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 above chart is hypothetical and is not based on any specific client situation or outcome. This scenario should be considered for informational purposes only and should not be construed as actual performance.
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% |
Highlights
Experienced Real Estate Company
The Real Estate Company is locally based and has prior experience purchasing and adding value to rent stabilized multifamily properties in Brooklyn. RM has transacted with the Real Estate Company on three previous occasions.
Significant Owner Equity
The Real Estate Company invested over $3.7 million in the Portfolio.
Well Located
The Portfolio is located in several gentrifying neighborhoods of Brooklyn, NY, within the Bedford-Stuyvesant/Bushwick, Crown Heights and Ditmas Park/Flatbush submarkets.
Highlights
Value Add
There is an opportunity to renovate the property and increase rental income. $8,109 is budgeted per unit for renovations which is anticipated to increase rents an average of $132 per unit upon completion. The Property is also being purchased at a basis below its comparative set and represents a discount to pre-COVID pricing.
Dynamic Market
The Property benefits from its close proximity to the Telecom Corridor. More than 5,700 companies have a presence in the area, including AT&T, Ericsson, Verizon, Texas Instruments and MetroPCS. The area also features a tight multifamily market, with 6.2% vacancy in June 2020 according to Axiometrics.
Repeat Sponsor
The Real Estate Company is a repeat sponsor of Realty Mogul Co. A previous transaction between the two companies recently completed its renovation plan, achieved 95% occupancy and is anticipated to be marketed for sale in September 2020.
Highlights
Location
With a $1.3 billion asset value and over 15,000 apartments, Northwest Oakland County is the fifth largest submarket in Detroit that appeals to baby boomers and empty nesters seeking a more rural environment. The market takes advantage of strong suburban population growth, which captures workers who are employed in the suburbs of Detroit and allows for a greater market share of renters than in other parts of Michigan.
Market Rent Growth
The submarket had strong year-over-year rent growth of 7.2%. Per AxioMetrics, rent is forecasted to grow by 3.5% annually and vacancy to stay below 5% in the next five years.
Recent Performance
As of the acquisition date, the property was 98% occupied. The property has been at least 96% occupied since April 2020. Since September 2020, new lease rents were 10% above in-place rents, signaling an attractive upward trajectory.
Highlights
Off-Market
The Real Estate Company reapproached a national brokerage firm following a broadly marketed process, due to the previous buyer's seeming uncertainty of execution. Following 6 months of consistent tracking, and the transaction ultimately falling through, the Real Estate Company contractually stepped in as the buyer at a lower price, with terms and a track record that ensures the ability to close.
Market
Austin has been named the #1 fastest-growing major metro area for population growth for nine straight years. Austin has also ranked the #1 place to live in the United States, for the third consecutive year in 2019. The Austin area consists of several Fortune 500 companies, including Apple, Facebook, Amazon, Dell, IBM, Oracle, and soon Tesla's new Gigafactory. Through the COVID-19 pandemic era, Austin added over 37,000 new jobs, marking 3.5% growth and making the city the 2nd fastest-growing metro in the United States. The City recently approved the Orange Line, a new metro rail that will be passing just two blocks from the Property and will provide commuters with convenient access to the Tech Ridge and Downtown Austin. The submarket has averaged 4%+ rent growth and 95%+ occupancy over the past 10 years.
Value-Add
Though built in 2012, the Real Estate Company has an opportunity to enhance all 222 units at Lotus Village, while also further enhancing amenities and exterior spaces. The Real Estate Company has the ability to raise the average current rents of $1.33 per square foot to $1.51 per square foot, which results in a $172 premium over in-place rents and assumed stabilized occupancy at 92%.
Highlights
Desirable Product Type
Sherwood Oaks stands out amongst its competitors with its unique, predominantly single-story construction, a feature that is highly desirable with tenants, and a huge competitive advantage over nearby apartment properties. The low-density grounds feature abundant, mature oak trees, which create a shade canopy over the property, providing temperature control and natural curb appeal.
Renovated
Since 2020, the Property has received over $3MM/$15K+ per unit in capital improvements. This includes a complete roof replacement, exterior paint, dog park, landscaping enhancements, and unit interior renovations.
Market
According to research from Yardi Matrix, the Tampa metro saw the third biggest year-over-year increase in apartment rental rates growing 15.1% between June 2020 and June 2021. That rate is more than twice the national average. In the Southeast Tampa submarket where this asset is located, quarter-to-date year-over-year asking rent growth is 25%.
Highlights
Basis
At $82K/unit, this basis is over $12K/unit below any of the Property’s sales comparables.
