Please carefully review the Disclaimers and Risk Factors section below.
Aggregate value of properties owned by the Apartment Growth REIT based on the most recent internal valuations as of the end of the fiscal quarter upon which our most recently announced NAV per share is based pursuant to our valuation policies; provided, however, the value of the preferred equity investments is based on the most recent purchase price of the asset and the value of properties underlying investments acquired since the most recent NAV per share was announced are based on the most recent purchase prices. As with any methodology used to estimate value, the methodology employed by our affiliates’ internal accountants or asset managers is based upon a number of estimates and assumptions about future events that may not be accurate or complete. For more information, see the section of our Offering Circular captioned “Description of Our Common Stock – Valuation Policies.”
There is no guarantee that stockholders will receive a distribution, and distributions have been paid from sources other than cash flow from operations, including net proceeds from our offering, cash advances by RM Adviser, LLC, manager of the Apartment Growth REIT (the "Manager"), cash resulting from a waiver of fees or reimbursements due to our Manager, borrowing and the issuance of additional securities. The Board of Directors may in the future declare lower distributions or no distributions at all for any given period.
The Apartment Growth REIT is a non-traded REIT that invests in apartment buildings located in resilient markets that can offer current income and solid growth potential. The Apartment Growth REIT’s primary objective is to realize capital appreciation in the value of its investments over the long term through the renovation or repositioning of multifamily properties as well as to pay attractive and stable cash distributions to stockholders.
RealtyMogul's Apartment Growth REIT has a minimum investment of just $5,000.
The RealtyMogul Apartment Growth REIT is managed by RM Adviser, LLC, a SEC registered investment adviser and wholly-owned subsidiary of Realty Mogul, Co. RM Adviser, which manages the Apartment Growth REIT’s day-to-day operations, and its affiliates have access to an experienced team of real estate finance professionals employed by Realty Mogul, Co., including Jilliene Helman, its Chief Executive Officer. The team has adopted underwriting approaches used by real estate finance industry leaders in its analysis of real estate capital structures and financial strategies.
INDEPENDENT BOARD OF DIRECTORS
Although the Manager, RM Adviser, LLC, manages the day-to-day operations, the Apartment Growth REIT operates under the direction of its board of directors, a majority of whom are independent directors.
Other than the limited stockholder voting rights described in our offering circular, our charter vets most other decisions relating to our assets and to the business of the Company, including certain decisions relating to acquisitions and dispositions, the engagement of asset managers, the issuance of securities in the Company including additional shares of our common stock, mergers, roll-up transactions, listing on a national securities exchange, and other decisions relating to our business, to our board of directors.
REITs are legally required to distribute 90% of all taxable income to investors annually.
Generally, REITs have historically outperformed the broad stock market more often than not when returns are measured in years.** REITs have also historically been positively correlated with inflation, which may make them a possible hedge for inflation.***
**. https://www.reit.com/news/blog/market-commentary/reit-average--historical-returns-vs-us-stocks
***. https://www.reit.com/news/blog/market-commentary/how-reits-provide-protection-against-inflation
• Demonstrated consistently high occupancy and income levels across market cycles; and
• Offer value-add opportunities with appropriate risk-adjusted returns and the potential for significant value appreciation.
