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Funded
Multifamily
Eagle Crest Apartments - Denver Multifamily
Lakewood, CO
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Orion Real Estate Partners, LLC "OREP"
15.0%* TARGET IRR 14.0%-16.0%
8.0%* TARGET AVG CASH ON CASH
1.89x* TARGET EQUITY MULTIPLE
Estimated Hold Period 5 years
Estimated First Distribution 6/2019
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Overview
Acquisition of a multifamily property in the Denver metropolitan area which has had approximately $1.4 million in capital invested by its seller over the past three years.
Market

Denver has been a top performing metro this economic cycle, and the Property's submarket ranked fourth out of 21 in Denver for 2Q18 rent growth, per Axiometrics.

Low Leverage

The Property's assumable loan and expected supplemental loan are expected to have an all-in loan-to-cost ratio of 55% with a remaining interest-only period longer than the Property's expected hold period.

Partner

Orion Real Estate Partners is a repeat RealtyMogul sponsor who is outperforming RealtyMogul's underwriting on a net operating income basis as of the end of 2Q18 on both of RealtyMogul's previous investments.

Property At A Glance
Year Built 1960
Years Renovated 2015-2018
# of Units 93
# of Buildings 4
Current Occupancy 100% as of August 2018
Acquisition Price

$15,650,000

Parking Ratio

1.72 spaces per unit

Investment Highlights
Market: The Property is located in the Lakewood submarket of Denver, CO. Per Axiometrics, the average annualized rent growth in the Denver metro has been 6.1% since the beginning of 2010, nearly twice the national average of 3.8% during the same period.
Low Leverage: The underwritten loan-to-cost for the investment, after the expected procurement of a supplemental loan prior to the acquisition of the Property, is approximately 55%. Should market conditions worsen significantly during the hold period, the investment in the Property would likely be more insulated from an event of default than if it had a higher leverage loan in-place.
Sponsorship: RealtyMogul has previously invested alongside the Real Estate Company on two other transactions, both of which were outperforming RealtyMogul underwriting as of the end of the second fiscal quarter of 2018.
No Deferred Maintenance: The third-party Property Condition Report for the Property recognized no immediate repair items, due primarily to the extensive capital improvements executed by the seller (reported at $1.4 million), which could lower necessary capital expenditure and repairs and maintenance expense during the hold period.
Management
Cumulative Distributions

Orion Real Estate Partners, LLC "OREP"

Orion Real Estate Partners, LLC ("OREP") is a real estate investment company formed in 2017 by Marc Venegas, Kyle Henrickson and Mark Limpert (together, the "Principals") to acquire multifamily assets in major markets in the Western United States.  OREP focuses on well located apartment properties with strong current cash flow and value add potential in markets expected to experience above average job growth.  OREP employs a disciplined and consistent underwriting process based upon macroeconomic trends, submarket factors and property fundamentals.

Prior to the formation of OREP, Marc Venegas and Kyle Henrickson operated in a partnership known as ColdWater Partners, LLC.  Through that entity, Marc Venegas and Kyle Henrickson acquired Parkwood Plaza Apartments, with RealtyMogul investors being involved in that transaction.  Since such time, the Principals have entered into a joint-venture agreement with other investors to create OREP.  However, while other investors are involved in the OREP entity, Marc Venegas and the Principals oversee all of OREP's day-to-day operations and maintain decision making rights within OREP.  Since the formation of OREP, RealtyMogul investors have invested in another transaction, Triple Crown 2, alongside OREP.

As noted above, RealtyMogul investors previously invested alongside OREP in the Parkwood Plaza acquisition in March 2017 and the Triple Crown 2 acquisition in December 2018.

As of the end of Q3 2018, Parkwood Plaza had successfully undergone rezoning approvals with the City of Denver to allow for five existing units that were previously not permitted to be rented to be brought online and rented to prospective tenants.  This income was not anticipated in the Estimated Financials for that property throughout the hold period, which could lead to an increase in revenues for that property above those in the Estimated Financials. From its acquisition through Q3 2018, that property is outperforming Estimated Financials on a net operating income basis by approximately 12% and is slightly underperforming on a cash on cash basis, with actual average cash on cash of 6.0% since inception, whereas the Estimated Financials targeted 6.5%.  The Real Estate Company has closed on a supplemental loan for the Parkwood Plaza property as of November 1, 2018, and the additional loan proceeds from that supplemental loan are expected to return approximately 40% of initially invested equity to the RealtyMogul investors in that transaction.  During the supplemental loan process the lender for Parkwood Plaza, CBRE, got an updated appraisal which valued that property at $15.3 million, which represents an approximately 31% increase in value over the all-in basis of approximately $11.7 million from its March 2017 acquisition.