Renovated
Since 2021, the Property has received over $11mm, or $33K/unit in capital improvements, including stainless steel appliances, new hardware, new vinyl plank flooring, new lighting, and new in-unit washer and dryers.
Sponsor
The real estate company sponsoring this transaction is a Colorado-based real estate investment company that has acquired more than 6,000 units of multifamily property with an aggregate value of over $1 billion. The real estate company is vertically integrated with in-house property management operations. RealtyMogul has invested with the real estate company on two previous transactions, both of which went full cycle.
Highlights
Basis
The real estate company sponsoring this transaction was able to identify the Property off-market through their relationship with the seller-developer. The seller's original asking price was 22% higher than the ultimately negotiated net purchase price of $356,000/unit.
Market
The Property is in Vancouver, a city just north of Portland, Oregon on the Washington State side of the metro. The submarket of Vancouver offers additional benefits given its location in the State of Washington. Residents in Washington benefit from no personal state income tax and Clark County, Washington allows for no personal county income tax. Additionally, there are no city/county business taxes in Clark County, Washington. On top of that, per Costar, Vancouver's cumulative rent growth over the last 10 years is above the national total over the same amount of time and since 2010, vacancy in the Vancouver submarket has been consistently below the national average.
Desirable Product Type
The Property is a brand new, 2022 built property comprised of 50 four-bedroom townhome style units. Interior finishes include stainless steel appliance packages, luxury vinyl plank flooring, in-unit washers and dryers, and select units have private fenced-in yards and decks amongst various other design touches which allow the property to outperform the market. The Property also features central air which is a unique feature for apartments in the Pacific Northwest. Each unit is 1,426 square feet and is ideally suited for a growing work from home tenant base.
Highlights
Market
The Property is exceptionally located inside the I-440 Beltline in the highly rated Mordecai Historic District, situated minutes from Downtown Raleigh in a neighborhood where single-family homes are listed as high as $1.6 Million according to Zillow. Raleigh is one of the fastest growing metros in the U.S. and was recently projected to be the second fastest-growing large city in the U.S. between 2015 and 2030, according to the United Nations Population Division.
Affordable Stabilized Rents
Underwritten post-renovation market rents of $1,426 per month offer a 17.1% rent to income ratio given the average household income within a two-mile radius of the Property is just under $100,000 according to CoStar. This is also an affordable price point in relation to the rest of the Raleigh MSA, as the average market rent in Raleigh is $1,561 according to CoStar. The Property is well positioned to harness the tremendous rent and income growth in the Raleigh MSA while providing an economic alternative to more expensive Class A product in the Downtown submarket.
Value-Add Potential
The Property is uniquely positioned for immediate upside through the implementation of interior and exterior upgrades. The business plan is to spend approximately $13,500 per classic unit to upgrade appliances, flooring, countertops, and cabinetry. All units feature laundry connections and will receive new W&D appliances in each unit. The business plan also includes an exterior refresh with conversion of the existing laundry facility to a fitness center to improve desirability and tenant experience.
Highlights
Favorable Debt Assumption
The loan on the property, at acquisition, was assumed from the previous owner in the amount of $21,026,000. The loan has approximately eight years of term remaining with a maturity date of August 2031, a fixed interest rate of 3.33% and approximately two years remaining for interest-only payments. This compelling interest rate, as well as the interest-only remaining, is not achievable on new loans in the market today. For comparison, a 7-year Fannie Mae loan at 65% leverage has an average interest rate of 5.78% as of December 7, 2023 according to Northmarq.
Proven Value Add Renovation
The seller of the Property has renovated 38 units to date with updated counters, cabinets, bathrooms, flooring, and appliances, which have achieved average premiums of $280 per month compared to previous rents. The business plan is to continue with a similar renovation scope for the remaining 132 units while also charging the same average renovation premium. RM Communities also plans to upgrade the Property by adding a valet trash program to provide an amenity that better competes with new product in this submarket. We believe the renovation plan should allow the Property to ahieve competitive rents for this submarket.
Submarket Affordability
The Property, after renovation, is projected to achieve average rents of $1,833 per month, which reflects a 25.5% rent to income ratio as the average household income within a three-mile radius of the Property is just over $86,000 according to CoStar. This monthly rent is also an affordable alternative to purchasing a home. According to Zillow, within four miles of the Property the average value for homes in the market is $550,000. We believe the property is well positioned to take advantage of the affordability in the immediate submarket while also providing an economic alternative to more expensive homeownership.
