Eagle Property Capital ("EPC") is a private, vertically integrated real estate investment firm engaged in the origination, ownership, acquisition, management, and disposition of B & C multifamily, narrowly focused in Florida and Texas. EPC targets moderate-income households, in predominantly Hispanic communities. Initially founded by Gerardo Mahuad and Rodrigo Conesa, EPC is headquartered in Coral Gables, FL. EPC has about 78 employees (18 corporate + 60 on-site).
Since 2011, EPC has acquired 22 multifamily properties ($261M) comprised of approximately 4,937 units. EPC's current $209M portfolio consists of 13 properties, with 3,130 units. Among ten of the Sponsor's properties (2,218 units) located in Dallas MSA, seven properties (1,394 units) are located in Irving.
RealtyMogul has invested with the Real Estate Company in the Villas de Estancia transaction, which was acquired in August 2018.
Built in 1971, this garden-style apartment complex is comprised of one (48 units), two (80 units), and three-bedroom (32 units) floor plans in 17 two-story buildings across eight acres. The Property is currently 95.6% leased (as of August 2018), has an average apartment size of 957 square feet, and offers four floor plans. Amenities at the Property include a business center, a clubhouse, a fitness center, a laundry center and a swimming pool.
Although the previous owner began upgrading the exterior and some interiors of the Property, the upgrades are incomplete, creating an attractive value-add opportunity for new ownership. Approximately 36% of the units have been upgraded to a somewhat lower standard than planned by the Real Estate Company, with unit amenities such as black appliances, light fixtures, painted cabinet fronts, vinyl wood flooring or new carpet, and resurfaced countertops. As of August rent roll, units previously renovated by the current owner over the prior two years are achieving an average premium of $85 per unit above unrenovated units.
| Unit Type | # of Units | % of Total | Unit (Square Feet) | Total Square Feet | Rent Per Unit | Rent Per Square Foot |
|---|---|---|---|---|---|---|
| 1 Bed, 1 Bath | 48 | 30% | 743 | 35,664 | $817 | $1.10 |
| 2 Bed, 2 Bath | 48 | 30% | 974 | 46,752 | $941 | $0.97 |
| 2 Bed, 2 Bath | 32 | 20% | 996 | 31,872 | $953 | $0.96 |
| 3 Bed, 2 Bath | 32 | 20% | 1,212 | 38,784 | $1,191 | $0.98 |
| Totals/Averages | 160 | 100% | 957 | 153,072 | $956 | $1.00 |
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| The Residences at Northgate |
Resort at Jefferson Park |
Broadmoor Villas | The Brandt | Bel Air Las Colinas |
Averages | Subject | |
|---|---|---|---|---|---|---|---|
| # of Units | 320 | 420 | 100 | 504 | 533 | 375 | 206 |
| Year Built | 1984 | 1985 | 1982 | 1985 | 1979 | 1983 | 1972 |
| 1 BDR | |||||||
| # of Units | 53 | 48 | 20 | 72 | 162 | 71 | 60 |
| Average Rent |
$855 | $957 | $1,072 | $1,184 | $928 | $999 | $973 |
| Average $/SF |
$1.17 | $1.35 | $1.33 | $1.61 | $1.15 | $1.32 | $1.31 |
| 2 BDR | |||||||
| # of Units | 53 | 60 | 40 | 120 | 72 | 69 | 90 |
| Average Rent |
$1,054 | $1,223 | $1,130 | $1,281 | $1,378 | $1,213 | $1,102 |
| Average $/SF |
$1.01 | $1.17 | $1.13 | $1.28 | $1.08 | $1.13 | $1.12 |
| 3 BDR | |||||||
| # of Units | 54 | 20 | - | - | - | 37 | 56 |
| Average Rent |
$1,384 | $1,568 | - | - | - | $1,476 | $1,347 |
| Average $/SF |
$1.15 | $1.28 | - | - | - | $1.22 | $1.11 |
| Miles from Subject |
1.5 mi | 1.6 mi | 0.3 mi | 0.9 mi | 2.2 mi | 1.3 mi | - |
| Knollwood Apartments |
Sierra Point | Sedona Park | Steeplechase | Woodwind Apartments |
Villas de Estancia | Averages | Subject | |
|---|---|---|---|---|---|---|---|---|
| Date | September-17 | February-18 | February-18 | August-18 | August-18 | August-18 | - | June-18 |
| # of Units | 188 | 212 | 282 | 316 | 64 | 206 | 211 | 160 |
| Year Built | 1973 | 1971 | 1982 | 1974 | 1983 | 1972 | 1976 | 1971 |
| Purchase Price | $14,250,000 | $20,882,000 | $30,000,097 | $26,600,000 | $5,950,000 | $20,400,000 | $19,383,667 | $14,325,000 |
| $/SF | $99 | $106 | $135 | $112 | $97 | $89 | $105 | $94 |
| $/Unit | $75,798 | $98,500 | $106,383 | $84,177 | $92,969 | $99,029 | $91,757 | $89,531 |
| Average SF/Unit | 766 | 931 | 787 | 754 | 960 | 1,113 | 885 | 957 |
| Cap Rate | - | - | *5.5% | *5.6% | *5.5% | *6.1% | 5.5% | *6.1% |
| Miles from Subject | 0.4 mi | 1.0 mi | 1.4 mi | 0.1 mi | 0.5 mi | 0.2 mi | 0.6 mi | - |
* Cap rate is based on trailing 12-months net operating income.