As of the end of Q2 2018, Triple Crown 2 was well into the capital expenditure portion of its business plan, with 60 units having undergone interior renovations since its acquisition.  In addition to the execution of the business plan to-date, the change in management executed by OREP after its acquisition of Triple Crown 2 seems to be well received by tenants, as the property's Google reviews increased from 2.8 stars at its acquisition to 4.1 out of 5.0 possible stars as of the end of Q3 2018. From its acquisition through Q2 2018, that property is outperforming Estimated Financials in the Issuer Document Package for that offering on a net operating income basis by approximately 22%, while its actual cash on cash is 6.6% since inception, whereas the Estimated Financials targeted 4.4%.

http://orionrep.com/
  • Marc Venegas
    Founder & CEO
  • Kyle Henrickson
    Founding Partner
  • Mark Limpert
    Founding Partner
Marc Venegas
Founder & CEO

Marc Venegas formed OREP to invest in multifamily properties throughout the Western United States and is responsible for all aspects of identifying and managing the firm’s investments.  OREP currently owns five multifamily properties, two of which (Parkwood Plaza and Triple Crown 2) RM has invested in.

Prior to forming OREP, Marc was the Director of Multifamily Investments for MIG Real Estate, a Newport Beach family office with over $2 billion of assets under management. Marc was responsible for identifying investment opportunities throughout the Western United States and overseeing the asset management for the multifamily portfolio. Over four years, Marc acquired $700 million of multifamily properties and managed a portfolio with over 6,200 units producing returns significantly in excess of underwriting including two dispositions that generated a blended 24% IRR and 1.8x equity multiple.

Prior to joining MIG Real Estate in 2012, Marc was a Senior Vice President of Acquisitions at Heitman, a Chicago-based real estate investment advisory firm with over $22 billion of assets under management, where he was responsible for identifying investment opportunities throughout the Western United States.

Before joining Heitman in 2006, Marc was a Vice President, Fund Investment Management, with the J. E. Robert Companies. Marc began his real estate career as a senior financial analyst with NHP Incorporated, a Washington DC-based multifamily owner and operator.

Over his 20-year career, Marc has successfully underwritten and closed over $3.0 billion of transactions in all property types, including over 16,000 multifamily units.

Marc holds a Bachelor of Science Degree in Economics from the University of Pennsylvania and is a licensed real estate broker in the State of California.

Kyle Henrickson
Founding Partner

Kyle Henrickson is responsible for fund raising and investment analysis for OREP. Prior to joining OREP, Kyle was in the debt and equity practice at HFF in Los Angeles.

Before joining HFF, Kyle was a Senior Vice President at George Smith Partners, a Los Angeles-based real estate investment banking firm, where he was responsible for underwriting, structuring/due diligence activities, and market research related to identifying the optimal capital source for commercial real estate transactions. Kyle successfully closed $1.3 billion in commercial mortgage debt and equity for all property types across the country. Areas of expertise include joint venture and preferred equity advisory as well as permanent, bridge, and mezzanine debt financing.

Mark Limpert
Founding Partner

Mark Limpert is a founding principal of Orion Real Estate Partners and oversees asset management and investor reporting. Previously, Mark was a Vice President at Bellwether Asset Management, the exclusive real estate asset management firm for Oaktree Capital Management. At Bellwether, Mark’s primary responsibility was to provide portfolio and asset-level surveillance and analytics for Oaktree’s $13 billion portfolio and served as the lead asset manager on a $1.2 billion value-add multifamily portfolio comprised of 10,000 units.

Before joining Bellwether in 2015, Mark worked at JRK Residential for six years where he was a Vice President of Asset Management overseeing revenue management, value-add capital strategies, and a staff of over 100 employees on a 6,000 unit portfolio of multifamily investments throughout the US.