Highlights
Favorable Debt Assumption
The loan on the property was assumed from the previous owner in the amount of $10,035,289 along with a supplemental loan from the same lender in the amount of $2,827,000. The loan has approximately five years of term remaining with a maturity date of October 2029, a blended fixed interest rate of 4.48% and is currently amortizing. This compelling interest rate is not achievable on new loans in the market today. For comparison, a 5-year Fannie Mae loan at 65% leverage has an average interest rate of 5.55% as of September 26, 2024 according to Northmarq.
Compelling Value Add Potential
The Property has been owned and operated by the same local owner-operator for nearly 20 years, and we believe the Property was historically not run for maximum profitability, as evidenced by exceptionally high retention rates, strong occupancy, and rents well below surrounding competitors. Consequently, we believe the Property presents incredible upside and is ideally primed for an exterior refresh and interior value-add renovation program that will include renovating all ranch-style units at the Property with the most comprehensive renovation scope design, and implementing a lighter renovation to the conventional units, as well as refreshing the Property’s exterior and amenities. We believe the renovation plan should allow the Property to achieve competitive rents for this submarket.
Ideal Location
The Property is situated within Columbus, operating adjacent to I-270 and near major employment centers including Defense Supply Center Columbus, Mount Carmel East Hospital, and a pocket of warehouse/distribution centers surrounding John Glenn International Airport. The Property’s proximity to I-270 offers exceptional connectivity to the entire city. Downtown Columbus is a short 15-minute drive, and the Property is 20 minutes from Intel’s new semi-conductor facility that is expected to generate more than 20,000 jobs. Reynoldsburg school district also boasts one of the highest graduation rates in the county (95%) with a leading gifted student program per the Ohio Department of Education, making it a highly sought-after school district for families.
| 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 |
Investment Summary
- On January 7, 2022, the Property was sold. As a result of the business plan for the renovation of the Property, since the Property’s acquisition, 279 of the 343 units had been renovated, and renovation costs remained under budget. The exterior and common area improvements were completed, including landscaping, installation of new signage, lighting, fencing, gates/security systems, a playground and dog park as well as a complete renovation of the leasing office/clubhouse. Other improvements included resurfacing of the pool, foundation repairs, exterior siding repairs and painting. Since the Property’s acquisition, the Property’s average rent rate increased from $578/month as of October 2017 to $830/month upon the sale of the Property, representing a 44% increase in rent rate.
- The Property was originally acquired for $19,500,000, or $56,851 per unit, and was sold for $38,500,000, or $112,245 per unit.
Original Investment Highlights
- On August 31, 2017, MogulREIT II acquired a $4,000,000 joint-venture equity investment related to the acquisition and renovation of The Clover on Park Lane (fka Serendipity Apartments), a 343-unit garden-style apartment community located in Dallas, TX (the "Property").
- The Property was built in 1975 and is comprised of studios, one, and two-bedroom floor plans with an average unit size of 610 square feet. Amenities at the Property include a clubhouse, business center, fitness center, laundry facilities, two pools, and picnic areas.
- The real estate company’s business plan is to bring in-place units to market rents and renovate all 343 units over a three-year period. The real estate company has budgeted approximately $3.04 million ($8,861/unit) to be allocated towards interior and exterior capital improvements. Unit interior upgrades are to include new appliances, painted cabinetry, new ceiling fans, and new lighting packages. Exterior/amenity improvements are to consist of new paint, new carpentry, new landscaping and drainage, a dog park, renovated pool, resealed parking lots, and a new signage package. Post-renovated rent increases are anticipated to be $142 per unit.
Investment Summary
- On December 22, 2023, the Property was sold. As a result of the business plan for the renovation of the Villas del Sol I & II Property, since the Property’s acquisition, 67 of the 156 units had been renovated with new flooring, appliances, backsplash, and lighting packages. The exterior and common area improvements were also completed, including an updated leasing office, new gazebos, the addition of BBQ grills, an upgraded laundry room, and an upgraded soccer court.
- The Property was originally acquired for $10,500,000, or $67,308 per unit, and was sold for $19,350,000, or $124,038 per unit.
Original Investment Highlights
- MogulREIT II has acquired a $1,000,000 joint-venture equity investment related to the acquisition and renovation of two garden-style apartment communities comprising 156-units located in Plano, TX (the "Property").
- The investment has an estimated hold period of approximately five years.
- The Properties are being purchased for $67,308 per unit at a 5.46% cap rate on tax-adjusted, trailing-12 month net operating income.
- The Properties were built in 1950 (Oak Gate) and 1971 (Collin Park) and are comprised of one and two-bedroom floor plans with an average unit size of 815 square feet. Amenities across the Properties include laundry centers, BBQ grills, a covered pavilion, 268 parking spaces (1.7 spaces/unit), 24-hour maintenance, and a leasing center.
