We run extensive background checks, criminal checks, bad actor checks, and reference checks on sponsors. In addition to never allowing a sponsor with a criminal history / any securities related issue to use the platform, we may also turn down sponsors due to poor reference checks even if background and criminal checks come back clear.
We require unaffiliated sponsors to use an unaffiliated third-party escrow agent. When an investor makes an investment with unaffiliated sponsors using the RealtyMogul platform, the investor’s money is transferred directly into a third-party escrow account. All closing conditions in connection with a sponsor’s offering need to be met before the third-party escrow agent will approve releasing investor funds to the issuer or general partner. For example, if an issuer or general partner plans to use funds for a real estate acquisition that does not ultimately transact, the third-party escrow agent will not transfer investor funds to the issuer or general partner, and funds will be returned to investors.
Our controls include visiting every property (or a subset of properties if it’s a fund) to confirm the real estate is what and where the real estate is supposed to be.
We have robust quality controls with detailed checklists and a review of third-party reports.
Bluerock Exchange LLC
Bluerock Exchange, LLC, a Delaware limited liability company, is an affiliate of Bluerock Real Estate, LLC (“Bluerock”), a private equity real estate investment firm having sponsored a portfolio currently exceeding 16 million square feet of primarily apartment and office real estate. Bluerock's senior management team has an average of over 25 years investing experience, has been involved with acquiring over 35 million square feet of real estate worth approximately $10 billion, and has helped launch leading real estate private and public company platforms. The Trust is to be managed by BR Grand at Westside Leaseco Manager, LLC, a Delaware limited liability company (the “Manager”), an affiliate of Bluerock.
Bluerock Property Management, LLC (the "Property Manager") has subcontracted all day-to-day, on-site management, leasing and related functions for the Property to Bell Partners Inc. (the "Property Sub-Manager" or "Bell Partners"). Bell Partners has nearly 60,000 apartment units under management and was ranked as the 15th largest national operator on the National Multifamily Housing Council's list of Top 50 in the United States for 2017.*
*Per the Sponsor
Property Name | Location | Property Type | Acquisition Date | # Units | Approximate Acquisition Price |
---|---|---|---|---|---|
Ansley Village | Macon, GA | Apartments | 6.2014 | 294 | $31,760,000 |
Alexan City Centre | Houston, TX | Apartments | 7.2014 | 340 | $83,200,000 |
Alexan Southside | Houston, TX | Apartments | 1.2015 | 270 | $49,000,000 |
APOK Townhomes | Boca Raton, FL | Apartments | 11.2016 | 90 | $28,900,000 |
Arium Glenridge | Atlkanta, GA | Apartmetns | 10.2016 | 480 | $69,500,000 |
Arium Grandewood | Orlando, FL | Apartments | 11.2014 | 306 | $44,650,000 |
Arium Palmer-Ranch | Sarasota, FL | Apartments | 1.2016 | 320 | $47,000,000 |
Arium Palms Gateway | Orlando, FL | Apartments | 8.2015 | 252 | $97,500,000 |
Arium Gulfshore | Naples, FL | Apartments | 1.2016 | 368 | $86,000,000 |