Mark began his career as an analyst at Lehman Brothers in the Global Real Estate Group and then joined JER Partners as an analyst in Los Angeles.

Mark holds a Bachelor of Arts in Economics from Dartmouth College.

Track Record

The below track record for Marc Venegas includes OREP's and ColdWater Partners, LLC's previous apartment acquisitions, as well as those Mr. Venegas was responsible for while Director of Multifamily Investments at MIG Real Estate.

Track Record
Property Name Location Date Acquired # of Units Purchase Price
ColdWater Partners / OREP - Founder & CEO (2016 - 2017)      
Triple Crown 2 Austin, TX Dec-17 199 $18,448,000
Lamar Station Apartments Denver, CO Jun-16 138 $13,554,000
Parkwood Plaza Apartments Denver, CO Mar-17 120 $11,702,000
Forest Cove Apartments Denver, CO Sep-17 100 $17,234,000
14th & Jay St Opportunity Zone (Development) Lakewood, CO Development 33 $9,100,000
1600 Hoyt Lakewood, CO Jan-20 64 $16,500,000
Continental Court Denver, CO Jan-20 98 $15,700,000
Hill at Woodway San Antonio, TX Dec-19 248 $25,950,000
Lookout Pointe Provo, UT Jun-20 115 $17,025,000
Eagle Crest Lakewood, CO Jan-19 93 $17,700,000
Cedars of San Marcos San Marcos, TX Aug-17 168 $17,500,000
Asbury Plaza Denver, CO Nov-17 110 $17,494,000
Subtotal     1,486 $197,907,000
         
MIG Real Estate - Director of Multifamily (2012-2016)      
Berkshire Apartments Renton, WA Dec-15 274 $46,600,000
Regency at Stone Bridge Ranch McKinney, TX Mar-15 301 $49,000,000
Midtown Commons Austin, TX Feb-15 562 $90,000,000
Alta Heights Houston, TX Dec-14 256 $53,000,000
Elan City Centre Dallas, TX Nov-14 330 $45,750,000
Marquis at Rogers Ranch San Antonio, TX Sep-14 246 $31,700,000
Symphony Chandler, AZ Aug-14 234 $35,500,000
Quadrangles Village Tempe, AZ Apr-14 510 $41,850,000
Copper Terrace Centennial, CO Feb-14 168 $24,000,000
Adagio Swenson Farms Austin, TX Jan-14 336 $32,875,000
Pine Creek Ranch Houston, TX Aug-13 240 $33,000,000
Acacia Creek Scottsdale, AZ Feb-13 304 $40,000,000
Churchill Downs Denver, CO Dec-12 168 $19,040,000
Canyon Point Cottages Golden, CO Aug-12 196 $31,250,000
Huntington Lakewood, CO Aug-12 288 $28,700,000
Hamptons Lakewood, CO Aug-12 312 $36,000,000
The Cottages Austin, TX Jun-12 330 $35,500,000
Wynhaven at Willowbrook Austin, TX May-12 372 $26,500,000
Subtotal     5,427 $700,265,000
         
Total     6,094 $771,090,000

The above track record information was provided by the Real Estate Company and has not been independently verified by RealtyMogul.

Business Plan

In this transaction, RealtyMogul investors are to invest in RealtyMogul 125, LLC ("The Company"), which is to subsequently invest in OREP Eagle Crest JV LLC ("The Target"), a limited liability company that will, through a 100% wholly owned subsidiary, hold title to the Property. Orion Real Estate Partners (the "Real Estate Company" or "OREP") is under contract to purchase the Property for $15.65 million ($168,280 per unit and $164 per square foot) and the total project cost is expected to be approximately $17.64 million ($189,712 per unit and $185 per square foot). The Property will be managed by AMC Management Consultants, LLC ("AMC"), a third-party property management firm based in Cottonwood Heights, UT. Established in 2000, AMC manages over 90,000 units throughout the US and per the National Multi Housing Council is the eighth largest property management company in the US. OREP has a successful history with the AMC team through previous ventures, and AMC currently manages the Real Estate Company’s existing four Denver properties totaling 468 units. Due to previous execution track record, the Real Estate Company is highly confident in AMC's ability to effectively manage the Property.

