Staff Menu (IO ID#: 84712):
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Completed Equity
Industrial
Houston Flex Portfolio
Houston, TX
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
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100% funded
Offered By Brennan Investment Group
14.7%* TARGET IRR 14.0%-15.0%
9.0%* TARGET AVG CASH ON CASH
1.65* TARGET EQUITY MULTIPLE
Estimated Hold Period 4 years
Estimated First Distribution
*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
Investment Highlights
Institutional sponsor that has owned in excess of 22 million square feet of industrial space
Two property flex industrial portfolio located in the Houston MSA
Purchase price is below replacement cost
Management
Cumulative Distributions

Brennan Investment Group

Brennan Investment Group, LLC (“Brennan Investment Group” or the “Company”) is a private real estate investment company headquartered in Chicago, Illinois. Brennan Investment Group was formed in 2010. Its Managing Principals are comprised primarily of former First Industrial Realty Trust (NYSE: FR) founders and executives. Since 2010, the Company has purchased more than $1 billion in industrial real estate, partnering with institutional capital providers such as Goldman Sachs, California State Teachers Retirement System (CalSTRS), Gatehouse Bank and DLJ Real Estate Capital Partners.

The Company’s current portfolio spans 22 states, encompasses over 22 million square feet  and currently has an occupancy rate of 98.5%. Brennan Investment Group acquires, develops and operates industrial real estate in select major metropolitan markets throughout the United States, including Central Florida, Chicago, Northern New Jersey, Southern California, Texas and Washington, D.C. The Company’s experienced principals utilize a disciplined investment approach in selectively identifying opportunities that look to achieve risk-adjusted returns for investors. Brennan Investment Group believes that industrial real estate is a large, stable and diversified investment class that offers a compelling opportunity for both current income and appreciation across a variety of industrial property types.

Track Record

 

http://brennaninvestmentgroup.com/
  • Michael Brennan, Chairman, Managing Principal
  • Scott McKibben, Chief Investment Officer & Co-Founder
  • Robert Vanecko, Managing Principal
  • W. Troy MacMane, Managing Principal
  • Tim Gudim, Managing Principal
  • Robert J. Krueger, Managing Principal
  • Tod Greenwood, Managing Partner
  • Allen Crosswell, Managing Principal
  • Brad O'Halloran, Executive Director of Investor Relations, Managing Principal
Michael Brennan, Chairman, Managing Principal

Michael W. Brennan is a Co-Founder, Chairman, and Managing Principal of Brennan Investment Group. Mr. Brennan has orchestrated more than $10 billion in industrial real estate transactions in the course of his 25-year career.

Prior to forming Brennan Investment Group, Mr. Brennan co-founded First Industrial Realty Trust (NYSE: FR) in 1994, and served as President, Chief Executive Officer and a member of the Board of Directors until late 2008. Under his direction First Industrial assisted many of the nation’s largest industrial users in completing complex supply chain reconfigurations, and attracted investment partners including The Carlyle Group, the Kuwait Finance House, Union Bank of Switzerland, ING, and the California State Teachers’ Retirement System.

Under his direction, The Guide to Classifying Industrial Property Types was written. The only book of its kind, the guide presents a precise classification system for industrial properties and provides an in-depth review of the characteristics and evolution of the industrial property sector. The Urban Land Institute (ULI) acquired the rights to the guide and collaborated with First Industrial on a second edition, which is currently available through ULI.

Often sought as an industry expert on industrial real estate, Mr. Brennan has appeared on CNBC, CNNfn and Bloomberg Television. Mr. Brennan is a prominent leader in the real estate community and is a member of ULI and the World’s Presidents Organization. Mr. Brennan was named Commercial Property News’ ‘Industrial Property Executive of the Year’ in 2000 and one of Irish American Magazine’s Top 100 Business Leaders in America in 2003.