The following third-party expense reimbursements will be paid from proceeds of the sale of the Apartment Growth REIT shares:
TYPE OF FEE | AMOUNT | NOTES |
---|---|---|
Organization and Offering Expenses including, but not limited to, actually incurred third-party legal, accounting, and marketing expenses.† | Up to 3% of gross offering proceeds | NAV, at any given time, is net of Organization and Offering expenses. |
The following fees will be paid by the Apartment Growth REIT to our Manager, RM Adviser, LLC, and/or its affiliates for services related to the offering, and the investment and management of our assets:††
TYPE OF FEE | AMOUNT | NOTES |
---|---|---|
Asset Management Fee paid to our Manager, RM Adviser, LLC | 1.25% annualized based on the "total equity value" | For purposes of this fee, total equity value equals (a) our then-current NAV per share, as determined by our board of directors, multiplied by (b) the number of shares of our common stock then outstanding. Actual amounts are dependent upon the offering proceeds we raise (and any leverage we employ) and the results of our operations and changes to our NAV. |
Reimbursement of Other Operating Expenses paid to our Manager, RM Adviser, LLC | Variable – dependent upon operations | Includes, but is not limited to, license fees, auditing fees, fees associated with SEC reporting requirements, acquisition expenses, interest expenses, property management fees, insurance costs, tax return preparation fees, marketing costs, taxes and filing fees, administration fees, fees for the services of independent directors, and third-party costs associated with the aforementioned expenses. |
Servicing Fee (Performing Preferred Equity Investments) - RM Originator, an affiliate of our Manager, RM Adviser, LLC | 0.5% of the principal balance plus accrued interest of each preferred equity investment to RM Originator for the servicing and administration of certain investments held by us. Servicing fees payable by us may be waived at RM Originator’s sole discretion. | Actual amounts are dependent upon the principal amount of the preferred equity investments. We cannot determine these amounts at the present time. |
Special Servicing Fee (Non- Performing Preferred Equity Investments) - RM Originator, an affiliate of our Manager, RM Adviser, LLC | 1% of the original value of a non-performing preferred equity investment serviced by such RM Originator. Whether an investment is deemed to be non-performing is at the sole discretion of our Manager. | Actual amounts are dependent upon the principal amount of the preferred equity investments. We can not determine these amounts at the present time. |
†† There are other fees not paid by the Apartment Growth REIT itself that may be paid to affiliates that originate or manage investments on behalf of the Apartment Growth REIT. To learn more about our fees, estimated use of proceeds, and the Apartment Growth REIT's estimated expenses, please refer to our full offering circular. Additionally, unaffiliated and affiliated third-parties will pay our Manager or affiliates of our Manager substantial fees related to the origination, investment, and management of our equity and preferred equity. A portion of these fees may be paid to personnel affiliated with our Manager, including officers of our Manager, Jilliene Helman and Eric Levy. These fees reduce the amount of funds that are invested in the underlying equity and preferred equity, or the amount of funds available to pay distributions to the Company, thereby reducing returns on that investment. Please carefully review the “Management Compensation” section of the Company’s Offering Circular for more information on these fees.
As is more thoroughly discussed in the Share Repurchase Program section of RealtyMogul Apartment Growth REIT’s Offering Circular, after 12 months of ownership, you may request up to 25% of your eligible shares to be repurchased on a quarterly basis at the most recently announced NAV per share multiplied by the Effective Repurchase Rate, a discount based on how long the shares have been held.
The Effective Repurchase Rate is based on the stock purchase anniversary as follows:
Share Repurchase Anniversary (Year) | Effective Repurchase Rate(1) |
---|---|
Less than 1 year | (Lock-up) 0% |
1 year until 2 years | 98% |
2 years until 3 years | 99% |
3 or more years | 100% |
Death (Exception Repurchases) | 100% |
We intend to limit the number of shares to be repurchased during any calendar year to 5.0% of the weighted average number of shares of common stock outstanding during the prior calendar year (or 1.25% per quarter, with excess capacity carried over to later quarters in the calendar year). In the event that share repurchase requests exceed the 5.0% annual limit of allowable repurchases, pending requests will be honored on a pro rata basis.
As of June 30, 2023, we are receiving requests for the repurchase of our shares in excess of the repurchase limit set forth in our share repurchase program. In accordance with our share repurchase program, such share repurchase requests are honored on a pro rata basis. For more information regarding our share repurchase program, see the section of our Offering Circular captioned “Description of Our Common Stock – Quarterly Share Repurchase Program."