Arium Hunter's Creek | Orlando, FL | Apartments | 10.2017 | 532 | $39,250,000 |
Arium Metro West | Orlando, FL | Apartments | 10.2017 | 510 | $40,320,000 |
Arium Pine Lakes | Port St. Lucie, FL | Apartments | 12.2016 | 320 | $38,500,000 |
Arium Westside | Atlanta, GA | Apartments | 7.2016 | 336 | $74,500,000 |
Arlo | Charlotte, NC | Apartments | 1.2016 | 287 | $60,000,000 |
Ashton Reserve | Charlotte, NC | Apartments | 1.2016 | 473 | $66,550,000 |
Beach House | Jacksonville Beach, FL | Apartments | 4.2016 | 228 | $51,570,000 |
Big Creek | Alpharetta,GA | Apartments | 12.2016 | 372 | $84,460,000 |
Brooklyn Riverside | Jacksonville, FL | Apartments | 6.2016 | 310 | $64,130,000 |
Citrus Tower | Clermonth, FL | Apartments | 9.2017 | 336 | $55,250,000 |
City Walk Apartments | Roswell, GA | Apartments | 12.2016 | 320 | $76,000,000 |
Crescent Perimeter | Atlanta, GA | Apartments | 12.2016 | 320 | $70,000,000 |
Domain Phase I | Garland, TX | Apartments | 12.2015 | 301 | $52,600,000 |
Enders Place | Orlando, FL | Apartments | 10.2012 | 198 | $25,100,000 |
Flager Village | Fort Lauderdale, FL | Apartments | 12.2015 | 384 | $140,400,000 |
Glenwood at Grant Park | Atlanta, GA | Apartments | 12.2017 | 216 | $55,400,000 |
Grand at the Dominion | San Antonio, TX | Apartments | 9.2017 | 320 | $56,900,000 |
Helios | Atlanta, GA | Apartments | 6.2015 | 285 | $51,400,000 |
James on South First | Austin, TX | Apartments | 11.2016 | 250 | $36,750,000 |
Land Four Corners | Davenport, FL | Apartments | 2.2016 | 270 | $38,850,000 |
Leigh House | Raleight, NC | Apartments | 1.2016 | 245 | $40,200,000 |
Marquis at the Cascades I | Tyler, TX | Apartments | 6.2017 | 328 | $44,650,000 |
Marquis at the Cascades II | Tyler, TX | Apartments | 6.2017 | 254 | $28,500,000 |
Marquis at Crown Ridge | San Antonio, TX | Apartments | 6.2017 | 352 | $39,500,000 |
Marquis at Stone Oak | San Antonio, TX | Apartments | 6.2017 | 335 | $55,350,000 |
Marquis at TPC | San Antonio, TX | Apartments | 6.2017 | 139 | $20,850,000 |
Outlook at Greystone | Birmingham, AL | Apartments | 10.2017 | 300 | $36,250,000 |
Park at Chapel Hill | Chapel Hill, NC | Apartments | 2.2011 | 198 | $8,400,000 |
Park & Kingston | Charlotte, NC | Apartments | 3.2015 | 168 | $27,850,000 |
Plaza Gardens | Overland Park, KS | Apartments | 8.2008 | 200 | $25,500,000 |
Pres. Henderson Beach | Destin, FL | Apartments | 3.2016 | 340 | $53,700,000 |
Preston View | Morrisville, NC | Apartments | 2.2017 | 382 | $59,500,000 |
Clearwater Apartments | Clearwater, FL | Apartments | 9.2015 | 240 | $46,250,000 |
Sonoma Pointe | Kissimmee, FL | Apartments | 8.2017 | 216 | $44,530,000 |
Sorrel Phillips Creek | Frisco, TX | Apartments | 11.2015 | 252 | $52,260,000 |
Sovereign Apartments | Fort Worth, TX | Apartments | 11.2015 | 322 | $44,440,000 |
Stonebrook | Nashville, TN | Apartments | 12.2011 | 320 | $18,250,000 |
The Brodie | Austin, TX | Apartments | 12.2016 | 324 | $48,900,000 |
The Grand at Westside | Kissimmee, FL | Apartmetns | 2.2018 | 336 | $74,440,000 |
The Links at Plum Creek | Castle Rock, CO | Apartmetns | 3.2018 | 264 | $61,100,000 |
The Mills | Greenville, SC | Apartments | 11.2017 | 304 | $40,250,000 |
Valley Townhomes | Puyallup, WA | Apartments | 7.2008 | 220 | $42,570,000 |