Before co-founding First Industrial, Mr. Brennan was a President and Partner in The Shidler Group, a nationally prominent real estate firm specializing in value-add real estate transactions. He was a founding investor of Tri-Net Property Trust and Co-Founder and member of the Board of Directors for Pacific Office Properties (AMEX: PCE), an office REIT that owns institutional quality properties in Hawaii, California, and Arizona. Mr. Brennan is a former member of the Board of Directors of the Chicago Public Library Foundation, which provides on-going funding, through its endowments and annual fundraising, for collections, book acquisition and a variety of community-based programs that contribute to the excellence of the Chicago Public Library. He began his industrial real estate career in 1984, as an Investment Specialist with CB Commercial. Mr. Brennan earned his Bachelor’s degree in Finance from the University of Notre Dame in 1979.

Mr. Brennan currently serves as Executive Director of the University of Wisconsin’s James A. Graaskamp Center for Real Estate, a program that is consistently ranked among the best real estate programs in the world.

Scott McKibben, Chief Investment Officer & Co-Founder

Scott McKibben is Chief Investment Officer, Co-Founder and a Managing Principal at Brennan Investment Group. He oversees the acquisition, development and disposition of primarily industrial properties throughout the United States.  Brennan Investment Group has acquisitions offices in Chicago, Tampa, Charlotte, Washington D.C., Indianapolis, Houston, Denver, San Diego and Atlanta.  While at Brennan Investment Group, Mr. McKibben has assisted in the acquisition, development and disposition of over $4 billion in transactions totaling over 50 million square feet of transactions in 31 different states.

Prior to joining Brennan Investment Group, Mr. McKibben was the Co-Founder of Madison Partners Realty, which purchased, managed, and leased over 5 million square feet of office and industrial buildings in primarily the Chicago and Milwaukee markets. During his career as a principal of Brennan Investment Group and of Madison Partners Realty and as the Vice-President of Acquisitions of Prime Group Realty Trust, Mr. McKibben completed the acquisition and development of over $7 billion in office and industrial properties.

Mr. McKibben earned his Bachelor’s B.S. in Finance in 1991 from DePaul University, his M.S. in Real Estate Appraisal and Investment Analysis in 1994 from University of Wisconsin Graduate School of Business and his Juris Doctor in 1994 from University of Wisconsin Law School. Mr. McKibben is an Illinois licensed attorney and real estate broker.

Robert Vanecko, Managing Principal

Robert Vanecko is a Managing Principal of Brennan Investment Group and is also the head of Brennan’s single-tenant, net lease division. Mr. Vanecko has extensive experience in a wide variety of real estate and corporate transactions as a principal, investment banker, and attorney. Since 1993, he has been involved in the structuring, negotiation, and execution of over forty separate transactions with a total value of over $3 billion. Mr. Vanecko combines his background in finance, capital markets and law to analyze, structure, negotiate and implement diverse and complex investment transactions.

Prior to Brennan Investment Group, Mr. Vanecko was a co-founder and co-general partner of DV Urban Realty Partners I L.P. (“DV”), a $71.5 million real estate private equity fund. DV invests in value-added urban real estate transactions, primarily in Chicago. Along with the other sponsors of DV, Mr. Vanecko directed the day-to-day operations of the fund, including investment sourcing, evaluation and execution, asset management, finance, and administration. The fund’s portfolio of investments and developments includes over 800 residential units and over 500,000 square feet of commercial space. Mr. Vanecko also co-founded and managed the fund’s property management affiliate – DV Property Management, LLC. Mr. Vanecko has a B.A. degree from Yale University and a J.D. degree (magna cum laude) from Northwestern University School of Law. He serves on the boards of several charitable and civic organizations.

W. Troy MacMane, Managing Principal

With more than two decades of real estate experience, Troy directs investment, operations, portfolio management, sales and development activity in Texas, Colorado and Arizona. Prior to forming Brennan Investment Group, Mr. MacMane was the co-founder and manager of Trident Equity Partners. Prior to forming Trident, Mr. MacMane was Regional Director at First Industrial. At First Industrial, Mr. MacMane was head of the company’s acquisition and development program in the southern portion of Texas and responsible for all aspects of portfolio management.

