GCG P10, LLC
GCG P10, LLC is a newly-formed multifamily acquisition venture established by Glenn Gonzales. Glenn Gonzales has previously acquired a multifamily portfolio of over 3,800 units at a cumulative purchase price of over $178 million via a partnership known as NAPA Ventures, LLC, of which Glenn was a Principal and Co-Founder. In addition to his background with NAPA Ventures, LLC, Mr. Gonzales currently serves as the Chief Executive Officer for Place 10 Residential, Inc., a property management firm with over 6,000 units under management. Place 10 Residential, Inc. is to serve as the property manager for the Property.
Place 10 Residential, Inc. was established in 1969 and is headquartered in Renton, WA with satellite offices in Dallas and Austin Texas. Place 10 Residential, Inc. is a national U.S. community management firm committed to delivering exceptional service to its apartment communities and residents. Place 10 Residential, Inc. provides community and compliance management services that create positive living environments for residents and build value for clients. Place 10 Residential, Inc.'s corporate team has over 75 years of combined experience.
Glenn Gonzales of GCG P10, LLC has, through predecessor entities, served as a Sponsor for three other real estate investments offered on the RealtyMogul platform. Those investments, known as Woodbridge Townhomes, Ravenwood Apartments, and Yardarm Apartments, have all three also employed Place 10 Residential, Inc. as property manager.https://www.place10residential.com/our-people
Mr. Glenn Gonzales is an entrepreneurial individual able to leverage 25 years of commercial real estate experience. Glenn served as Treasurer on the Board of Directors for the Washington Multi-family Housing Association, and was elected as President of the association in 2006. From 1994 to 1998, Glenn was a board member for the Utah Apartment Association. He also served a two-year term as the Chairman of the Public Relations Committee and a one-year term as the Secretary-Treasurer for the Institute of Real Estate Management (IREM). Since 1994, Glenn has also been an instructor for the Apartment Associations in his local markets.
|Property Name||Location||Asset Type||Date Acquired||# of Units||Purchase Price|
|Encinal||San Antonio, TX||Multifamily||12/19/2013||201||$4,818,750|
|Lakeview Apartments||Killeen, TX||Multifamily||4/4/2014||62||$1,175,000|
|Morgan Manor||San Antonio, TX||Multifamily||9/26/2014||157||$3,650,000|
|Sante Fe||San Antonio, TX||Multifamily||6/30/2015||327||$7,300,000|
|Montecito Creek||Dallas, TX||Multifamily||9/30/2015||650||$34,000,000|
|Oates Creek||Mesquite, TX||Multifamily||6/30/2016||280||$15,700,000|
|Parkside Townhomes||Arlington, TX||Multifamily||7/14/2016||144||$11,500,000|
|Woodbridge Townhomes||Arlington, TX||Multifamily||8/24/2016||91||$6,225,000|
|Westwood Apartments||Dallas, TX||Multifamily||8/31/2016||187||$7,400,000|
|Ravenwood Apartments||Fort Worth, TX||Multifamily||10/12/2016||122||$4,900,000|
|Brandon Mill||Dallas, TX||Multifamily||9/26/2016||300||$12,160,000|
|Eagle Point||Dallas, TX||Multifamily||11/15/2016||156||$6,961,100|
|Pleasant Creek||Lancaster, TX||Multifamily||12/30/2016||159||$8,580,000|
|Oyster Creek||Lake Jackson, TX||Multifamily||2/28/2017||201||$15,900,000|
|Treasure Bay||Lake Jackson, TX||Multifamily||2/28/2017||200||$15,100,000|
|Prescott Woods||Tulsa, OK||Multifamily||5/12/2017||256||$8,300,000|
|Yardarm Apartments||Corpus Christi, TX||Multifamily||7/28/2017||150||$8,875,000|
Note - The above track record represents a portfolio for which Glenn Gonzales of the Real Estate Company served as a Principal and Co-Founder. However, the above portfolio was and is not owned by GCG P10, LLC. Prior to the acquisition of the Property, GCG P10, LLC will not own any commercial real estate assets.