The Real Estate Company plans to acquire the Property and implement a four-prong business plan as follows:

1) As of August 2018, 30 of the 93 units at the Property were leased to government-subsidized tenants, per the lease audit. The Housing Assistance Payments ("HAP") program in Denver, CO has a budget of $71 MM for the 2019 calendar year, per their online budget.  Due to dwindling workforce housing supply available in the market, the HAP has already reached out to the Real Estate Company and let them know they would renew leases for their existing tenants at the Property at rents above the expected post-renovation rents for market-rate units, with no interior improvement capital expenditures necessary for those units. The pro forma included in the Issuer Document Package attached to this offering assumes that those 30 units are increased to rents in-line with the HAP's pricing guidance and no interior capital expenditure is necessary for those units.

2) For the 63 non-government subsidized units, the Real Estate Company intends to invest approximately $882,000 ($14,000 per unit) on the interior renovations as follows: (i) modernized kitchen countertops (formica and quartz options), (ii) tile back-splashes in kitchens, (iii) new shaker-style cabinet faces, (iv) stainless steel appliances, (v) new plank wood flooring, (vi) updated light and plumbing fixtures, (vii) quarter-round molding throughout unit, (viii) new vanity with framed mirrors in bathrooms, and (ix) sophisticated two-tone paint.

3) Invest approximately $570,000 on the exterior capital improvements to increase the Property's curb-appeal as follows: (i) new pool including the deck and furniture, (ii) improved landscaping, signage, and branding, (iii) improved kids play area and pet area, and (iv) addition of an expected 30 car ports to be leased at $60 per month at an expected 90% occupancy rate.

4) Increase operational efficiencies at the Property via: (i) hiring AMC, the third party manager that currently manages the Real Estate Company's other Denver assets, (ii) increase staffing efficiencies by sharing staff with the Lamar Station asset two miles away also owned by the Real Estate Company, thus lowering payroll expenses, and (iii) implementing a utility reimbursement program resulting in an expected approximately $70,000 per year of additional income at stabilization, which is expected to occur by the third year of the hold period.

Upon execution of the business plan the Real Estate Company plans to sell the Property in five (5) years at a 6.0% cap rate.

RealtyMogul investors previously invested alongside the Real Estate Company in the Parkwood Plaza acquisition in March 2017 and the Triple Crown 2 acquisition in December 2018.  For detail on those investments please scroll up to the Management section of this offering.

Property
Property Details

Built in 1960 and heavily renovated by the seller from 2015-2018, the Property consists of one, two, three and four-bedroom floor plans comprising 93 units, four (4) apartments buildings and one (1) standalone house, 160 parking spaces (1.7 parking spaces per unit), and 95,325 rentable square feet. The weighted average unit size and rent per unit are 1,025 square feet (well above the average unit size in the submarket of 851 square feet, per Axiometrics) and $1,187 ($1.16 per square foot), respectively (as of August 2018). The units offer large common living spaces, eat-in kitchens with dishwashers, full-size washer/dryer hookups, ceiling fans, and ample closet space.  On-site amenities include a pool, a playground, and a dog park.

In-Place Unit Mix
Unit Type # of Units Unit (Square Feet) Total Square Feet Rent Per Unit Rent Per Square Foot
1 Bed, 1 Bath 4 650 2,600 $947 $1.46
2 Bed, 1 Bath 42 950 39,900 $1,050 $1.11
3 Bed, 1 Bath 40 1,100 44,000 $1,392 $1.27
Standalone Home 1 1,200 1,200 $1,400 $1.17
4 Bed, 1 Bath 6 1,268 1,268 $1,631 $1.29
Totals/Averages 93 1,025 95,325 $1,234 $1.20
Comparables