Mr. MacMane began his career at CB Commercial in Houston and then Trammell Crow Company in Austin. Troy has acquired and developed over $1 billion of industrial assets totaling over 30 million square feet and 525 acres of land. Troy was a recipient of a “Top Producer Award” at First Industrial and in 2007 he received First Industrial’s “Deal of the Year Award”. Mr. MacMane received Weingarten Realty’s Producer of the Year and served on the Board of Directors for NAIOP in the Houston Chapter. Mr. MacMane graduated from the University of Texas at Austin in 1991 and attended St. Thomas University’s MBA program.

Tim Gudim, Managing Principal

Tim Gudim is a Managing Principal of Brennan Investment Group. He is responsible for industrial property investments in the Western United States, with a primary focus on Southern California.

Tim began his industrial real estate career in 1982 with Pacifica Holding Company, an investment and development company based in Los Angeles. In 1990, Tim moved to Denver to help grow Pacificas’ commercial real estate investment and management operations in that market. From 1990-1997, he was instrumental in buying and developing a portfolio of industrial, office and retail properties which grew to be the largest privately owned portfolio in Denver totaling 8.5 million square feet. The Pacifica Denver industrial portfolio consisting of 4.5 million square feet was sold to First Industrial Realty Trust, a publically traded REIT in November, 1997.

Through the First Industrial transaction, Tim became responsible for overseeing all aspects of First Industrials Denver Portfolio and 26 person staff as Regional Director. In June, 1998, Tim was promoted to Senior Regional Director and was granted increased responsibility to manage and grow First Industrial’s portfolios and offices in Dallas, Houston, New Orleans, Phoenix, and Salt Lake City. In December 1998, First Industrial promoted Tim to Managing Director-West Region to expand the company’s investment and development objectives and open new regional offices in the major West Coast markets. During his tenure at First Industrial, Tim acquired portfolios and opened regional offices in Los Angeles, San Diego and Portland, while also acquiring properties in San Francisco. Several of the transactions Tim led involved joint venture arrangements with partners including The Carlyle Group, Apollo Real Estate Advisors, GE Capital and Heller Financial. Over the course of a 31 year career, Tim has orchestrated over $1 billion in commercial real estate transactions in excess of 60 million square feet, spanning multiple Western regional markets including Los Angeles, San Diego, San Francisco, Denver, Portland, and Phoenix.

Mr. Gudim earned his Bachelor of Arts degree in Economics from The University of California at Los Angeles (UCLA) in 1982.

Robert J. Krueger, Managing Principal

Robert J. Krueger is a Co-Founder and Managing Principal of Brennan Investment Group. He is responsible for industrial property transactions in Central Florida. Mr. Krueger is among the most accomplished industrial professionals in the Florida market, with 37 years of experience in construction, development, and acquisitions. From 1997 to 2009, Mr. Krueger was the key executive in building First Industrial’s portfolio in Central Florida. During his tenure with First Industrial Mr. Krueger acquired and developed over 5 million square feet of industrial and flex space in the Florida market for such tenants as Home Depot, J.C. Penney, Caterpillar Tractor, Haverty’s Furniture and Walgreen’s. Before leaving First Industrial, Mr. Krueger was in charge of managing First Industrial’s Florida portfolio of nearly 3 million square feet, and 821 acres, in Tampa, Orlando and Miami.

Based in First Industrial’s Tampa office, Mr. Krueger started his First Industrial career as Senior Regional Development Officer for the Florida region, with the additional responsibility to oversee construction of First Industrial’s major projects throughout the United States. He came to First Industrial in 1997 through the company’s acquisition of Thompson-Kirk Properties (TKP), where he was Vice President and General Manager of TKP’s construction company.

Earlier in his career, Mr. Krueger served as Vice President of Commercial and Industrial Properties at Florida Design Communities and, previously, worked with Cadillac Fairview Industrial Development.

A member of the 2009 NAIOP National Board of Directors and past President of the Tampa Bay Chapter of the National Association of Industrial and Office Properties (NAIOP), Mr. Krueger is also an active member of the Real Estate Investment Council (REIC), NAIOP Build to Suit Forum and Leadership Tampa Bay. In 2006 and 2007 Mr. Krueger was named Developer of the Year by the Tampa Chapter of NAIOP.