Our board of directors may in its sole discretion, amend, suspend, or terminate the share repurchase program at any time. Reasons we may amend, suspend or terminate the share repurchase program include (i) to protect our operations and our remaining shareholders, (ii) to prevent an undue burden on our liquidity, (iii) to preserve our status as a REIT, or (iv) following any material decrease in our NAV.
Additional details regarding the RealtyMogul Apartment Growth REIT, Inc.’s Repurchase Program are found in the Offering Circular, including all supplements.
To learn more about the Apartment Growth REIT's Share Repurchase Plan, please refer to the section of our offering circular captioned “Description of our Common Stock – Quarterly Share Repurchase Program.”
Because each investor’s tax considerations are different, it is recommended that you consult with your tax advisor. You also should review the section of the offering circular entitled “U.S. Federal Income Tax Considerations,” including for a discussion of the special rules applicable to distributions in repurchase of shares and liquidating distributions.
Your annual detailed tax information will be reported on Form 1099-DIV, if required, and will be provided to you in electronic form by January 31 of the year following each taxable year.
A liquidity transaction could consist of a sale of all assets, a roll-off to maturity of all assets, a sale or merger of the Apartment Growth REIT, consolidation with other REITs managed by our Manager, a listing of the Apartment Growth REIT on an exchange, or any other similar transaction.
The Apartment Growth REIT does not have a stated term. The board of directors has the discretion to consider and execute a liquidity transaction at any time if it determines it is in the best interest of the Company.
Accredited Investors include individuals who meet the following criteria:
- Have a net worth over $1 million, excluding primary residence (individually or with spouse or partner)
- Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year
All Other Investors may invest so long as their investment in our common shares does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons)
CUMULATIVE DISTRIBUTIONS
Locations where the broader MSAs have a population of 5 million or greater.
Secondary
Locations where the broader MSAs have a population between 2 – 5 million.
Tertiary
Locations where the broader MSAs have a population less than 2 million.
The RealtyMogul Apartment Growth REIT targets apartment communities that have demonstrated consistently high occupancy and income levels across market cycles as well as multifamily properties that offer value added opportunities with appropriate risk-adjusted returns and opportunity for value appreciation.
Investment | Location | Property Type | Investment Type | Weight |
---|---|---|---|---|
Brooklyn, NY | Multi-family | Joint Venture Equity | 0% | |
Dallas, TX | Multi-family | Joint Venture Equity | 0% | |
Orion Township, MI | Multi-family | Joint Venture Equity | 0% | |
Austin, TX | Multi-family | Joint Venture Equity | 0% | |
Riverview, FL | Multi-family | Joint Venture Equity | 0% | |
Oklahoma City, OK | Multi-family | Preferred Equity | 0% | |
Vancouver, WA | Multi-family | Joint Venture Equity | 0% | |
Raleigh, NC | Multi-family | Joint Venture Equity | 0% | |
East Lansing, MI | Multi-family | Joint Venture Equity | 0% | |
Reynoldsburg, OH | Multi-family | Joint Venture Equity | 0% |
Investment | Location | Property Type | Investment Type | Invested |
---|---|---|---|---|
Dallas, TX | Multi-family | Joint Venture Equity | 4000000.00 | |
Plano, TX | Multi-family | Joint Venture Equity | 1000000.00 | |
San Antonio, TX | Multi-family | Joint Venture Equity | 1000000.00 | |
Fort Worth, TX | Multi-family | Joint Venture Equity | 1066558.00 | |
Avon, CT | Multi-family | Joint Venture Equity | 3000000.00 | |
El Paso, TX | Multi-family | Joint Venture Equity | 3385320.00 | |
Chicago, IL | Multi-family | Preferred Equity | 1440000.00 |
The NAV per share calculation reflects the total value of our assets minus the total value of our liabilities, divided by the number of shares outstanding. As with any methodology used to estimate value, the methodology employed calculating our NAV per share is based upon a number of estimates and assumptions about future events that may not be accurate or complete. Further, different parties using different assumptions and estimates could derive a different NAV per share, which could be significantly different from our calculated NAV per share. Our NAV will fluctuate over time and does not represent: (i) the price at which our shares would trade on a national securities exchange, (ii) the amount per share a shareholder would obtain if he, she or it tried to sell his, her or its shares or (iii) the amount per share shareholders would receive if we liquidated our assets and distributed the proceeds after paying all our expenses and liabilities.