Vickers | Roswell, GA | Apartments | 12.2016 | 79 | $30,700,000 |
Villages of Cypress Creek | Houston, TX | Apartments | 9.2017 | 384 | $40,700,000 |
Wesley Village | Charlotte, NC | Apartments | 3.2017 | 301 | $58,000,000 |
Whetstone | Durham, NC | Apartments | 5.2015 | 204 | $35,630,000 |
Cummings Research Park I | Huntsville, AL | Office | 11.2007 | - | $58,460,000 |
Cummings Research Park II | Huntsville, AL | Office | 11.2007 | - | $63,990,000 |
Cummings Research Park III | Huntsville, AL | Office | 11.2007 | - | $57,210,000 |
Summit at Southpoint | Jacksonville, FL | Office | 12.2006 | - | $37,400,000 |
Town & Country | St. Louis, MO | Office | 6.2008 | - | $51,790,000 |
Applebee's | Jonesboro, GA | Retail | 4.2013 | - | $2,850,000 |
Dollar General | Hartford, CT | Retail | 4.2013 | - | $1,800,000 |
Dollar General | Jacksonville, FL | Retail | 4.2013 | - | $1,550,000 |
TCF Bank | Chicago, IL | Retail | 4.2013 | - | $3,060,000 |
Walgreens | Haltom City, TX | Retail | 4.2013 | - | $4,390,000 |
Walgreens | Abilene, TX | Retail | 4.2013 | - | $5,040,000 |
Total | 16,295 | $3,081,250,000 |
Property Name | Location | Property Type | Acquisition /Sale Date | Approximate Purchase Cost | Approximate Equity Invested | Total Gross Return | Gross IRR |
---|---|---|---|---|---|---|---|
Woodlands | Hauppauge, NY | Office | 04/2013 - 05/2006 | 16,900,000 | 5,000,000 | 6,480,000 | 9.9% |
The Ashford | Atlanta, GA | Apartments | 11/2009 - 09/2011 | 19,750,000 | 2,040,000 | 4,190,000 | 47.9% |
Lynd Portfolio Subtotal | Apartments | 21,900,000 | 6,340,000 | 12,090,000 | 17.5% | ||
- Mesa Ridge | San Antonio, TX | Apartments | 12/2008 - 03/2011 | 6,550,000 | 2,010,000 | 4,810,000 | |
- Meadows | Austin, TX | Apartments | 02/2008 - 10/2011 | 3,450,000 | 1,040,000 | 2,470,000 | |
- Stratford | San Antonio, TX | Apartments | 12/2008 - 10/2012 | 11,190,000 | 3,290,000 | 4,810,000 | |
Tech Ridge | Austin, TX | Apartments | 02/2010 - 08/2012 | 17,190,000 | 6,030,000 | 13,170,000 | 42.5% |
Note 16 | Nashville, TN | Apartments | 03/2012 - 06/2013 | 11,300,000 | 1,420,000 | 2,510,000 | 53.1% |
Hillsboro | Nashville, TN | Apartments | 09/2010 - 09/2013 | 31,600,000 | 3,900,000 | 8,560,000 | 33.1% |
Meadowmont | Chapel Hill, NC | Apartments | 04/2010 - 09/2013 | 37,000,000 | 4,700,000 | 11,330,000 | 32.0% |
The Stratford | Cary, NC | Apartments | 06/2012 - 12/2013 | 20,300,000 | 5,290,000 | 7,980,000 | 38.8% |
Arbor Terrace | Marietta, GA | Apartments | 05/2011 - 03/2014 | 15,500,000 | 7,890,000 | 10,010,000 | 10.2% |
Creekside Village | Chattanooga, TN | Apartments | 03/2010 - 03/2014 | 14,250,000 | 1,820,000 | 4,130,000 | 26.4% |
Landmark | St. Louis, MO | Office | 03/2007 - 07/2014 | 26,030,000 | 7,500,000 | -24.5% | |
Estates at Perimeter | Augusta, GA | Apartments | 09/2010 - 11/2014 | 24,950,000 | 1,930,000 | 2,410,000 | 6.5% |
Grove at Waterford | Hendersonville, TN | Apartments | 04/2012 - 11/2014 | 27,880,000 | 4,670,000 | 6,250,000 | 17.3% |
23Hundred Berry Hill | Nashville, TN | Apartments | 10/2012 - 01/2015 | 33,670,000 | 4,440,000 | 8,350,000 | 59.4% |
Villas at Oak Crest | Chattanooga, TN | Apartments | 04/2012 - 09/2015 | 15,520,000 | 2,900,000 | 3,730,000 | 15.5% |