Mr. Krueger earned a Bachelor’s degree in Structural Engineering from Marquette University in 1972. He is a licensed real estate broker, a licensed professional engineer in Florida, Hawaii and Wisconsin, and holds a Florida Class A general contracting license.

Tod Greenwood, Managing Partner

Tod Greenwood is a Managing Partner of Brennan Investment Group. He is responsible for industrial property transactions in Texas, with a focus on Houston, Dallas, San Antonio, and Austin. Prior to joining Brennan Investment Group, Mr. Greenwood was the co- founder and manager of Trident Equity Partners. Prior to forming Trident, Mr. Greenwood worked in the industrial division of the Trammell Crow Company where he was an industrial leasing broker from 1993 to 1998, focusing on landlord representation. In 1999, Mr., Greenwood was asked to run the industrial development program for the Houston office of Trammell Crow Company. As Vice President for industrial development, Mr. Greenwood developed a variety of product types including cross-dock, dock-high rear load and bulk distribution buildings.

Mr. Greenwood graduated from the University of Texas with a Bachelor of Business degree in 1988, and the University of Texas Graduate School of Business with a Master of Business Administration degree in 1993.

Allen Crosswell, Managing Principal

Allen Crosswell, a Managing Principal of Brennan Investment Group as well as founder of Crosswell/ Greenwood Development, is a leader in the Houston real estate brokerage and investment community. Previously co-founder of TGB Crosswell, Allen has a significant track record of identifying and executing successful raw land investment and development opportunities. His ability to pinpoint the key issues in a deal and to work through those issues in a way that is agreeable and even beneficial to all parties involved is a recurring theme in the transactions Allen has completed.

A native Houstonian, Allen believes in the value of long-term relationships and that fair business dealings lead to repeat business. By employing this philosophy, he has gained the confidence of landowners, investors, brokers and retailers within the real estate community and has produced consistent year in and year out results for his clients and investors in both the land brokerage and development arenas. Allen was also co-founder of Crosswell Torian Commercial Properties, LLC., which specialized in commercial land brokerage. From July 1989 through December 1992, he worked as a consultant with Lewis Realty Advisors, Inc. Allen received his Bachelor of Business degree from the University of Mississippi. 

Brad O'Halloran, Executive Director of Investor Relations, Managing Principal

Brad O'Halloran is the Executive Director of Investor Relations and a Managing Principal of Brennan Investment Group. Mr. O’Halloran has a wide range of business, educational and government service experience. 

Mr. O’Halloran formerly served, as Regional Director of Development for the University of Notre Dame, cultivating key high-level benefactors for the University and representing it’s various interests within the Chicago Metropolitan area. Prior to joining the University, Mr. O’Halloran held the position of Senior Vice President and Director of Corporate Development for Duty Free International and its successor company World Duty Free, a wholly owned subsidiary of BAA, plc.  In this capacity, Mr. O’Halloran, oversaw all mergers and acquisition activity for the corporation as well as strategic marketing and key partnership development.

Mr. O’Halloran came to Duty Free International when he merged his specialty retail operation, Sports Section Inc. with DFI in 1989. He was subsequently involved in the successful IPO of Duty Free International on the NYSE in 1993 and it’s subsequent sale to BAA plc. in 1999.

Mr. O’Halloran has been a serial entrepreneur throughout his career with interests in over 19 companies and current interests in half a dozen in various stages of development.

Mr. O’Halloran currently serves on the Board of Directors for Old Plank Trail Bank, a subsidiary of Wintrust Financial Corporation. In addition he is a former member of the Board of Directors of the Airports Council International, the International Visitors Center of Chicago and the Chicago Chamber of Commerce. He also served as a member of the board of the Village of Orland Park, Metra and of the State of Illinois Architectural Licensing Board.

Mr. O’Halloran holds a Bachelor’s Degree, as well as a Masters, Business Administration (Magna cum Laude) from the University of Notre Dame.