The Real Estate Company's bio and track record were provided by the Real Estate Company and have not been verified by RealtyMogul or NCPS.
In this transaction, Realty Mogul investors are to invest in RealtyMogul 120, LLC ("The Company"). The Company will subsequently invest in P10 HGH - Village Creek, LLC ("The Target"), a limited liability company that will hold title to the Property. GCG P10, LLC (the "Real Estate Company") is under contract to purchase the Property for $11,000,000 ($59,783 per unit), and the total project cost is expected to be $12,160,000 ($66,087 per unit).
The business plan for the Property entails acquiring the Property at an above-market going-in cap rate, executing on an approximately $608,000 capital expenditure budget focused on curing deferred maintenance and improving the Property's curb appeal, maintaining the strong in-place occupancy throughout the hold period, and selling the Property within approximately three (3) years, market conditions permitting.
Major curb appeal improvements anticipated to be completed as part of the business plan include: the installation of a pool and patio, the renovation of the clubhouse, and the installation of three playgrounds across the Property.
|CapEx Item||$ Amount||Per Unit|
|Pool and Patio Installation||$150,000||$815|
|Concrete, Asphalt and Foundational Repairs||$71,950||$391|
|Masonry Repointing and Repairs||$59,500||$323|
|Repair Exterior Gates||$35,000||$190|
|Adding Three New Playgrounds||$35,000||$190|
|Miscellaneous Deferred Maintenance||$13,750||$75|
|Painting and Vinly Siding||$13,025||$71|
|Parking Lot Seal Coat and Striping||$11,640||$63|
|Construction Management Fee 5.0%||$28,967||$157|
Village Creek Townhomes (the "Property"), which was constructed in 1970 and completely renovated down to the wood frames in 1994, is a 184-unit townhome community located in Southeast Fort Worth, TX approximately 10 minutes from Downtown Fort Worth along the State Highway 820 loop. The Property is currently 97% leased, has an average apartment size of 816 square feet, and offers two, three and four-bedroom townhome layouts.
The Property is situated on 21.4 acres, providing for a low density of 8.6 units per acre. The Property's 418 parking spaces equates to 2.25 spaces per unit. The Property consists of wood-frame construction duplexes with masonry exteriors and concrete slab foundations.
The Property is walking distance (less than a quarter mile) to the local primary, middle and high schools and is less than a mile away from Lake Arlington. The other surrounding uses near the Property are primarily single family residential neighborhoods.
|Unit Type||# of Units||% of Total||Unit (SF)||Total SF||In-Place Rent||Post Renovation Rent|
|2 Bed, 1 Bath||126||68%||725||91,350||$671||$750|
|3 Bed, 1.5 Bath||28||15%||975||27,300||$914||$975|
|4 Bed, 2 Bath||30||17%||1,050||31,500||$965||$1,050|
|Rental Comparables||Antigua Village||Heather Village||Brentwood Court||Quail Ridge||Madison Park||Averages||Subject|
|# of Units||160||170||42||296||140||162||184|
|2x1 - # of Units||53||61||10||80||8||42||126|
|2x1 - SF||850||987||905||810||868||884||702|
|2x1 - Rent||$799||$795||$780||$725||$835||$787||$750|
|2x1 - $/SF||$0.94||$0.81||$0.86||$0.90||$0.96||$0.89||$1.07|
|3x2- # of Units||--||11||--||16||12||13||28|
|3x2 - SF||--||1,360||--||1,234||1,050||1,215||900|
|3x2 - Rent||--||$1,060||--||$970||--||$1,042||$975|
|3x2 - $/SF||--||$0.78||--||$0.79||$1.04||$0.87||$1.08|
|4x2- # of Units||--||--||--||--||--||--||30|
|4x2 - SF||--||--||--||--||--||--||1,168|
|4x2 - Rent||--||--||--||--||--||--||$1,050|
|4x2 - $/SF||--||--||--||--||--||--||$0.90|
|Distance from Subject (mi.)||1.0||3.4||2.5||3.0||3.3||2.6||--|
Source - Axiometrics
|Sales Comparables||Oak Ridge||Woodstone Apartments||Bridge Hollow||Copper Creek||Sterling Pointe||Averages||Subject|
|# of Units||28||200||280||274||216||200||184|
*Note: Subject Cap Rate is representative of T-12 NOI adjusted for reserves.