You should carefully review the “Risk Factors” section of this offering circular which contains a detailed discussion of the material risks that you should consider before you invest in our common shares. These risks include the following:
- We depend on our Manager to select our investments and conduct our operations. We pay fees and expenses to our Manager and its affiliates that were determined as between related parties, and therefore we do not have the benefit of arm’s length negotiations of the type normally conducted between unrelated parties. These fees increase your risk of loss. In addition, we can offer no assurance that our Manager will remain our investment manager.
- Some of the investments in which we will invest will be acquired by our affiliates, RM Communities, LLC (“RM Communities”) or Realty Mogul Commercial Capital, Co. (“RMCC”), each of which, in their acquisition capacity, may be referred to as an RM Originator in this offering circular. We may purchase investments directly from an RM Originator. The RM Originator may also receive profit participation fees and/or other fees with respect to investments in which we invest. A portion of these fees may be paid to personnel affiliated with our Manager for their roles in the investment opportunity. While these fees will not be paid by the Company or its investors, they may incentivize our Manager to make investments on our behalf that are riskier than we might otherwise make and thereby indirectly have the effect of lowering the return our investors would receive in the absence of these fees.
- We have limited operating history, and there is no assurance that we will achieve our investment objectives.
- This is a “blind pool” offering because, as of the date of this offering circular, we have not identified all of the investments we will make with the net proceeds of this offering. Depending on our progress in funding investments at the time of your purchase, you may not be able to evaluate the economic merit of all of our investments. You will have to rely entirely on the ability of our Manager to select suitable and successful investment opportunities.
- Our ability to implement our investment strategy is dependent, in part, upon RM Securities’ ability to successfully execute sales of shares of our common stock on the Realty Mogul Platform, as defined below, which makes an investment in us more speculative.
- There are conflicts of interest between us, our Manager and its affiliates.
- Our Manager’s executive officers, and key real estate professionals are also officers, directors, managers and/or key professionals of Realty Mogul, Co. and its affiliates. As a result, they will face conflicts of interest, including time constraints and other conflicts created by our Manager’s compensation arrangements with us and other affiliates of Realty Mogul, Co.
- Our Sponsor and Manager sponsors and advises, respectively, RealtyMogul Income REIT, LLC, a real estate program substantially similar to us, and they sponsor and advise additional companies that may compete with us, and neither our Sponsor nor our Manager has an exclusive management arrangement with us.
- By purchasing shares in this offering, you are bound by the arbitration provisions contained in our subscription agreement which limits your ability to bring class action lawsuits or seek remedy on a class basis.
- This offering is being made pursuant to recently adopted rules and regulations under Regulation A (“Regulation A”) of the Securities Act of 1933, as amended (the “Securities Act”). The legal and compliance requirements of these rules and regulations, including ongoing reporting requirements related thereto, are relatively untested.
- If we internalize our management functions, your interest in us could be diluted and we could incur other significant costs associated with being self-managed.
- Our Manager may change our targeted investments and asset allocation without stockholder consent, which could result in investments that are different from, and possibly riskier than, those described in this offering circular.
- Although our goal is to fund the payment of distributions solely from cash flow from operations, we have paid, and may continue to pay, distributions from other sources, including net proceeds of this offering, cash advances by our Manager, cash resulting from a waiver of fees or reimbursements due to our Manager, borrowings in anticipation of future operating cash flow and the issuance of additional securities, and we have no limit on the amounts we may pay from such other sources. If we pay distributions from sources other than our cash flow from operations, we will have less funds available for investments and your overall return may be reduced. In any event, we intend to make annual distributions as required to comply with real estate investment trust (“REIT”) distribution requirements and avoid U.S. federal income and excise taxes on retained income. We have not established a minimum distribution payment level. The amount of our distributions may fluctuate and may be adversely affected by a number of factors, including the risk factors in this offering circular.