Lease Comps
  Lamar Station Falls at Lakewood Mountain Vista Lime Averages Subject
Submarket North Lakewood South Lakewood South Lakewood North Lakewood   North Lakewood/Wheat Ridge
Axio Grade in Market B- B B+ B   C+
Axio Grade in Submarket B- B+ B+ B   B
Axio Submarket Grade B- B- B- B- 1,843 B-
Units 138 96 257 60 138 93*
Year Built 1940 1974 1973 1960 1974 1960
Average SF 639 912 548 1,050 787 1,025
Average Rental Rate $1,040 $1,559 $1,108 $1,448 $1,289 $1,476
# of Units (1x1) 87 12 172   90 4
Rent (1x1) $978 $1,210 $1,085   $1,091 $1,180
Average SF (1x1) 522 650 500   557 650
Average $/SF (1x1) $1.87 $1.86 $2.17   $1.97 $1.82
# of Units (2x1) 27 48 54 30 40 42
Rent (2x1) $1,292 $1,535 $1,181 $1,245 $1,313 $1,284
Average SF (2x1) 902 850 670 900 830 950
Average $/SF (2x1) $1.43 $1.81 $1.76 $1.38 $1.60 $1.35
# of Units (3x1) 3 24   30 19 40
Rent (3x1) $1,220 $1,645   $1,650 $1,505 $1,690
Average SF (3x1) 1,333 1,050   1,200 1,194 1,100
Average $/SF (3x1) $0.92 $1.57   $1.38 $1.29 $1.54
# of Units (4x1)   12     12 6
Rent (4x1)   $1,832     $1,832 $1,631
Average SF (4x1)   1,150     1,150 1,268
Average $/SF (4x1)   $1.59     $1.59 $1.29
Distance from Subject (mi.) 2.4 4.1 4.2 1.9 3.2 -

Lease Comparable information provided per Axiometrics.com

*The Property is 93 total units and 63 non-government-subsidized units.  One of the 93 units is a stand-alone single family home and is not picked-up in this comparable table.  The Subject rents in this table are representative of the underwritten post-renovation rents for the units which are not occupied by government-subsidized tenants.

 

Sales Comps
  Silver Leaf Apartments McKenzie Apartments 915 Carr Street Westhill Apartments 9493 W 14th Ave Averages Subject
Date Sep '17 Dec '16 Nov '17 Sep '16 Oct '17   Dec '18
Submarket Lakewood Lakewood Lakewood Lakewood Eiber   North Lakewood/Wheat Ridge
Costar Rating 3 stars 2 stars 3 stars 3 stars 2 stars   3 stars
Units 19 24 24 400 8 95 93
Year Built 1969 1961 1968 1972 1957 1965 1960
Average SF 855 1,000 842 963 913 915 1,025
Purchase Price $3,165,000 $3,750,000 $4,150,000 $66,000,000 $1,475,000 $15,708,000 $15,650,000
$/Unit $166,579 $156,250 $172,917 $165,000 $184,375 $169,024 $168,280
Cap Rate 5.88% 5.49% 5.06% 5.75% 5.46% 5.53% 4.87%*
Distance from Subject (mi.) 1.9  0.8 0.1 3.7 0.5 1.4 -

Sale Comparable information provided per CoStar.com

*The Property cap rate is based on T-12 net operating income, adjusted for taxes.

Location

 

The Property is located in Lakewood, CO, about 20 minutes from Downtown Denver, CO, which is home to more than 130,000 employees and over 37 million square feet of office space. Some major employers in the Property's vicinity are: Denver Federal Center (8,000 employees), Miller Coors Brewing Company (2,500 employees), Saint Anthony Central Hospital (2,300 employees), Jefferson County government offices (2,300 employees), Terumo BCT global headquarters (2,275 employees), and the National Renewable Energy Laboratory (2,200 employees).

Market Overview 

Per Costar, several 2018 indicators point to a rebounding demand in Denver's apartment market. Employment growth has accelerated in almost a straight line since the start of 17Q4. In August 2018, annual employment growth came in at 2.8% (41,000 jobs), sharply up from a recent low of 1.7% in September 2017 (25,000 jobs).

Alongside an improving economic picture (itself partially tied to stronger oil prices), rents were growing at their strongest rate in two years moving into the final quarter of 2018. Even if gains remain subdued compared to the booming years earlier in the recovery, this marks an impressive turnaround at this point in the cycle, especially considering that the metro is now a more than a year into its largest supply test to-date. Vacancies closed 18Q3 in the high 6% range. Given that Denver is in the midst of a massive supply wave that kicked off in mid-2017, the fact that vacancies are this controlled (and that rents haven't further deteriorated) speaks to an uptick in demand. In both CoStar data and anecdotal reports from property managers, the recent summer leasing season was likely the strongest since at least 2015.