North Park Towers | Southfield, MI | Apartments | 12/2005 - 10/2015 | 36,900,000 | 11,430,000 | 2,830,000 | -12.2% |
Artisan on 18th | Nashville, TN | Apartments | 06/2013 - 10/2015 | 22,300,000 | 1,000,000 | 2,120,000 | 35.2% |
Indian Springs | El Paso, TX | Apartments | 09/2011 - 10/2015 | 12,350,000 | 2,740,000 | 2,690,000 | -0.5% |
Springhouse | Newport News, VA | Apartments | 12/2009 - 08/2016 | 29,500,000 | 6,890,000 | 16,560,000 | 17.4% |
Mesa Ridge | San Antonio, TX | Apartments | 03/2011 - 11/2016 | 10,940,000 | 5,160,000 | 8,070,000 | 9.8% |
EOS | Orlando, FL | Apartments | 07/2014 - 12/2016 | 36,960,000 | 11,090,000 | 19,630,000 | 41.2% |
Village Green | Ann Arbor, MI | Apartments | 09/2012 - 02/2017 | 58,000,000 | 8,190,000 | 18,430,000 | 24.2% |
Lansbrook | Palm Harbor, FL | Apartments | 03/2014 - 04/2017 | 58,500,000 | 16,510,000 | 30,530,000 | 27.2% |
Fox Hill | Austin, TX | Apartments | 04/2015 - 04/2017 | 38,150,000 | 11,920,000 | 19,310,000 | 25.8% |
MDA City | Chicago, IL | Apartments | 12/2012 - 06/2017 | 54,870,000 | 9,760,000 | 22,680,000 | 24.3% |
CoHo House | Atlanta, GA | Apartments | 07/2014 - 11/2017 | 20,760,000 | 5,290,000 | 6,670,000 | 8.12% |
Chace Lake Villas | Birmingham, AL | Apartments | 06/2012 - 12/2017 | 26,340,000 | 12,230,000 | 17,080,000 | 8.10% |
Alamance Reserve | Burllington, NC | Apartmetns | 01/2014 - 03/2018 | 23,790,000 | 11,090,000 | 11,460,000 | 6.9% |
Total | 764,060,000 | 179,120,000 | 279,050,000 | 22.7% |
*Figures do not reflect any fees that may have been associated with the transaction.
**These returns were provided by and calculated by the Sponsor
On May 10, 2018 the Sponsor acquired the Property from a third-party seller. Concurrently with the acquisition of the Property, the Trust obtained a loan from KeyBank under the Fannie Mae DUS program. The Property is master leased by the Trust to BR Axis West Leaseco, 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. BR Axis West Leaseco Manager, LLC (the "Manager") has been appointed to manage the Trust pursuant to the Trust Agreement.
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.
The Property is a 268-unit Class A multifamily community comprised of 4 buildings located in Orlando, Florida. The Property was delivered in 2017 and stabilized with a current occupancy of 93%. The unit mix consists of 109 one-bedroom units, 123 two-bedroom units, and 36 three-bedroom units.
The Property offers numerous amenities including a gated community with controlled access buildings, gourmet coffee bar, central lake with fountain and walking trail, lakeside grill islands, resident's clubhouse, relaxation room with massage chair, resort style zero-entry heated saltwater pool with cabanas and lounge seating, performance fitness center with wellness and spin room, "bark parks" and grooming stations, contemporary children's playground, car care center, and attached and detached garages.
Unit amenities include granite countertops, lake views, elevator access, air conditioned hallways, hardwood-style flooring, island kitchens, stainless steel appliances, side-by-side refrigerators, deep kitchen sinks with gooseneck faucets, forty-two inch cabinetry, smooth surface cook tops, jetted garden tubs, walk in closets, in unit washers and dryers, and private screened-in patios and balconies.