Track Record

Business Plan
Property

At A Glance

Investment Strategy: Buy and Hold
Projected Hold Period: Four (4) years
Total Project Budget: $11,066,666
Property Type: Flex Industrial
Net Rentable Area: 132,997 Square Feet
Distributions to Realty Mogul 47, LLC: Pari passu to a 10% IRR, then 60/40 split
Going-In Cap Rate (Year 1): 8.55%
Going-In Cap Rate(1): 8.80%
Projected First Distribution: March 2016
Distribution Schedule: Quarterly
Investor Funding Deadline: October 19, 2015
Estimated Closing Date: October 23, 2015

(1) Based on T6 NOI annualized. 

Investment Details

Brennan Investment Group ("Sponsor" or "BIG") is under contract to purchase 8600 Jameel Road and 12705 Kirkwood St. (the “Portfolio” or "Properties") for $10,375,000 ($78.01/sf) representing an 8.55% cap rate on projected Year 1 net operating income. For the last 15 years the Portfolio has been institutionally owned by the publicly traded First Industrial REIT (NYSE: FR). Troy MacMane, co-founder of BIG and located in BIG's Houston office, was previously employed by First Industrial and charged with managing their investment portfolio including the Jameel and Kirkwood assets.  Troy has nearly a decade of experience with the assets to be acquired.

Realty Mogul investors are being provided the opportunity to invest in Realty Mogul 47, LLC.  Realty Mogul 47, LLC will be making an investment in Jameel Kirkwood LLC, which will hold title to the Property. Through Jameel Kirkwood LLC​, the Sponsor will handle all aspects of the investment including acquiring the property, implementing capital improvements as necessary, property management, leasing, and ultimately selling the property.

Although the buildings have been well maintained, the Sponsor has budgeted $80,000 for minor capital improvements to increase the attractiveness of the Property as necessary. The Sponsor intends to leverage their prior experience with the assets and the market by managing rollover over the hold period. The Sponsor has underwritten an 8% general vacancy factor (in addition to turnover and absorption vacancy), and assumes that tenants renew at a 65% probability.  The project should benefit from four years of interest-only debt, but the main driver of value creation is the spread between the exit cap and going in cap rates. The Sponsor believes they were able to tie up the property at a cap rate that would not have been feasible a year ago, as historically, cap rates were in the 8% to sub-8% range (as indicated by the sales comps), but expects that cap rate levels will normalize by the end of the hold period. 

The Sponsor plans to hold the property for four (4) years before exiting the investment, but the hold period could be longer or shorter. Realty Mogul investors have the opportunity to participate as equity stakeholders and earn a share of the cash-flow and appreciation. Investors may expect to receive quarterly updates and distributions, with the first distribution expected in March 2016 and on a quarterly basis thereafter.

Investment Highlights

  • Well Maintained/Institutionally Owned
  • 94% Occupied With In Place Cash Flow   
  • Well Located: Both properties are strategically located within close proximity to major highways and are located on hard corners at the front of their respective parks
  • Diversified Tenant Base With Limited Exposure to the Energy Markets

  • Sponsor Has Over a Decade of Experience With the Assets and has a Local Office in Houston
  • Rental Rate Growth: Industrial rental rates are projected to increase in Houston and in Texas over the next couple of years.  According to CBRE  Houston Industrial MarketView Q2 2015, economists "expect 4.3% annual average rent growth through 2017". The included pro-forma by comparison assumes a more conservative annual growth rate of 1.5% in year 2 and then 3% thereafter.
  • Basis Compares Favorably to Comps and is Below Estimated Replacement Cost ($115-125 PSF per conversations with market participants):

The investment will be structured as the purchase of limited liability company interests in Realty Mogul 47, LLC, which will in turn purchase interests in Jameel Kirkwood LLC​.  Jameel Kirkwood LLC will hold title to the Property and is managed by the Sponsor.  Realty Mogul 47, LLC is a special purpose entity pursuing a venture capital strategy, and will be advised by RM Manager, LLC, an exempt reporting adviser and a wholly-owned subsidiary of Realty Mogul, Co.