Source - Real Captial Analytics
The Property is located in Fort Worth, TX, within the greater Tarrant County. The Property is located in Southeast Fort Worth, approximately 10 minutes from Downtown Fort Worth along the State Highway 820 loop. The Property is walking distance (less than a quarter mile) to the local primary, middle and high schools. The Property is less than a mile away from Lake Arlington. The other surrounding uses near the Property are primarily single family residential neighborhoods.
Per CoStar, The Dallas-Fort Worth apartment market has performed well over the last few years, thanks to exceptional demand driven by some of the best in-migration and employment growth in the country. Supply levels are cresting, but the influx of tens of thousands of jobs from corporate moves like those by Toyota and Liberty Mutual is helping drive demand, especially in the northern suburbs along the Dallas North Tollway. Rent growth has cooled from its peak in 2015, with the slowdown most prevalent in pricey, supply-heavy submarkets and in 4 & 5 Star assets. As the market moves towards the late-cycle phase, rising vacancies and slower rent growth can be expected. However, the Dallas-Fort Worth economy continues to fire on all cylinders, and as long as the metro comes close to maintaining its recent job growth numbers, there should be enough demand to keep vacancies below the historical average for at least a few more quarters.
Per Axiometrics, annual effective rent increased 0.1% from $1,003 in 4Q17 to $1,004 in 1Q18, which resulted in an annual growth rate of 3.0%. Annual effective rent growth is forecast to be 3.9% in 2019, and average 2.7% from 2020 to 2022. Annual effective rent growth has averaged 2.3% 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, Fort Worth-Arlington, TX Metro Division was 85th for quarterly effective rent growth, and 46th for annual effective rent growth for 1Q18.
The market's occupancy rate decreased from 94.6% in 4Q17 to 94.5% in 1Q18, and was down from 95.1% a year ago. The market's occupancy rate was at the national average of 94.5% in 1Q18. For the forecast period, the market's occupancy rate is expected to be 95.0% in 2019, and average 94.6% from 2020 to 2022. The market's occupancy rate has averaged 93.7% since 3Q95.
Per Axiometrics, annual effective rent increased 0.3% from $1,029 in 4Q17 to $1,032 in 1Q18 in the Southeast submarket of the Fort Worth-Arlington market. The submarket's annual rent growth rate of 2.8% was below the market average of 3.0%. Out of the 12 submarkets in the market, the Southeast submarket ranked fourth for quarterly effective rent growth and eighth for annual effective rent growth for 1Q18. Annual effective rent growth is forecast to be 2.5% in 2018, and average 3.1% through 2018 to 2020. The annual effective rent growth has averaged 2.4% per year since 3Q96.
The submarket's occupancy rate increased from 94.9% in 4Q17 to 95.1% in 1Q18, and was down from 95.2% a year ago. The submarket's occupancy rate was above the market average of 94.5% in 1Q18. For the forecast period, the submarket's occupancy rate is expected to decrease to 95.0% in 2018 and average 95.1% from 2018 to 2020. The submarket's occupancy rate has averaged 94.1% since 3Q96.
|1 Mile||3 Miles||5 Miles|
|Estimated Population (2023)||11,927||100,167||257,561|
|Estimated Population Growth (2018-2023)||8.55%||8.03%||7.92%|
|Average Household Income||$43,162||$59,104||$64,847|
|Median Household Income||$32,243||$42,609||$46,261|
|Median Home Value||$81,488||$88,538||$128,642|
|Average Household Size||2.9||2.9||2.8|
Demographic information above was obtained from CoStar.