Unit Type | # of Units | Avg SF/Unit | Avg Rent/Unit | Avg Rent/Unit |
---|---|---|---|---|
1 BR / 1 BA | 24 | 626 | $1,275 | $2.04 |
1 BR / 1 BA | 28 | 735 | $1,375 | $1.87 |
1 BR / 1 BA | 22 | 806 | $1,450 | $1.80 |
1 BR / 1 BA | 19 | 853 | $1,500 | $1.76 |
1 BR / 1 BA | 16 | 888 | $1,575 | $1.77 |
2 BR / 2 BA | 21 | 954 | $1,600 | $1.68 |
2 BR / 2 BA | 17 | 1,040 | $1,625 | $1.56 |
2 BR / 2 BA | 34 | 1,076 | $1,725 | $1.60 |
2 BR / 2 BA | 23 | 1,133 | $1,750 | $1.54 |
2 BR / 2 BA | 28 | 1,183 | $1,775 | $1.50 |
3 BR / 2 BA | 36 | 1,331 | $2,100 | $1.58 |
Total / (Wtd.) Average | 268 | 989 | $1,701 | $1.72 |
Altis at Sand Lake | Integra Cove | Lantower Grande Pines | Citi Lakes | Lake Vue | Total / Averages | Subject | |
---|---|---|---|---|---|---|---|
# of Units | 315 | 282 | 282 | 346 | 196 | 284 | 268 |
Year Built | 2015 | 2015 | 2017 | 2015 | 2015 | 2014 | 2017 |
1 BD - Average SF (Per Unit) | 793 | 744 | 802 | 682 | 790 | 762 | 782 |
1 BD - Average Rental Rate (Per Unit) | 1353 | $1,273 | $1,433 | $1,232 | $1,318 | $1,322 | $1,435 |
1 BD - Average Rent PSF | $1.71 | $1.73 | $1.79 | $1.85 | $1.67 | $1.75 | $1.85 |
2 BD - Average SF (Per Unit) | 1,120 | 1,114 | 1,127 | 1,082 | 1,233 | 1,135 | 1,077 |
2 BD - Average Rental Rate (Per Unit) | $1,718 | $1,620 | $1,658 | $1,613 | $1,765 | $1,675 | $1,695 |
2 BD - Average Rent PSF | $1.54 | $1.46 | $1.47 | $1.49 | $1.43 | $1.48 | $1.58 |
3 BD - Average SF (Per Unit) | 1,419 | 1,295 | 1,320 | 1,290 | N/A | 1,331 | 1,331 |
3 BD - Average Rental Rate (Per Unit) | $2,018 | $1,904 | $2,045 | $1,926 | N/A | $1,973 | $2,100 |
3 BD - Average Rent PSF | $1.43 | $1.47 | $1.55 | $1.50 | N/A | $1.49 | $1.58 |
Source: Newmark Grubb Knight Frank Appraisal dated March 14, 2018
Linden Audubon Park | Camden North Quarter | Murano | Park Place at Maguire | Sola at Celebration | Averages | Subject | |
---|---|---|---|---|---|---|---|
Date | 11/14/17 | 2/13/18 | 2/8/18 | 6/30/17 | 9/1/16 | - | - |
# of Units | 449 | 333 | 240 | 243 | 306 | 314 | 268 |
Year Built | 2017 | 2016 | 2016 | 2016 | 2016 | 2016 | 2017 |
Purchase Price | $97,100,000 | $80,750,000 | $50,000,000 | $49,560,000 | $67 | $57,402,000 | $62,850,000 |
$/Unit | $216,258 | $242,492 | $208,333 | $203,951 | $218,954 | $217,998 | $234,515 |
Cap Rate | 4.90% | 4.50% | 5.00% | 5.05% | 4.90%% | 4.87% | 5.5% |
Source: Newmark Grubb Knight Frank Appraisal dated March 14,2018 and Costar
Property Appraisal available upon request. Please email investor-help@realtymogul.com.
The Property is located in Williamsburg, Florida in the Orlando-Kissimmee-Sanford Metropolitan Statistical Area (“MSA”) (“Orlando Metro”) in the interior of Central Florida, south of U.S Highway 528/U.S Highway 4 intersection. The Property is located less than 6-10 miles away from the Disney Theme Parks, the MSA’s largest employer (74,000 workers) and worldwide tourist destination. Disney contributes $18.2 billion in annual economic impact with an annual payroll of more than $2 billion. (Source: Walt Disney World Fact Sheet).