Risks and Risk Mitigation*

  • 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.
  • Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 47, LLC 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. 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.
  • Interest Only Loan: The loan being used to acquire the Property is interest-only for four years of operation, which means that there will be no reduction in the principal balance during that period. 
  • Debt With a Ten-Year Term: The loan on the Property is expected to have a term of ten years and will require defeasance to prepay the Loan. This means that a potential buyer will likely need to assume the loan. RM has underwritten the 1% assumption fee as being borne 50/50 by the Sponsor/buyer. At the projected exit price, the loan LTV is expected to be 60%. ​ 
  • Local Market Conditions May Impact Rental Rates: Local conditions may significantly affect occupancy, rental rates, and the operating performance of a property. Such risks include (but are not limited to): (i) plant closings, industry slowdowns and other facts that affect the local economy; (ii) an oversupply of, or a reduced demand for, similar properties; (iii) a decline in household formation or employment or lack of employment growth, (iv) laws that could inhibit the ability to raise rents or to sell a property; and (v) other economic conditions that might cause an increase in operating expenses, such as increases in property taxes, utilities, compensation of on-site personnel and routine maintenance.
  • Management Risk: Investors will be relying solely on the Sponsor for the execution of its business plan. The Sponsor may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of Jameel Kirkwood LLC (including Realty Mogul 47, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the Sponsor has significant operating experience, Jameel Kirkwood LLC is a newly formed company and has no operating history or record of performance.   Realty Mogul 47, LLC is pursuing a venture capital strategy through its investment in Jameel Kirkwood LLC, and the manager of Realty Mogul 47, LLC is expected to be treated as an investment adviser exempt from federal or state registration under this strategy.
  • Manager of Realty Mogul 47, LLC Will Participate in Sponsors' Promote Interest:The manager of Realty Mogul 47, LLC will be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the property realized upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 47, LLC. Investors must recognize and agree to waive and bear the risk of this conflict of interest. 
  • Uncertain Distributions: The Sponsor cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 47, LLC) from either net cash from operations or proceeds from the sale or refinancing of the asset. Sponsor, in its discretion, may retain any portion of such funds for tenant improvements, tenant refurbishments and other lease-up costs or for working capital reserves. Sponsor has chosen to make distributions semi-annually. 
  • Risk of Interest Charges for Sponsor Capital Calls: The amount of capital that may be required by Jameel Kirkwood LLC from Realty Mogul 47, LLC is unknown, and although Jameel Kirkwood LLC does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or additional capital.  Realty Mogul 47, LLC does not intend to participate in a capital call if one is requested by Jameel Kirkwood LLC, and in such event the manager of Jameel Kirkwood LLC may accept additional contributions from other members of Jameel Kirkwood LLC.  Amounts that the manager of Jameel Kirkwood LLC advances on behalf of Realty Mogul 47, LLC will be deemed to be a manager loan at an interest rate of 16%.  Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 47, LLC's interest in Jameel Kirkwood LLC will suffer a proportionate amount of dilution.
  • Uncertain Exit Timing: Although it is anticipated that the Property will be sold at the end of the expected four (4) year hold period, Realty Mogul 47, LLC will not have full control over the timing of the sale of the Property, and therefore we cannot offer assurances of when the exit will occur.  If the Property is not sold after five (5) years Realty Mogul 47, LLC has the right to cause a sale of the Portfolio.​
  • General Economic and Market Risks: While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not investor sentiment and the capital markets will be favorable to the property at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the Sponsor​​.

*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.

The above presentation is based upon information supplied by the Sponsor.  Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 47, LLC, 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.

Property Details

The Portfolio consists of 6 separate free standing buildings on individual parcels.  The buildings have minimum clear heights of 12', with grade level loading incorporated.  There is adequate parking, with 127 spaces at Kirkwood Center and 211 spaces at 8600-8850 Jameel Road. The size of the tenants range from 1,541-8,611 square feet, with an average tenant size of 3,437 square feet.  The suites are in good condition, function well, and have a low TI and maintenance requirement on new leases and renewals.