Lease and Sale Comparable information provided by the Real Estate Company, Axiometrics, and Real Capital Analytics.
| Sources of Funds | Cost |
|---|---|
| Debt | $10,118,000 |
| Equity | $5,962,471 |
| Total Sources of Funds | $16,080,471 |
| Uses of Funds | Cost |
| Purchase Price | $14,325,000 |
| Real Estate Company Acquisition Fee (Realty Mogul 89, LLC) | $140,912 |
| Broker Dealer Fee | $112,000 |
| Capital Expenditures | $1,138,344 |
| Loan Broker Fee | $75,885 |
| Lender Costs | $47,750 |
| Escrows | $30,360 |
| Buyer's Closing, Insurance Up-Front, Legal Fees & Due Diligence | $210,220 |
| Total Uses of Funds | $16,080,471 |
The expected terms of the debt financing are as follows:
- Lender: Berkadia as a Fannie Mae DUS
- Estimated Proceeds: $10,118,000
- Term: 10 years
- Estimated Rate (Fixed): 4.76%
- Amortization: 30 years with ten years of interest-only
- Prepayment: Yield Maintenance through the first 96 months of the loan. From Months 97-117 of the loan the prepayment shall be 1.0%. Thereafter, the loan may be paid off at par.
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 as follows:
- To the Company, pro rata share of distributable cash to an 8% IRR;
- 75.0% to the Company and 25.0% to the Real Estate Company of excess distributable cash to a 16.7% IRR;
- Excess balances will be split pro rata 65% to the Company and 35% 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 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 RealtyMogul.com investors). The manager of the Company will receive a portion (up to 10% pro-rata) of the Real Estate Company's promote interest.
Distributions are expected to start in March 2019 and are projected 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 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Effective Gross Revenue | $2,099,580 | $2,339,390 | $2,453,235 | $2,514,341 | $2,595,640 |
| Total Operating Expenses | $1,069,237 | $1,134,569 | $1,168,694 | $1,201,878 | $1,236,700 |
| Net Operating Income | $1,030,343 | $1,204,821 | $1,284,541 | $1,312,463 | $1,358,940 |
| Year 0 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|---|
| Distributions to the Company | ($2,830,000) | $31,908 | $165,492 | $245,462 | $268,674 | $284,202 | $4,529,057 |
| Net Earnings to Investor - Hypothetical $50,000 Investment |
($50,000) | $564 | $2,924 | $4,337 | $4,747 | $5,021 | $80,019 |
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 | $140,912 | Real Estate Company | Capitalized Equity Contribution | 2.2% of the Property purchase price (The Company pro-rata share to the Target) |
| Broker-Dealer Fee | $112,000 | North Capital (1) | Capitalized Equity Contribution | 4.0% of equity raised by RealtyMogul.com ($50,000 minimum) |
| Due Diligence Fee | $8,000 | Real Estate Company Affiliate | Capitalized Equity Contribution | $50 per unit |
| Type of Fee | Amount of Fee | Received By | Paid From | Notes |
|---|---|---|---|---|
| Property Management Fee | 3.5% of Effective Gross Income |
Real Estate Company Affiliate | Distributable Cash | |
| Asset Management Fee | 1.5% of amount invested in the Target |
Real Estate Company | Distributable Cash | Asset Management Fee based on distributable cash to RealtyMogul 89, LLC |
| Construction Management Fee | 4.0% of hard costs | Real Estate Company Affiliate | Capitalized Equity Contribution & Distributable Cash | |
| Management and Administrative Fee | 1.0% of amount invested in the Company | RM Manager, LLC | Distributable Cash | RM Manager, LLC is the Manager of Realty Mogul 89, LLC 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.
RM Securities, LLC, its registered representatives, affiliates, associated persons, and personnel of its affiliates who may also be associated with it, including our associated persons and personnel of our affiliates who are also be associated with RM Securities, LLC (it (“RM Securities,” “we,” “our,” or “us”) will receive fees, expense reimbursements, and other compensation (“Fees”) from the issuer of this investment offering, its sponsor, or an affiliate thereof (“Sponsor”), or otherwise in connection with Sponsor’s offering. The Fees paid to us are in addition to other fees you will pay to Sponsor or in connection with Sponsor’s investment offering. You will pay Fees to Sponsor, either directly or indirectly as an investor in the Sponsor’s offering. Sponsor will use the Fees you pay, as well as funds you invest in the relevant offering, to compensate us. The Fees paid to us will directly or indirectly be borne by you as the investor (typically, but not always, in the form of an expense of the Sponsor’s offering in which you invest) because such Fees will reduce the proceeds available for distribution to you and reduce the amount you earn over time.