- The internal accountants or asset managers of our Manager or its affiliates will calculate our NAV on a quarterly basis using valuation methodologies that involve subjective judgments and estimates. As a result, our NAV may not accurately reflect the actual prices at which our commercial real estate assets and investments, including related liabilities, could be liquidated on any given day.
- Our charter does not require the board of directors to seek stockholder approval to liquidate our assets by a specified date, nor does our charter require the board of directors to list our shares for trading by a specified date. No public market currently exists for our shares of common stock. Unless our shares of common stock are listed on a national securities exchange, you may not have the opportunity to sell your shares. If you are able to sell your shares, you may have to sell them at a substantial loss. We do not currently intend to list our shares of common stock on a national securities exchange, and no market for our shares of common stock may develop.
- If we fail to qualify as a REIT for U.S. federal income tax purposes and no relief provisions apply, we would be subject to entity-level federal income tax and, as a result, our cash available for distribution to our stockholders and the value of our shares could materially decrease.
- We may be subject to adverse legislative or regulatory tax changes.
- We will attempt to manage our portfolio so that we are not required to register as an investment company, such as a mutual fund. This may result in us not making potentially profitable investments, or in us disposing of investments at times that we otherwise would prefer to hold those investments
- Our direct investments in commercial real estate and other select real estate-related assets will be subject to risks relating to the volatility in the value of the underlying real estate, default on underlying income streams, fluctuations in interest rates, and other risks associated with debt and real estate investments generally. These investments are only suitable for sophisticated investors with a high-risk investment profile. Our investment strategy involves leverage. These investments may not be suitable for investors with lower risk tolerances.
- Our Manager, its principals and/or its other affiliates may continue to sponsor and offer other real estate investment opportunities, including additional blind pool equity offerings similar to this offering, on the Realty Mogul Platform, and may make investments in real estate assets for their own respective accounts, whether or not competitive with our business.
- The terms of the management agreement (including our Manager’s rights and obligations and the compensation payable to our Manager and its affiliates) were not negotiated at arm’s length.
- The board of directors may, without stockholder consent unless otherwise required by law, determine that we should engage in a roll-up or other similar transaction where we acquire other entities, including entities affiliated with the board of directors. Similarly, the board of directors may, without stockholder consent unless otherwise required by law, determine that we should list our shares on a national securities exchange.
- Affiliates of our Sponsor and our Manager are engaged in selling investment opportunities to individuals and institutions outside of the Company, some of which may compete with the Company. There may be a conflict of interest in this arrangement because, among other things, the economic return to the entities or their respective personnel may be greater in selling opportunities to these competitive interests rather than to the Company.
- The compensation arrangements for our Manager, its affiliates and the personnel of our Managers and its affiliates may provide them an incentive to increase leverage in the Company or its investments, which may increase risk and volatility in the Company’s performance.
- Number of unique investors, consecutive distribution periods, and amount distributed to investors as of September, 2024.
2 These hypothetical case studies are provided for illustrative purposes only and do not represent an actual investor or an actual investor's experience, but rather are meant to provide an example of the Apartment Growth REIT's process and methodology. An individual's experience may vary based on his or her individual circumstances. There can be no assurance that the Apartment Growth REIT will be able to achieve similar results in comparable situations. Hypothetical returns are net of advisory fees and transaction costs; all dividends are assumed to be reinvested quarterly. Actual returns may differ materially from hypothetical returns. Actual returns may differ materially from hypothetical returns. Hypothetical returns are from the Apartment Growth REIT's inception date through September 15, 2024. Past hypothetical performance is not a guarantee of future returns.