- As of October 2017, the Properties were 100% occupied with an average in-place rental rate of $806 per unit.
- The real estate company’s business plan is to implement a value-add strategy by completing interior and exterior renovations at the Properties. Unit interior upgrades are expected to include a combination of black-on-black appliances, faux-wood flooring, energy saving devices, and new fixtures. Exterior and amenity improvements are expected to address painting, carpentry, landscaping, parking lots, leasing center, laundry facilities, and signage. The pro forma financials assume that classic and renovated units will be able to achieve rental premiums of approximately $59 and $82 per unit per month upon completion, respectively.
- The real estate company is a dynamic real estate investment firm specializing in multifamily apartment communities in densely-populated Hispanic neighborhoods. The real estate company owns and manages over $270 million in multifamily assets overall, comprising over 4,500 units. Core to its investment strategy is creating culturally-relevant, inclusive communities that are tailored to the various ethnicities living at its communities. The real estate company specializes in acquiring and repositioning apartments in infill locations and implementing its proprietary cultural management platform which includes specific cultural upgrades and community-oriented resident services and programs.
- The real estate company has secured senior debt of $8,640,000, which includes a $750,000 reserve for capital expenditures. The debt has a ten-year term with three years of interest-only payments. The debt has a fixed, blended interest rate of 4.48%.
Investment Summary
- On December 20, 2021, the Property was sold. The Property was originally acquired for $14,350,000, or $75,526 per unit, and was sold for $17,650,000, or $92,895 per unit.
Original Investment Highlights
- On January 31, 2018, MogulREIT II acquired a $1,000,000 joint-venture equity investment related to the acquisition and renovation of Villas de Toscana (fka Tuscany at Westover Hills), a 190-unit garden-style apartment community located in San Antonio, TX (the "Property").
- The Property was built in 1984 and is comprised of studios, one and two-bedroom floor plans with an average unit size of 684 square feet. The Property is a gated community with amenities that include a basketball court, fitness center, pool, dog park, picnic area, carports, laundry facilities and a BBQ area.
- The Real Estate Company’s business plan is to implement a value-add strategy by completing interior and exterior renovations at the Property. Unit interior upgrades are expected to include a combination of black-on-black appliances, faux-wood flooring, utility saving devices, and new fixtures. Exterior and amenity improvements are expected to address painting, carpentry, landscaping, fitness center upgrades, backyard changes, pool enhancements, and balcony improvements.
Investment Summary
- On October 25, 2022, the Property was sold. As a result of the business plan for the renovation of the Property, since the Property’s acquisition, 49 of the 263 units had been renovated. The exterior and common area improvements were completed, including painting, clubhouse renovations, the addition of BBQ grills, signage, and a water retrofit. Due to the weaker than anticipated tenant demographic both at the Property and in the surrounding submarket, the real estate company sponsoring the transaction was unable to lease renovated units as underwritten, and the Property required capital calls as a result to support operations and sale efforts; however, the Fort Worth market appreciated, and the Property was sold at a profit, causing the special purpose entity to receive its original investment without a loss of principal.
- The Property was originally acquired for $14,530,750, or $55,250 per unit, and was sold for $21,150,000, or $80,418 per unit.
Original Investment Highlights
- MogulREIT II has acquired a $1,000,000 joint-venture equity investment related to the acquisition and renovation of a 263-unit garden-style apartment community located in Fort Worth, TX (the "Property").
- The Property was purchased for $55,250 per unit.
- The Property was built in 1968 and is comprised of one, two, and three-bedroom floor plans with an average unit size of 1,043 square feet. Amenities include a swimming pool, clubhouse, children's play area, a public mail center, a public laundry center, 24 hour emergency on-site maintenance, and a leasing center with full public kitchen.
- The Real Estate Company’s business plan is to implement a value-add strategy by completing interior and exterior renovations at the Property. Interior upgrades are expected to include black-on-black appliances, faux-wood flooring, utility-efficient devices and new fixtures. Exterior and amenity improvements are expected to include a parking lot seal coat and restriping, new signage, leasing clubhouse upgrades and a dog park, among other improvements.
Investment Summary
- On September 30, 2022, the Property was sold for $33,750,000, or $205,793 per unit, reflecting a 40.6% increase in property value since acquisition. As a result of the business plan for the renovation of the Property, since the Property’s acquisition, 39 of the 164 units had been renovated. The exterior and common area improvements were completed, including painting all common areas and hallways, furnishing the pool area, as well as renovating the clubhouse/game room and kitchen. Since the Property’s acquisition, the Property’s average rental rate increased from $1,499/month as of November 2018 to $1,706/month upon the sale of the Property, representing a 14% increase in rental rate.
