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 Properties 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 Properties are 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 Properties could be adversely affected by competitive properties in the real estate market, which could affect the operations of the Properties and the ultimate value of the Properties. Success in owning the Properties, 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 Properties' 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 Properties, increase vacancy rates, decrease rental rates and impact the value of the Properties themselves. There may also be additional real property available in the general vicinity of the Properties that could support additional multifamily properties. If newer housing is built, it may siphon demand away from the Properties, as newer housing tends to be more attractive to prospective tenants. It is possible that tenants from the Properties will move to existing or new apartment communities in the surrounding area, which could adversely affect the financial performance of the Properties. Competition from nearby apartment communities could make it more difficult to attract new tenants and ultimately sell the Properties on a profitable basis. The Properties 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 Properties. There is no assurance that the property managers will be able to attract residents to the Properties given these facts.

The Properties are 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 Properties to increase and could adversely affect the Trust’s ability to sell the Properties 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 Properties.

Interest-Only Loans

The loans used to acquire the Properties are expected to have an interest-only period for the initial 60 months of the loan term, which means there will be no reduction in the principal balance during this 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. ​

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 Properties, 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 Properties, including, among other things, factors discussed below:

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

The proceeds realized from the sale of the Properties 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 Properties.

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.​

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.

Hurricane Risk

The Properties are located near the Atlantic Ocean and Gulf of Mexico, which are subject to frequest and sometimes destructive hurricanes. There can be no assurance that a sizable hurricane will not cause significant damage to the Properties, in which case the business and financial condition of the Trust would be materially adversely affected. There is no guarantee that the Trust will have adequate inaurance for the Properties at the time of potential hurricane damage.

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.