|Sources of Funds||Cost|
|Total Sources of Funds||$12,160,000|
|Uses of Funds||Cost|
|Real Estate Company Acquisition Fee||$110,000|
|Broker Dealer Fee||$93,200|
|Mortgage Broker Fee||$141,960|
|Buyer's Closing, Legal Fees & Due Diligence||$176,542|
|Total Uses of Funds||$12,160,000|
The terms of the debt financing are as follows:
- Lender: Fannie Mae (Arbor Commercial Funding I, LLC as DUS)
- Loan Type: Agency
- Proceeds: $9,464,000
- Term: 12 years
- Rate: 10-year US Treasury + 2.15% (5.09% as of 6/20/2018)
- Amortization: 30 years
- Interest-Only Period: None
- Extensions: None
- Prepayment: Yield Maintenance through the first 11.5 years of the loan, then 1.0% until 90 days from maturity, then none
- Recourse: Non-recourse except for carve-outs
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, and the Real Estate Company, collectively, the "Members") as follows:
- 60% to the Members pari passu and 40% to the Real Estate Company to a 20% IRR,
- 50% to the Members pari passu and 50% to the Real Estate Company thereafter.
Note that these distributions will occur after the payment of The Company's liabilities (loan payments, operating expenses and other fees as set forth in the LLC agreement, in addition to any member loans or returns due on member loans).
The Company will distribute 100% of its share of excess cash flow (after expenses and fees) to the members of The Company (the Realty Mogul investors).
Distributions are expected to start in March 2019 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||$1,773,288||$1,878,358||$1,933,610|
|Total Operating Expenses||$929,851||$959,821||$988,572|
|Net Operating Income||$843,437||$918,536||$945,038|
|Distributions to The Company||($2,375,000)||$0||$230,633||$220,389||$3,425,371|
|Net Earnings to Investor -
Hypothetical $50,000 Investment
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||$110,000||Real Estate Company||Capitalized Equity Contribution||1.0% of the Property purchase price|
|Disposition Fee||1.0% of Sales Price||Real Estate Company||Sales Proceeds||Subject to a full return of the Company's capital contributions|
|Broker-Dealer Fee||$93,200||North Capital (1)||Capitalized Equity Contribution||4.0% of equity raised by RealtyMogul.com|
|Marketing Fee||$25,000||RM Manager, LLC||Investor Overraise|
|Type of Fee||Amount of Fee||Received By||Paid From||Notes|
|Property Management Fee||4.0% of Effective Gross Income||Real Estate Company Affiliate||Distributable Cash|
|Asset Management Fee||1.5% of Effective Gross Income||Real Estate Company||Distributable Cash|
|Construction Management Fee||5.0% of Total Costs||Real Estate Company Affiliate||Distributable Cash|
|Management and Administrative Fee||1.0% of amount invested in the Target||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.
Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated”, “projected”, “forecasted”, “estimated”, “prospective”, “believes”, “expects”, “plans”, “future”, “intends”, “should”, “can”, “could”, “might”, “potential”, “continue”, “may”, “will” and similar expressions to identify these forward-looking statements.
Non-Transferability of Securities
The transferability of membership interests in The Company are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Moreover, the estimated investment holding period described herein is only a projection, and there can be no assurance when or if an investment may be liquidated. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
Capital Call Risk
The amount of capital that may be required by the Target from the Company is unknown, and although the Target does not require that the Company and its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or sell additional equity. The Company does not intend to participate in a capital call if one is requested by the Target, and in such event the manager of the Target may accept additional contributions from other members of Target or from new members. In the event that the manager of Target advances any capital on behalf of the Company, it will be deemed to be a manager loan at an interest rate that cannot be determined at this time. Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case the Company's interest in Target will potentially suffer a proportionate amount of dilution.
Financial Past of Sponsor's Principal
Investors should consider that one of the Sponsor’s principals experienced personal bankruptcy in 2002 and a foreclosure on his primary residence in 2010. It should be noted that past financial events are not necessarily indicative of future performance or management ability.
*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Issuer Document Package for a discussion of additional risks. The above presentation is based upon information supplied by the Real Estate Company and others. Realty Mogul, Co., RM Manager, LLC, and The Company, along with their respective affiliates, officers, directors or representatives (the "RM Parties") hereby advise you that none of them has independently confirmed or verified any of the information contained herein. The RM Parties further make no representations as to the accuracy or completeness of any such information and undertake no obligation now or in the future to update or correct this presentation or any information contained herein.
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