Original Investment Highlights
- MogulREIT II has acquired a $3,000,000 joint-venture equity investment related to the acquisition and renovation of a 164-unit garden-style apartment community located in Avon, CT (the "Property").
- The Property was purchased for $146,341 per unit.
- The Property was built in 1973 and is comprised of one, two, and three-bedroom floor plans with an average unit size of 1,165 square feet. Amenities at the Property include a fitness center, pool, picnic area, dog park, tot lot, tennis court, elevators, community laundry, WiFi, low-density wooded landscape, and a clubhouse.
- The Real Estate Company's business plan is to implement a value-add strategy by completing interior and exterior renovations at the Property. Planned unit interior upgrades will include the addition of new appliances, countertops, cabinetry, fixtures, flooring, lighting, and in-unit washers and dryers. Exterior / amenity improvements will consist of painting, lighting, new landscaping, a grill area and fire pit, and patio fences.
Investment Summary
- On November 1, 2021, the Property was sold. As a result of the business plan for the renovation of the Property, since the Property’s acquisition, 219 of the 310 units had been renovated, and renovation costs remained under budget. Of those 219 units, all were leased and achieved an average premium rent rate of $134/month over prior rent rates and within 4% of projected rent rates. The exterior capex work was completed, including HVAC conversion to refrigerated air, new roofs, new exterior paint, upgraded landscaping, pool renovation, re-purposing of an old tennis court to a new resident lounge area with a new basketball court and open grass area, new tables and benches, new BBQ grills, and low-flow toilets and showerheads retrofit. Since the Property’s acquisition, the Property’s average rent rate increased from $668/month at acquisition to $820/month upon the sale of the Property, representing a 23% increase in rent rate.
- The Property was originally acquired for $18,700,000, or $60,323 per unit, and was sold for $27,325,000, or $88,145 per unit.
Original Investment Highlights
- On May 31, 2019, MogulREIT II acquired a $3,385,320 joint venture limited partnership equity investment in connection with the acquisition and renovation of Terrace Hill Apartments, a Class B 310-unit multifamily apartment complex in El Paso, Texas (the “Property”).
- The real estate company managing the project plans to improve the Property through a strategic renovation program, renovating units that become available due to normal tenant turnover, and re-leasing the renovated units at a higher rental rate. Unit interior renovations may include vinyl plank flooring, new hardware and lighting fixtures, upgrades to the cabinets, the addition of backsplashes in select units, and resurfaced countertops. The real estate company also intends to convert the air conditioning to refrigerated air for select units and replace all toilets, showerheads, and aerators with low-flow models, resulting in resource conservation and cost savings. The unit interior renovations will take place in conjunction with common area and amenity enhancements including new pool furniture, upgraded BBQ areas, and an outdoor lounge with gazebos. This renovation strategy assumes a renovation budget of approximately $14,000 per unit financed by loan proceeds. As of April 2019, the Property was 94.8% occupied with average in place rents of $668 per unit.
Investment Summary
- On June 6, 2019, the preferred equity investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 15%.
Original Investment Highlights
- MogulREIT II has acquired a $1,440,000 preferred equity interest (the “Investment”) related to the renovation of a 31-unit multifamily property located in Chicago, IL (the "Property").
- The business plan is to rehabilitate the Property by addressing all deferred maintenance items and substantially improving and modernizing the Property's interiors, exteriors, and landscaping. Upon completion of the capital expenditure plan, the Property is anticipated to offer renovated interiors and amenities including a new workout room, storage lockers, a bike room, and new landscaping of the common area garden. The business plan is anticipated to take approximately 15 months to complete.
- The Property was built in 1918 and is comprised of one and two-bedroom floor plans wtih an average unit size of 777 square feet.
- The Property is approximately 77% leased. The Real Estate Company has intentionally left particular units vacant in order to execute the interior renovations immediately.
- The Real Estate Company acquired the Property in March 2018 from the original owner and anticipates using the refinance proceeds to (1) pay off an existing senior loan and (2) to repair and renovate the Property.
- The Real Estate Company has over thirty five years of real estate experience and has managed the repositioning of nine investment properties in the Chicago area since 2014. The Property will be managed by an affiliate of the Sponsor.
- The Real Estate Company has secured a senior loan of $6,200,000, which includes a $1,047,000 holdback for property renovations. The loan has a three-year initial term with two 12-month extensions.
- The Investment has a remaining term of 60 months as of the acquisition date of June 22, 2018.
- The Investment is interest-only throughout the entire term.
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 October, 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.