue||$402,017||$765,893||$1,008,702|
|Total Operating Expenses||$288,420||$330,940||$360,486|
|Net Operating Income||$113,597||$434,953||$648,216|
|Distributions to The Company||($2,040,000)||$0||$0||$362,068||$2,842,163|
|Net Earnings to Investor - Hypothetical $50,000 Investment||($50,000)||$0||$0||$8,874||$69,661|
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||$93,000||Real Estate Company||Capitalized Equity Contribution||2.0% of the Property purchase price|
|Financing Fee||$56,450||Real Estate Company||Capitalized Equity Contribution||1.0% of the Loan Amount|
|Broker-Dealer Fee||$80,000||North Capital (1)||Capitalized Equity Contribution||4.0% of equity raised by RealtyMogul ($50,000 minimum)|
|Marketing Fee||$25,000||RM Manager, LLC||Investor Overraise|
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Property Management Fee||2.5% of Effective Gross Income||Third Party Manager||Distributable Cash|
|Leasing Fee||0.5% of new leases and renewals||Real Estate Company||Capex Budget, Sales Proceeds||0.5% leasing commission paid as a percentage of new leases and renewals|
|Management and Administrative Fee||1.0% of amount invested in Realty Mogul 107, LLC||RM Manager, LLC||Distributable Cash||RM Manager, LLC is the Manager of The Company 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.
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