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Market Overview
The Orlando Metro is comprised of approximately 2.4 million residents, ranked 23rd of 381 MSAs in the nation. The State of Florida recently surpassed New York as the third largest state in America with a population reaching nearly 20 million (U.S. Census Bureau). The Orlando Metro area’s population grew by 14.4% from 2010-2016, tied for the fastest growing top 30 metro. Furthermore, the metro grew by 29.8% from 2000-2010 and by 34.3% from 1990-2000, about triple the national average for both time periods. (Orlando Economic Development Commission).
Effective rent increased 1.8% from $1,231 in 4Q17 to $1,252 in 1Q18, which resulted in an annual growth rate of 7.1%. Annual effective rent growth is forecast to be 2.9% in 2019, and average 2.9% from 2020 to 2022. Annual effective rent growth has averaged 2.6% since 3Q96. The market's annual rent growth rate was above the national average of 2.5%. Out of the 120 markets ranked by Axiometrics nationally, Orlando-Kissimmee-Sanford, FL Metro Area was 6th for quarterly effective rent growth, and 4th for annual effective rent growth for 1Q18. The market's occupancy rate increased from 95.8% in 4Q17 to 96.0% in 1Q18, and was up from 95.5% a year ago. The market's occupancy rate was above the national average of 94.5% in 1Q18. For the forecast period, the market's occupancy rate is expected to be 95.1% in 2019, and average 95.2% from 2020 to 2022. The market's occupancy rate has averaged 94.0% since 3Q95.
Submarket Overview
Per Axiometrics, the Property is located in the Far South / Lake Buena Vista submarket of the Orlando-Kissimmee-Sanford, FL Metro Area. Effective Rent Growth was 8.8% in 1Q18, which ranks #3 out of the 13 submarkets in the MSA. Axiometrics forecasts rent growth to average 3.2% from 2019-2022. Occupancy was 95.9% in 1Q18 which ranks 7th out of 13 the submarkets. Axiometrics forecasts occupancy to be an average of 95.0% from 2019-2022. The submarket has average rents of $1,193, which are below the market average of $1,230.
Market and Submarket Overview information above was obtained from Axiometrics and the PPM.
Demographic Information
Distance from Property | 1 Mile | 3 Miles | 5 Miles |
Population | 7,165 | 41,095 | 123,863 |
Population Forecast (2023) | 8,117 | 46,082 | 137,813 |
Average Age | 33 | 37 | 37 |
Median Household Income | $44,303 | $59,995 | $58,822 |
Average Household Size | 2.0 | 2.5 | 2.7 |
Median Home Value | $449,375 | $293,406 | $249,888 |
Population Growth 2018 - 2023 | 13.3% | 12.1% | 11.3% |
Demographic information above was obtained from CoStar.
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.
Sources of Funds | Cost |
---|---|
Debt | $38,400,000 |
Equity | $31,500,683 |
Total Sources of Funds | $69,900,683 |
Uses of Funds | Cost |
Purchase Price | $62,850,000 |
Acquisition Fee | $1,257,000 |
Financing and Other Closing Costs | $1,493,439 |
Selling Commissions | $1,890,041 |
Dealer Fee | $393,759 |
Placement Agent Fee | $441,010 |
Organizational & Offering Expenses | $189,004 |
Lender Controlled Reserves | $736,430 |
Trust Controlled Reserves | $650,000 |
Total Uses of Funds | $69,900,683 |
*Sources and Uses represent 99% ownership of the Trust, the remaining 1% will be retained by the Sponsor
The Property has existing debt:
- Loan Origination Date: 5/10/2018
- Lender: KeyBank Fannie Mae DUS
- Loan Proceeds: $38,400,000
- Loan to Cost: 54.69%
- Interest Rate: 4.46% Fixed
- Amortization: 30-year amortization
- Interest Only: 5-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
- Yield Maintenance: 114 months with a minimum 1% of the outstanding principal balance of the loan
- Prepayment Penalty: 1% if loan repaid after the expiration of yield maintenance period but before the last calendar day of the fourth month prior to the month in which the loan matures
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.