The near-term outlook remains uncertain. The pipeline is still elevated - at the onset of 18Q4, roughly 17,000 units were underway, on top of just over 17,000 that have delivered since the beginning of 2017. Development numbers are off slightly from a recent peak - 19,000 units were underway as of 17Q1, the high point of the current cycle. However, fundamentals only remain as controlled as they are in part due to a material uptick in economic activity and demand over the past year. Any return to slower growth could reinforce headwinds for the apartment sector.

Submarket Overview

Per Costar, following the metrowide trend, apartment rents in the Lakewood/West Corridor submarket were growing at the strongest rate seen in two years moving into the final quarter of 2018. The improvement metrowide reflects rebounding demand drivers: Employment growth has accelerated in virtually a straight line upwards since the third quarter of 2017, from a recent low of 1.7% in September 2017, to a 2.8% annual rate as of August 2018.

Also per Costar, following the track of Denver’s multi-phase light rail expansion, the Lakewood/West Corridor Submarket posted some of the strongest rent growth in the metro from 2013-2015, 7% on average, compared to 5.5% average annual growth metrowide. Rent growth slowed dramatically in 2016 (following the metrowide trend), but rents have since regained some momentum, alongside a broader economic acceleration in metro Denver that began during the second half of 2017.

Per Axiometrics, annual effective rent growth in the North Lakewood submarket is forecasted to average 3.2% from 2018 to 2020, which is greater than Axiometrics' national average rent growth expectation for that time period. The annual effective rent growth for the North Lakewood submarket averaged 7.3% per year from 2011-2016, which is also greater than the national average rent growth was during that time period.

Demographic Information

Demographics

Distance from Property 1 mile 3 miles 5 miles
Population (2018) 12,258 106,672 323,707
Population (2023) 12,972 112,250 334,507
Average Age 41 40 39
Average Household Income $70,998 $73,144 $78,257
Median Household Income $52,861 $54,995 $57,453
Median Home Value $381,951 $352,211 $336,637
Population Growth 2018-2023 5.8% 5.2% 6.4%

Demographic information above was obtained from CoStar.

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Cost
Debt $9,671,000
Equity $7,972,210
Total Sources of Funds $17,643,210
Uses of Funds Cost
Purchase Price $15,650,000
CapEx Reserve $1,450,000
Sponsor Legal & DD Costs $160,800
Sponsor Acquisition Fee $156,500
North Capital Broker Dealer Fee $79,200
Lender Origination Fee $96,710
Working Capital $50,000
Total Uses of Funds $17,643,210
Debt Assumptions

The blended loan terms of the existing assumable debt financing and the expected supplemental are as follows:

  • Lender: Midland Loan Services, a Division of PNC Bank, NA
  • Loan Type:  Freddie Mac Fixed-Rate
  • Estimated Proceeds: $9,671,000
  • Estimated Interest Rate: 4.35%
  • Amortization: None
  • Remaining Loan Term: Approximately 6.5 years remaining at the time of the acquisition of the Property
  • Remaining Interest Only:  Full initial loan term of 6.5 years
  • Prepayment Penalty: Through January 2024, the greater of (i) yield maintenance or (ii) 1.0% of total loan proceeds.  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.

Distributions

The Target intends to make distributions of operating cash flows to investors (The Company, Other LP investors and the Real Estate Company, collectively, the "Members") as follows:

Operating Income, Refinance, and Sales Proceeds

  1. To the Members, pari passu, all excess operating cash flows to an 8.0% IRR to the Members,
  2. 80.0% / 20.0% (80.0% pro rata to the Members / 20.0% to the Real Estate Company) of excess operating cash flows to a 14.0% IRR,
  3. 65.0% / 35.0% 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 RealtyMogul investors).  The Manager of The Company will receive a portion (up to 10%) of The Real Estate Company's promote.