The properties are in good physical condition, including new roofs on all 6 buildings (2004 for Jameel) and (2011 for Kirkwood). The roofs on the Kirkwood Center buildings have warranties in place until 2026. The recently completed property condition report performed by EBI Consulting found no immediate repairs necessary at either asset.

  Jameel Kirkwood Total/Avg
Addresses: 8600 Jameel Rd., Houston, TX 12705 Kirkwood St., Stafford, TX  
Year Built: 1980 1984  
Property Type: Flex Industrial Flex Industrial  
SF: 87,099 45,898 132,997
Occupancy: 91% 100% 94%
Buildings: 4 2 6
% Office 72% 78% 74%
Clear Heights: 12' 12' 12'
Parking Spaces: 211 127 338
Parking Ratio: 2.42:1,000 SF 2.77:1,000 SF 2.54:1,000 SF


Location

Both properties are strategically located within close proximity to major highways and are located on hard corners. Kirkwood Center is located one mile from the Hwy. 59 and US Hwy 90A intersection. 8600-8850 Jameel Rd. is located just two miles from the Beltway 8 and US Hwy 290 intersection. The parks are mature, well landscaped industrial centers with similar age and style to the light industrial & manufacturing product immediately surrounding. The Properties are located in the northwest and southwest Houston industrial submarkets.   

8600 Jameel Road is a four-building multi-tenant industrial property comprising 87,099 SF that was built in 1980. Situated on 5.86 acres, the Property located on the corner of Jameel Road and Fairbanks North Houston Road nearby US Highway 290 and US Highway 8 (Houston’s outer loop).

12705 S. Kirkwood Rd. is a two-building multi-tenant industrial property comprising 45,898 SF that was built in 1984. Situated on 3.10 acres, the Property is located on the corner of S. Kirkwood Road and Bluebonnet Drive nearby US Highway 90, Interstate 6/US Highway 59, and US Highway 8 (Houston’s outer loop).

Houston Market Overview

According to CBRE, the overall Houston industrial market contains more than 487 million SF of inventory, and as of the end of the 2nd quarter 2015 has an availability rate of 7.0%. Overall rents were unchanged in Q2 2015; current average monthly asking gross rates per sq. ft. citywide are $0.69 per month. Still, these rates have steadily increased during the prior 12 months ending Q2 2015 with a 4.5% escalation since Q2 2014. Going forward, CBRE Econometric Advisors expects 4.3% annual average rent growth through 2017 as oil price impacts are limited to those Houston submarket’s most exposed to the inverse volatility between the upstream and downstream energy sectors – i.e.: the Southeast and South submarkets. The average quoted gross monthly rent rates are $0.48 per sq. ft. for warehouse/ distribution space; $0.86 per sq. ft. for flex/service space; and $0.73 per sq. ft. for manufacturing space with flex making the lion’s share of the gains this year. Class A and new product rent will remain steady while, interestingly enough, older product has been seeing a slight increase during the economic recovery. Still the tax man cometh: Houston’s Harris County Appraisal District (HCAD) has started mailing property value notices to commercial and industrial property owners. The chief appraiser has advised that Houston’s booming economy will continue to have an impact on property values for 2015 and they will continue to increase this year. Even in the face of shrinking oil prices and subsequent, the Harris County economy in general is doing very well. HCAD reports that warehouses also have seen an increase in value because the city’s industrial growth is directly related to its transportation infrastructure. Warehouse values increased 23% in 2015, compared with 14% in the 2014 tax year. Increased trade through the county has continued to strengthen Houston’s industrial market and warehouse sector. 

The above information came from the Q2 2015 CBRE Houston Industrial Marketview Report. The demographic information to the right was provided by onboardnavigator.com and is presented with statistics for Jameel/Kirkwood.

The above presentation is based upon information supplied by the Sponsor.  Realty Mogul, Co., RM Manager, LLC, and Realty Mogul 47, LLC, 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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