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 | $1,257,000 | Sponsor | Capitalized Equity Contribution | 2.0% of Purchase Price. |
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. Surplus fees retained by Sponsor. |
Dealer Fee | 1.25% of offering proceeds | Broker Dealers | Capitalized Equity Contribution | 1.25% 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. |
Placement Agreement Fee | 1.40% of offering proceeds | Broker Dealers | Capitalized Equity Contribution | Managing Broker-Dealer will receive a fee up to 1.4% 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 | 0.60% of offering proceeds | 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 $189,004 or 0.60% of the Offering Amount. |
Disposition Fee | 3.50% | Sponsor | Sale Proceeds | 3.5% of Sales Price |
Type of Fee | Amount of Fee | Received By | Paid From | Notes |
---|---|---|---|---|
Asset Management Fee | 0.20% of Purchase Price | Manager | Operating Cash Flow | |
Property Management Fee | 2.50% of Effective Gross Income | Property Manager | Operating Cash Flow | Bell Partners Inc. ("Bell Partners"), an unaffiliated party, will perform the property management on the Property. |
Master Lease Operating Profit | N/A | Master Lessee | Operating Cash Flow | The Master Lessee will retain net operating revenues from the Property that exceed the total rent payable to the Trust under the Master Lease. |
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.
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 “Market and Location Overview – Competitive Properties” 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 Manager or the Property Sub-Manager 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 Period
The loan used to acquire the Property is expected to have an interest-only period for the first 60 months of the loan term, which means there will be no reduction in the principal balance during that interest-only period.
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.
The Master Tenant Has a Limited Right to Defer Rental Payments Under the Master Lease
Under the Master Lease, if the Property’s operating cash flow is insufficient to pay all of the associated expenses of the Property (not including the Asset Management Fee), the full Base Rent, then in such event, the Master Tenant has a limited right to defer and accrue a portion of the Additional Rent and Supplemental Rent payments due under the Master Lease (but not any portion of the Base Rent required to make debt service payments due under the Loan Documents). Because the Master Tenant may accrue a portion of the Additional Rent and Supplemental Rent, it will not be required to call the demand note from Bluerock in order to make up such a shortfall. In such an instance, Purchasers may receive less or more varied distributions than they would have if the Master Tenant were required to call the demand note to fund any such Rent shortfall. Furthermore, if future cash flow from the Property or disposition proceeds are insufficient to pay the accrued Rent and Bluerock is unable to fund the demand note when called, then the Trust may never receive the full amount of any such accrued Rent, which could materially and adversely affect the returns to the Purchasers. Additionally, in the event that the Master Tenant elects to defer payment of a portion of the Rent, although the issue is not completely settled under existing law, under Section 467 of the Code, Beneficial Owners may be required to report and pay tax on rent in accordance with the rent schedule attached to the Master Lease, even though the Master Tenant may have elected to defer the payment of a portion of such rent. As a result, Beneficial Owners may be required to recognize rental income even though rent is not being fully paid, and therefore Beneficial Owners may have to use funds from other sources to pay tax on such income. See “Summary of 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 November 2, 2017 prepared by Blackstone Consulting, based on a site visit conducted on October 17, 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.
Investor Equity Diluted 1%
100% of the equity required to close the transaction will be funded by investors, which will be diluted by 1% so that the Sponsor will have a 1% ownership stake for which they will make no cash contribution but will receive cash distributions.
No RealtyMogul Site Visit
The Property has not been physically inspected by a representative of RealtyMogul or any of its affiliates.
Florida Hurricane & Flood Risk
Orlando, FL is subject to frequent and sometimes destructive hurricanes. There can be no assurance that a sizable hurricane or a large amount of rain will not cause significant damage to the Property, in which case the business and financial condition of the Trust would be materially adversely affected. There is no guarantee that the Trust or the tenants of the Property will carry adequate hurricane or flood insurance for the properties at the time of a loss.
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.
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.