Distributions are expected to start in June 2019 and are expected to continue on a quarterly basis thereafter. These distributions are at the discretion of the the Real Estate Company, who may decide to delay distributions for any reason, including maintenance or capital reserves. 

Cash Flow Objectives
  Year 1 Year 2 Year 3 Year 4   Year 5  
Effective Gross Revenue $1,546,927 $1,685,714 $1,823,258 $1,920,456 $1,992,863
Total Operating Expenses $580,661 $594,730 $609,010 $626,909 $639,749
Net Operating Income $966,266 $1,090,984 $1,214,248 $1,293,546 $1,353,115
RealtyMogul 125, LLC Cash Flows
  Year 0 2019 2020 2021 2022 2023
Distributions to RealtyMogul 125,
LLC Investors
($2,000,000) $107,759 $138,390 $168,662 $188,116 $3,175,009
Net Earnings to Investor -
Hypothetical $50,000 Investment
($50,000) $2,694 $3,460 $4,217 $4,703 $79,375
Fees

Certain fees and compensation will be paid over the life of the transaction. The following fees and compensation will be paid:

One-Time Fees
Type of Fee Amount of Fee Received By Paid From Notes
Acquisition Fee $156,500 The Real Estate Company Capitalized Equity Contribution 1.0% of Purchase Price
Broker-Dealer Fee $79,200 North Capital (1) Capitalized Equity Contribution 4.0% based on the amount of equity invested by The Company
Recurring Fees
Type of Fee Amount of Fee Received By Paid From Notes

Asset Management Fee

1.0% of effective gross income The Real Estate Company Operating Cash Flow  
Construction Management Fee 4.0% of capital expenditure budget The Real Estate Company Capitalized Equity Contribution  
Management and Administrative Fee 1.0% of amount invested in the Company RM Manager, LLC Distributable Cash RM Manager, LLC is the Manager of The Company and a wholly-owned subsidiary of Realty Mogul, Co. (2)

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.

Documents
Disclaimers/FAQs
Disclaimers

Forward-Looking Statements

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.


Escrow Contingency

All funds from investors will be held in a non-interest-bearing escrow account with Broker-Dealer as escrow agent for the benefit of the investors in accordance with Rule 15c2-4 under the Exchange Act. All investor funds will be transmitted directly by wire or electronic funds transfer via ACH to the escrow account maintained by the escrow agent per the instructions in the Subscription Agreement. Upon certification by Broker-Dealer and acceptance by the Company that all contingencies have been met, the investor’s funds will be promptly transmitted to the Company. If the contingencies fail to be satisfied during the offering period, we will instruct the Broker-Dealer to return all funds to the investors without interest, deduction, or setoff, and all of the obligations of the investor hereunder shall terminate.


Interest-Only Loan Period

The loan being assumed in the acquisition of the Property is expected to have a remaining interest-only period of approximately 6.5 years, which means that there will be no reduction in the principal balance during that interest-only period.


Apartment Complex – Competition

Competition in the Property’s local market area is significant and may affect the Property’s occupancy levels, rental rates and operating expenses. The Property will compete with other residential alternatives to attract tenants, including but not limited to other apartment units that are currently available for rent, new apartments that are built and condominiums/houses that are for rent or sale. If development of apartment complexes by other operators were to increase, due to increases in availability of funds for investment or other reasons, then competition with the Property could intensify. If the Property is not able to successfully compete with the competitive residential alternatives in the local or regional area this could adversely affect the ability of Target to sell the Property, rent its units as necessary to maintain occupancy, and/or to increase or maintain unit rental rates.


Renovation Risks

As of August 2018, the Property had a 100% occupancy level, and the Target intends to implement a capital improvement plan involving the interior and exterior renovation of the Property, and a leasing program in its effort to add value to the Property. The Target intends to renovate all or some of the units within the Property and increase the current rental rates of such renovated units. There can be no assurance that, (i) the renovations will be consummated on a timely basis, (ii) the renovations will be completed satisfactorily, (iii) such work will not materially adversely affect other aspects of the operation of the Property, and (iv) the planned rental rate increase will have favorable results to meet the goals the Target projected. Any delays or negative results of the renovation work or rental increase efforts could adversely affect the Property’s financial results or occupancy levels, including its business operations and thus the value of the Company’s investment.


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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