For more information on the Fees paid to us, or any other Fees you will pay in connection with Sponsor’s offering, please carefully review the Sponsor’s Investment Documents. Please also carefully review RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
No Approval, Opinion or Representation, or Warranty by RM Securities, LLCSponsor has provided, approved, and is solely responsible in all aspects for the information on this webpage (“Page”), including Sponsor’s offering documentation, which may include without limitation the Private Placement Memorandum, Operating or Limited Partnership Agreement, Subscription Agreement, the Project Summary and all exhibits and other documents attached thereto or referenced therein (collectively, the “Investment Documents”). The Investment Documents linked on this page have been prepared and posted by Sponsor, and not by RM Securities. We did not assist in preparing, do not adopt or endorse, and we are not otherwise responsible for, the Sponsor’s Investment Documents. We make no representations or warranties as to the accuracy of information on this Page or in the Sponsor’s Investment Documents and we accept no liability therefor. No part of the information on this Page or in the Sponsor’s Investment Documents is intended to be binding on us.
Sponsor’s Information Qualified by Investment DocumentsThe information on this Page is qualified in its entirety by reference to the more complete information about the offering contained in the Sponsor’s Investment Documents. The information on this Page is not complete and subject to change at the Sponsor’s discretion at any time up to the closing date. The Sponsor’s Investment Documents and supplements thereto contain important information about the Sponsor’s offering including relevant investment objectives, the business plan, risks, charges, expenses, and other information, which you should consider carefully before investing. The information on this Page should not be used as a basis for an investor’s decision to invest.
Risk of InvestmentThis investment is speculative, highly illiquid, and involves substantial risk. There can be no assurances that all or any of Sponsor’s assumptions, expectations, estimates, goals, hypothetical illustrations, or other aspects of Sponsor’s business plans (“Assumptions”) will be true or that actual performance will bear any relation to Sponsor’s Assumptions, and no guarantee or representation is made that Sponsor’s Assumptions will be achieved. If Sponsor does not achieve its Assumptions, your investment could be materially and adversely affected. A loss of part or all of the principal value of your investment may occur. You should not invest unless you can readily bear the consequences of such loss. Sponsor’s Assumptions should not be relied upon as the primary basis for your decision to invest.
No Reliance on Forward-Looking Statements; Sponsor AssumptionsSponsor is solely responsible for statements made concerning forward-looking statements and Assumptions, which apply only as of the date made, are preliminary and subject to change, and are expressly qualified in their entirety by the disclosures and cautionary statements included in Sponsor’s Investment Documents, which you should carefully review. Neither RM Securities nor Sponsor are obligated to update or revise such forward-looking statements or Assumptions to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Sponsor’s forward-looking statements and Assumptions are hypothetical, not based on actual investment achievements or events, and are presented solely for purposes of providing insight into the Sponsor’s investment objectives, detailing Sponsor’s anticipated risk and reward characteristics, and establishing a benchmark for future evaluation of actual results; therefore, they are not a predictor, projection, or guarantee of future results. You should not rely on Sponsor’s forward-looking statements as a basis to invest.
Importantly, we do not adopt, endorse, or provide any assurance of returns or as to the accuracy or reasonableness of Sponsor’s Assumptions or forward-looking statements.
No Reliance on Past PerformanceAny description of past performance is not a reliable indicator of future performance and should not be relied upon as the primary basis to invest.
Sponsor’s Use of DebtA substantial portion of the total cost of the real estate asset acquired by the Sponsor with investor funds (“Property”) will be paid with borrowed funds, i.e., debt. Sponsor’s estimated rates and terms of the debt financing are subject to lender approval, and there is no assurance that the Sponsor will secure debt at the rates and terms presented on this Page or in the Sponsor’s Investment Documents, or at all. The use of borrowed money to acquire real estate is referred to as leveraging, which can amplify losses and could result in lender foreclosure. In addition, if the debt includes a variable (or “floating”) interest rate, the total amount of interest paid over the term of the debt will fluctuate and can increase. As a result, Sponsor’s use of debt can result in a loss of some or all of your investment.
Sponsor’s Offering is Not RegisteredSponsor’s securities offering will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemptions from registration pursuant to Rule 506(c) of Regulation D as promulgated under the Securities Act (“Private Placement”). In addition, the offering will not be registered under any state securities laws in reliance on exemptions from state registration. Such securities (your ownership interests) are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption. All Private Placements on the Platform are intended solely for “Accredited Investors,” as that term is defined in Rule 501(a) under the Securities Act.
No Investment AdviceNothing on this Page should be regarded as investment advice (either with respect to a particular security or regarding an overall investment strategy), a recommendation, an offer to sell, or a solicitation of or an offer to buy any security. Advice from a securities professional is strongly advised to understand and assess the risks associated with real estate or private placement investments. For additional information on RM Securities’ involvement in this offering, please carefully review the Sponsor’s Investment Documents, and RM Securities’ Form CRS, Regulation Best Interest Disclosures, and Limited Brokerage Services Agreement.
1031 Exchange RiskInternal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances.