Please carefully review the Disclaimers and Risk Factors section below.
Aggregate value of properties owned by the Income 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 properties underlying investments acquired since the most recent NAV per share was announced are based on the most recent purchase prices. The aggregate value of the properties underlying loans made by the Income REIT is based on independent appraisals dated within six months of the original acquisition dates by RM Adviser, LLC, Realty Mogul, Co. or Realty Mogul Commercial Capital, Co., as applicable. 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 Shares – Valuation Policies.”
There is no guarantee that shareholders 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 Income REIT (the "Manager"), cash resulting from a waiver of fees or reimbursements due to our Manager, borrowing and the issuance of additional securities. The Manager may in the future declare lower distributions or no distributions at all for any given period.
The Income REIT's primary focus is to provide monthly income to investors by rigorously evaluating numerous investment opportunities to find those that can support the Income REIT's distribution target.
RealtyMogul's Income REIT has a minimum investment of just $5,000.
The Income REIT has:
- Paid investors an annualized cash distribution of at least 6% net of fees for ${mogulReit1DistributionDuration} consecutive months.
- Distributed a total of ${mogulReit1DistributionAmount} to investors to date.
- ${reitTotalAssetValue} in assets purchased by approximately 7,700 unique investors.2
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 Income 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 Income 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 MANAGERS
Although the Manager, RM Adviser, LLC, manages the day-to-day operations, the Income REIT operates under the direction of its board of managers, a majority of whom are independent managers.
Other than the limited shareholder voting rights described in our offering circular, our LLC Agreement vests most other decisions relating to our assets and to the business of the Company, including decisions relating to investments, acquisitions and dispositions, the engagement of asset managers, the issuance of securities in the Company including additional common shares, mergers, roll-up transactions, conversion to a corporation, listing on a national securities exchange, and other decisions relating to our business, in our Manager, certain of which decisions our Manager has delegated to our board of managers.
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
In short, the RealtyMogul Apartment Growth REIT is focused on growth investments while the RealtyMogul Income REIT is more focused on income-producing investments.
To learn more about the RealtyMogul REITs, click here.
The following third-party expense reimbursements will be paid from proceeds of the sale of the Income 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 Income 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, and/or its affiliates | 1% annualized based on the “total equity value”. | For purposes of this fee, total equity value equals (a) our then-current NAV per share, multiplied by (b) the number of our common shares 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 not limited to, license fees, auditing fees, fees associated with SEC reporting requirements, insurance costs, tax return preparation fees, taxes and filing fees, administration fees, fees for the services of an Independent Representative or Advisory Board, and third-party costs associated with the aforementioned expenses. |
Fees Paid with Respect to Loans and Preferred Equity Only:
| TYPE OF FEE | AMOUNT | NOTES |
|---|---|---|
| Servicing Fee (Performing Loans and Preferred Equity Investments) - RM Originator, an affiliate of our Manager, RM Adviser, LLC | 0.5% of the principal balance plus accrued interest of each loan or preferred equity investments to RM Originator for the servicing and administration of certain loans and 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 loans or preferred equity investments. We cannot determine these amounts at the present time. |
| Special Servicing Fee (Non-Performing Loans and Preferred Equity Investments) - RM Originator, an affiliate of our Manager, RM Adviser, LLC | 1% of the original value of a non-performing debt or 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 occurrence of a debt or preferred equity investment becoming non-performing and the original value of such assets. We cannot determine these amounts at the present time. |
††There are other fees not paid by the Income REIT itself that may be paid to affiliates that originate or manage investments on behalf of the Income REIT. To learn more about our fees, estimated use of proceeds, and the Income 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, preferred equity, debt, and fixed income assets. 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, preferred equity, debt, and fixed income assets, 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 Income 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, which may discount the amount you receive for your repurchased shares 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 | No Repurchase Allowed |
| 1 year until 2 years | 98% |
| 2 years until 3 years | 99% |
| 3 or more years | 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 common shares 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 Shares – Quarterly Share Repurchase Program."
Our REIT Manager 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, (iv) following any material decrease in our NAV, or (v) for any other reason.
To learn more about the Income REIT's Share Repurchase Plan, please refer to the section of our full offering circular captioned “Description of Our Common Shares – 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 Company, consolidation with other REITs managed by our Manager, a listing of the Company on an exchange, or any other similar transaction.
The Income REIT does not have a stated term. The Income REIT's Manager 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)
The Income REIT focuses on investing in the following types of assets: commercial real estate loan and equity assets, including, without limitation, senior debt, mezzanine debt, junior debt participation, equity interests, including joint ventures and limited partnerships, preferred equity, and other real estate-related assets. We intend to hold at least 55% of the total value of our assets in commercial mortgage-related instruments that are closely tied to one or more underlying commercial real estate projects, such as mortgage loans, subordinated mortgage loans, mezzanine debt and participations, as well as direct interests in real estate that meet certain criteria set by the staff of the SEC.
CUMULATIVE DISTRIBUTIONS
- Multi-FamilyProperties that have five or more residential units in a single building and may be further classified as garden style, low-rise, or high-rise.
- OfficeMid-rise or high-rise, downtown or suburban.
- RetailGrocery-anchored centers, shopping centers, power centers and strip malls.
- Joint Venture EquityInvestors in Joint Venture Equity own an interest in an entity (usually an LLC) that invests in the equity portion of a property. After all debt is paid, and any Preferred Equity distributions are made, the Joint Venture Equity investor receives a pro rata portion of a preferred return, cash flow, and any profits upon sale. Joint Venture Equity is the riskiest investment as it has the lowest priority of distributions, although it has the greatest upside potential.
- Mezzanine DebtSecond in line for repayment are investors in Mezzanine Debt and B Notes. Mezzanine Debt is structured as a loan secured by a pledge of interest in the entity owning the property. In the event of loan default, investors may have the right to foreclose on the interests of the entity and step into ownership of the property, subject to any senior debt. B Notes are secondary tranches of senior loans with an A/B structure, and are secured by the property itself. In the event of loan default, the investors in a B Note may participate in the right to foreclose on the property and receive sale proceeds to repay principal, unpaid interest and any fees, subject to the A Note investor.
- Preferred EquityInvestors in Preferred Equity investments own an interest in the property and have a priority over the other equity investors to receive distributions of cash flow and capital invested. In the event of loan default, Preferred Equity investors may have the right to take over control and management of the property.
| Investment | Location | Property Type | Investment Type | Weight |
|---|---|---|---|---|
| Multiple Cities, TX | Retail | Preferred Equity | 0% | |
| El Paso, TX | Multi-family | Joint Venture Equity | 0% | |
| Virginia Beach, VA | Multi-family | Joint Venture Equity | 0% | |
| Columbus, OH | Office | Joint Venture Equity | 0% | |
| Richmond, VA | Multi-family | Joint Venture Equity | 0% | |
| Lubbock, TX | Office | Joint Venture Equity | 0% | |
| Fenton, MO | Multi-family | Joint Venture Equity | 0% | |
| Creve Coeur, MO | Multi-family | Joint Venture Equity | 0% | |
| Vancouver, WA | Multi-family | Joint Venture Equity | 0% | |
| Vancouver, WA | Multi-family | Joint Venture Equity | 0% | |
| Grove City, OH | Multi-family | Joint Venture Equity | 0% | |
| Georgetown, KY | Multi-family | Joint Venture Equity | 0% | |
| Gresham, OR | Multi-family | Joint Venture Equity | 0% | |
| Cincinnati, OH | Mixed-Use | Joint Venture Equity | 0% | |
| Beavercreek, OH | Office | Joint Venture Equity | 0% | |
| Columbus, OH | Multi-family | Joint Venture Equity | 0% |
Highlights
Senior Loan Originated by Starwood Mortgage Capital LLC ("Starwood")
The preferred equity investment will be subordinate to a senior loan originated by Starwood, which is anticipated for a Commercial Mortgage Backed Security (CMBS) execution
Historical Occupancy
Five of the six assets in the portfolio have been 100% leased since 2011 and portfolio occupancy is at 95% as of July 2017
Additional Equity Infusion
The Sponsor infused an additional $1.3 million into the transaction during the June 2017 refinance
Highlights
Cash Flow
The successful execution of the business plan is not overly dependent upon capital improvement implementation. The Property currently features strong in-place cash flow and high occupancy.
Resilient Market
The Property is situated in a historically resilient market. Per CoStar, El Paso incurred cumulative job losses of less than 3% during the last recession, and the solid base of government jobs in the area should provide a hedge against future economic downturns.
Additional Upside
With below market rents, the Property offers significant rental upside via mark-to-market as well as additional renovation potential in the form of strategic amenitization.
Highlights
Cash Flow & Value-Add Opportunity
The property features in-place cash flow and the potential to increase rents by marking them to market. Additionally, there is the possibility of value creation through a strategic renovation program.
Demand for Multifamily
According to Newmark Knight Frank, the supply of new apartment units in the Virginia Beach submarket has slowed in recent years and demand remains high. Per CoStar, the Hampton Roads market sustains apartment demand because many residents are government employees in the prime renter cohort (20 to 34 years old).
Stable Market
Per CoStar, Virginia Beach fundamentals are stable, and the market continues to grow while vacancy remains low. There has been an inflow of new residents into the Virginia Beach submarket since 2010. Further, the large government employment base lends to this stability, and could hedge against an economic downtown.
Highlights
In-Place Occupancy
As of October 2019, the Portfolio was 97% occupied with average in-place rent of $11.52 per square foot ($12.57 per square foot for office only).
Partner
The Real Estate Company is an experienced office operator, as well as a repeat partner of RealtyMogul. It has owned and operated real estate properties with a total basis exceeding $346 million.
Market
The Columbus office market is one of the healthiest in the country thanks to significant employment gains and years of conservative construction (according to CoStar). Over the past five years, the market has experienced average annual rent growth of 5.6% and an average vacancy rate of 5.1%.
Highlights
Growing Market and Sub-Market
Per CoStar, Richmond, and the Shockoe-Bottom sub-market in particular, are in the midst of an exceptional growth period. Affordable cost of living, high quality of life, and job growth in high paying sectors are attracting young professionals to the area with strong population growth projected in the near term.
Management and Value-Add Upside
We believe there is both management upside by raising rents to market rates as well as value-creation potential by refreshing unit interiors, common areas and amenities to lease renovated units at higher rental rates.
Pedestrian Friendly
The properties are adjacent to the only supermarket in the Shockoe Bottom sub-market, a drug store, a coffee shop, and a public transit stop. There is also ground floor retail at the properties which includes a gym and fitness center, a salon, and a laundry pick-up/drop-off. In addition, there are many dining and cultural opportunites, as well as parks and schools within walking distance of the properties.
Highlights
Building Location
The Lubbock Medical Office Building ("The Property") is well located within the Lubbock Medical District, proximal to over 1,100 hospital beds. The Property is adjacent to the largest hospital within the Covenant Health System network, the 394-bed Covenant Medical Center, and their new 150-bed hospital tower expecting completion in winter of 2021.
Credit Tenant
The tenant at the Property is Covenant Health System, whose parent company is Providence St. Joseph Health which has a Moody’s Aa3 rating. Covenant Health System is a dominant healthcare provider in the region; it serves most of the West Texas and New Mexico markets and has a strong presence in Lubbock with a 60% market share.
NNN Lease
Under its triple-net lease, the tenant is responsible for all expenses, including repairs and maintenance, capital expenditures, property management fees, and owner’s insurance.
Highlights
Market
Jefferson County has been resilient during the COVID-19 crisis. According to the Bureau of Labor Statistics, as of November 2020, the County reported an unemployment rate of 3.8% vs. 6.7% national average. We believe the submarket has weathered the coronavirus pandemic as compared to denser, urban areas.
High Barriers to Entry
The Property is the first new multifamily development in Fenton in over 12 years. Given its newer build, we believe that it separates itself from the competition in terms of quality and location. We believe the Property's strong lease-up velocity demonstrates the need for additional rental properties in the area; however, scarcity of land allowed for commercial/multifamily development in addition to strict municipal codes will help prevent an influx of supply for the forseeable future. There are currently no apartment communities being developed in the immediate area.
Location
The Property benefits from having exceptional access and visibility and is conveniently located near virtually all of St. Louis' major interstates. Within a ten-mile radius, there are over 175,000 jobs, 6.9 million square feet of retail space within a five-mile radius, as well as a wide variety of nearby amenities.
Highlights
Value-Add
As the only property constructed in the submarket between 2001-2015, Kings Landing is uniquely positioned for a renovation. The business plan is to spend approximately $12,000 per unit to upgrade the interior of the units to include quartz counters, vinyl flooring, modern finishes, and a tech package.
Asset Quality
Kings Landing's construction as a mid-rise asset provides a significant contrast to the majority of Creve Coeur multifamily, which is primarily comprised of 1990s and older vintage, and largely garden-style units, with some high-end construction beginning in 2016. Additionally, the Property is the only property in the comparable set with ground-floor retail spaces.
Market
Kings Landing is in Creve Coeur, MO, an affluent suburb of St. Louis. Creve Coeur is one of the most educated suburbs in St. Louis, with higher education attainment of 68%. It has one of the highest median area incomes in the MSA at $96K, and an unemployment rate of 5.1% compared to 6.1% nationally.
Highlights
Desirable Product Type
Roosevelt Commons is a brand new, 2020 built property comprised of 36 townhome style units. Interior finishes include stainless steel appliance packages, luxury vinyl plank flooring, and modern flat panel cabinetry amongst various other design touches which allow the property to achieve above market rents.
10-Year Tax Abatement
Eight of the units have been reserved for residents earning 80% Area Median Income (AMI). This qualifies the Property to receive a 10-year tax abatement from Vancouver's MFTE program which runs through the year 2030. By not having to pay taxes on the improvements to the land, the Property averages a tax savings of over $120,000 a year throughout the hold period.
Market
Roosevelt Commons is in Vancouver, a city just north of Portland on the Washington state side of the metro. Being in Washington state, Vancouver has no income tax. With over thirty-one thousand multifamily units, it is the largest submarket in the region. Vancouver's rent growth has outperformed the overall Portland metro for the past six years, and year-over-year submarket gains are significantly stronger than Portland's performance.
Highlights
Desirable Product Type
Minnehaha Meadows is a brand new, 2020 built property comprised of 49 townhome style units. Interior finishes include stainless steel appliance packages, luxury vinyl plank flooring, and modern flat panel cabinetry 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 1,288 square feet and is ideally suited to a growing work from home tenant base.
Lease-Up
The Property has experienced exceptional leasing velocity since construction was completed in June 2020. Within six months, the property reached 100% occupancy and between March and May of 2021 was averaging ten new leases per month.
Market
Minnehaha Meadows is in Vancouver, a city just north of Portland, Oregon on the Washington State side of the metro. Since Vancouver is located in the Washington State and not Oregon, there is no income tax in Vancouver. With over thirty-one thousand multifamily units, it is the largest submarket in the region. Vancouver's rent growth has outperformed the overall Portland metro for the past six years, and year-over-year submarket gains are significantly stronger than Portland's performance.
Highlights
New Construction
Bentley Apartments is a 138 unit apartment community built in 2020. Equipped with premium finishes and high-quality construction, the Sponsor believes the Property competes well against the new comparable properties in the submarket.
Cash Flow
The Property was developed within a Community Reinvestment Area and received a 15-year full tax abatement on the improved value of the Property starting in tax year 2021. As a result of the tax abatement, a potential to push rents organically, and the favorable interest rate environment, the Sponsor believes the Property is positioned to have strong gross property-level cash flow.
Location
Bentley Apartments is located in Grove City, OH a thriving suburb south of downtown Columbus. Through a mix of public-private projects in downtown Grove City, the area has transformed over the past five years and attracted an influx of young professionals. Additionally, the Property is located near several retail, dining, and entertainment options.
Highlights
Value-Add
Haverford Place, built in 2001, is primed for a value-add business plan. The submarket has exhibited strong demand for premium finishes. The Property is positioned to capture premiums to current rental rates through higher-end interior upgrades such as granite counters, backsplashes, flooring, upgraded lighting and fixtures, and other interior upgrades.
Desirable Product Type
Haverford Place is comprised of 73% large two- and three-bedroom townhomes, which are desirable in this submarket. The unit sizes at Haverford Place are on average 259 SF larger than other nearby comparable properties. Larger unit sizes are highly sought-after due to the increased prevalence of remote working.
Market
Georgetown, KY has seen significant development through recent investment in the Toyota manufacturing plant and public infrastructure throughout the city. There have been new developments such as shopping centers and dining options. Additionally, the submarket is home to Georgetown College, multiple historical reserves and museums, and state-renowned Scott County Community Park.
Highlights
Market
The Portland-Vancouver-Hillsboro metropolitan statistical area (“MSA”) has recorded cumulative rent growth of 47.2% over the last 10 years, according to CoStar. The submarket of Gresham has exceeded that mark with rent growth of 58.8% over the same period. Over each of the past six years, rent growth in Gresham has been stronger than metro-wide performance in Portland.
Supply Constraint
An average of 27 permits were issued annually totaling 3,230 multifamily units in Multnomah County from 2015 to 2019 compared to 2021 where only two building permits were issued for a total of 352 units, according to JLL. Considering the City of Portland’s implementation of Inclusionary Housing and Urban Growth Boundary programs, we believe the MSA is one of the more challenging markets to develop in across the country.
Desirable Product Type
Edison offers desirable open-concept floorplans with modern design touches. All units have in-unit washers and dryers, as well as air conditioning. 60 of the 64 units are large 2-bed/2-bath, and the average unit is 900 square feet. Compared to the City of Portland's average apartment size of 765 square feet, renters at the Edison have over 17% more living space on average.
Highlights
Strong Sub-Market
The Property is in a well located, highly visible location in Columbia Tusculum, Ohio, the oldest and one of the most prestigious neighborhoods in Cincinnati, Ohio. According to CoStar, submarket vacancy is 0.8% and 5.3% for retail and office, respectively, in a submarket that has 4.6 million square feet of retail and 3.9 million square feet of office. Additionally, we believe that this tenant mix is ideally suited for this high-income neighborhood, which has over a $146,000 average household income within a 1-mile radius, according to CoStar.
Operational Upside
We believe there is an opportunity to improve the Property through capital expenditures and property improvements as well as renewals of existing tenancy at the same or higher rental rates. According to CoStar, rents for the retail and office suites at the Property are 6% and 29% below submarket rents as of August 2022, respectively.
Highly Occupied
As of August 2022, the Property is 100% occupied by a diverse roster of tenants with a weighted average lease term of 3.1 years. The office building at the Property totals 48,137 square feet and is anchored by IPSOS SA, a French market research and consulting firm with 17,000 employees worldwide and a market capitalization of approximately $2 billion. IPSOS comprises 33,284 square feet and is leased through August 2026 at a below market rental rate, according to CoStar. The three retail buildings at the Property total 25,661 square feet and include retail uses that we believe are e-commerce resistant, such as a bank, gym, hair salon, and Verizon store as well as several restaurants.
Highlights
Strong In-Place Leases and Projected Cash Flow
As of the acquisition date, the Property is 96.4% leased. The underwriting projects a gross property-level 9.8% average cash-on-cash return over a hold period of five years.
Defense-Focused Tenancy with Specialized Buildouts
The Property features a strong tenant mix, including defense contractors with uses directly related to Wright-Patterson Air Force Base ("Wright-Patt AFB").
Property Location
The Property is located in Beavercreek, Ohio, directly adjacent to Dayton and approximately three miles from Wright-Patt AFB, one of the largest U.S. Air Force Bases in operation. The City of Beavercreek is an unincorporated municipality and therefore does not assess city income tax on its residents, including tenants at the Property. Because of this tax benefit as well as its close proximity to Wright-Patt AFB, we believe the Property is in a more desirable location than its neighboring areas. Wright-Patt AFB has over 30,000 employees and is the largest single site employer in the state of Ohio with an economic impact of $4.2 billion per year. It is also the headquarters for major units such as the Air Force Materiel Command, which conducts research and development among other duties, and the Air Force Research Laboratory, which leads the discovery, development, and integration of technologies for the Air Force. Wright-Patt AFB also receives government funding for various projects, including the current construction of a 225,000 square foot National Air and Space Intelligence Center, which is expected to add 980 workstations, mission-specific function, meeting areas and advanced visualization capabilities.
Highlights
Attractive Debt Assumption
The loan has approximately five years of term remaining at a below-market fixed interest rate, which is below that of new loans in the market today. A new 5-year Fannie Mae loan at 65% leverage has an estimated interest rate of 6.10% per Northmarq as of 3/6/2024.
Long-Term Tax Abatement
Tax abatement applies to the value of improvements through 2034.
Strong Projected Cash Flow
Gross property-level cash flow projected at 8.8% throughout the hold due to the long-term tax abatement along with the below-market interest rate.
| Investment | Location | Property Type | Investment Type | Invested |
|---|---|---|---|---|
| Canton, OH | Office | Preferred Equity | 2000000.00 | |
| San Antonio, TX | Office | Mezzanine Debt | 3400000.00 | |
| Centennial, CO | Office | Mezzanine Debt | 2300000.00 | |
| Pensacola, FL | Retail | Mezzanine Debt | 1125000.00 | |
| Suwanee, GA | Office | Senior Debt | 1500000.00 | |
| Jonesboro, GA | Retail | Preferred Equity | 1250000.00 | |
| Corona, CA | Retail | Mezzanine Debt | 3549300.00 | |
| Chula Vista, CA | Multi-family | Senior Debt | 4490000.00 | |
| San Francisco, CA | Mixed-Use | Senior Debt | 4750000.00 | |
| La Habra, CA | Retail | Preferred Equity | 1900000.00 | |
| Tucson, AZ | Multi-family | Preferred Equity | 2275000.00 | |
| Virginia Beach, VA | Office | Preferred Equity | 1700000.00 | |
| Hanford, CA | Retail | Senior Debt | 1900000.00 | |
| Garden Grove, CA | Self-storage | Mezzanine Debt | 3915000.00 | |
| Brooklyn, NY | Mixed-Use | Senior Debt | 1350000.00 | |
| Waterbury, CT | Retail | Preferred Equity | 3000000.00 | |
| Riverside, CA | Office | Mezzanine Debt | 2500000.00 | |
| West Chester, PA | Flex | Preferred Equity | 1450128.00 | |
| Fresno, CA | Retail | Senior Debt | 3600000.00 | |
| Portland, OR | Office | Senior Debt | 3950000.00 | |
| Syracuse, NY | Flex | Preferred Equity | 1500000.00 | |
| Las Vegas, NV | Office | Joint Venture Equity | 6000000.00 | |
| Plano, TX | Multi-family | Preferred Equity | 2323030.00 |
Investment Summary
- On June 25, 2021, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 10%.
Original Investment Highlights
- MogulREIT I has acquired a $2,000,000 preferred equity investment related to the acquisition of a 150,000 square foot office property in Canton, Ohio.
- The property was originally built in 2001 as a build-to-suit building for General Electric. The property is currently 100% leased to Synchrony Financial ("Synchrony"), a spin-off of General Electric, that has been at the property since construction.
- Synchrony, which filed for its IPO in 2014 and has a BBB- credit rating from Standard and Poor's, recently signed a new 10 year lease at the property. The lease, signed in January 2016, is guaranteed by Synchrony.
- The preferred equity investment is fully amortizing over a 5.5 year period and is intended to be paid off by December 2021, prior to the expiration of the new lease in 2025.
- The investment has a 10% fixed interest rate.
- The sponsor and its affiliates have previously acquired 11 assets with a combined value of $40 million, and specialize in acquiring office and retail assets with long term investment objectives.
- The sponsor plans to hold the asset long term.
- The lease is a triple-net lease. As typical with such leases, the tenant carries all property taxes, insurance, and maintenance expenses, resulting in lower landlord expenses when compared to other types of leases.
Investment Summary
• On December 30, 2019, the investment was paid off in full.
• All interest payments were paid in full during the hold period at an interest rate of 10% from February 17, 2017 to November 8, 2019 and 12% from November 9, 2019 to December 30, 2019.
Original Investment Highlights
• MogulREIT I has acquired a $3,400,000 mezzanine debt investment related to the refinancing of a 189,388 square foot five-building office portfolio located in San Antonio, TX.
• The mezzanine debt investment has a fixed interest rate of 10.0%.
• The refinance allowed the Sponsor to pay off the existing senior loan, buyout an existing equity partner, and secure additional leasing dollars for future leasing. The Sponsor is retaining $4.8 million of retained cash equity in the transaction.
• The Sponsor plans to exit the investment in three years.
• Since 2011, the Sponsor has previously acquired 19 assets with a combined purchase price of over $290 million, including eleven office assets totaling approximately $249 million.
• Per Costar, the asset is located within the Northwest submarket of the San Antonio office market. The Northwest submarket has posted approximately 616,000 square feet of absorption over the past twelve months ending in December 2016, a figure that ranks first of all San Antonio submarkets over the span.
Investment Summary
- On February 16, 2022, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 10% from March 22, 2017 to November 8, 2021 and 13.5% from November 9, 2021 to February 16, 2022.
Original Investment Highlights
- MogulREIT I has acquired a $2,300,000 mezzanine debt investment related to the refinancing of a 138,771 square foot three-story office building located in Centennial, CO. Centennial is located approximately 15 miles south east of Denver.
- The mezzanine debt investment has a fixed interest rate of 10.0% and a remaining term of approximately 31 months as of the acquisition date of March 23, 2017.
- The refinance allowed the Sponsor to pay off the existing senior loan, repatriate a portion of the initial equity contribution, and secure dollars for tenant improvements and capital expenditures related to the largest tenant’s recent expansion and extension. The Sponsor is retaining approximately $3.2 million of retained cash equity in the transaction.
- Occupying nearly 45% of the square footage, Shane Co. has been at the Property since 2007 and recently executed a lease extension, extending their lease to March 2026 and expanding their square footage by 7,700 SF. Shane Co. is the largest privately owned jeweler in the United States and this location is ideally situated less than three miles away from their flagship retail store in nearby Greenwood Village.
- Other main tenants at the Property include TCF National Bank (19.5% of gross leasing area ("GLA")), Open Technology Solutions (17.3% of GLA), and Yardi Systems (15.0% of GLA).
- Since 2011, the Sponsor has previously acquired 19 assets with a combined purchase price of over $290 million, including eleven office assets totaling approximately $249 million. This includes Parkway Plaza, which was recently added to MogulREIT I.
- Per Costar, the asset is located in the Panorama/Highland Park submarket in the Denver office market. As of the fourth quarter, the Panorama/Highland Park submarket ranks second of 34 Denver submarkets in vacancy rate (3.1%) and 12-month absorption (447,000 square feet).
Investment Summary
- On March 31, 2021, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 9.75% from June 12, 2017 to June 4, 2020 and 11.75% from June 5, 2020 to March 31, 2021.
Original Investment Highlights
- MogulREIT I has acquired a $1,125,000 mezzanine debt investment related to the refinancing of a 49,768 square foot anchored retail center located in Pensacola, FL (the “Property”).
- The mezzanine debt investment has a fixed interest rate of 9.75% and a remaining term of approximately 34 months as of the acquisition date of June 12, 2017.
- The refinance allowed the Sponsor to pay off the existing senior loan and replace it with a new senior loan and mezzanine loan in order to provide more flexible debt on the asset in anticipation of a sale in approximately three years. The Sponsor did not cash out any equity in the transaction and currently has approximately $830,000 of retained equity in this transaction.
- The Property is currently 100% leased to Ross Dress for Less (54% of the rentable square footage, “RSF”), Office Depot (42% of RSF), and T-Mobile (4% of RSF).
- Ross Dress for Less (“Ross”) has been at the Property since early 2011 and possesses an investment grade credit rating (BBB+ by Standard & Poor’s). Office Depot has been at the Property since early 2008 and recently renewed their lease in May 2016 to extend their lease expiration date through February 2023. Both tenants lease expirations extend beyond the initial loan term.
- Since 2011, the Sponsor reports that they have acquired over $700 million of retail, office, multifamily, and medical buildings across the United States. Cumulatively, the principals of the firm have over 80 years of real estate experience.
Investment Summary
- On August 30, 2019, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 14%.
Original Investment Highlights
- MogulREIT I has acquired a $1,500,000 junior participation in a loan secured by a first deed trust related to the refinancing of a 52,090 square foot Class-A medical office building located in Suwanee, GA (the “Property”).
- The debt investment has a fixed interest rate of 14.0% and a remaining term of approximately 24 months as of the acquisition date of June 20, 2017.
- The Property is currently 100% master leased to Northside Hospital. Northside is a leading healthcare system in Georgia with three hospitals and a leading presence across the metro Atlanta area. The Property was originally a build-to-suit for Northside Hospital and was completed in 1999.
- At the time of origination, the property was 58% occupied with 80% of the property remaining on the original master lease which runs through December 2019. At the close of the refinance, a new lease was executed with Northside Hospital that extended the 20% of their lease that is no longer covered under the original master lease through May 2027 and released a portion of the currently encumbered space for market leasing by the borrower. Northside Hospital is expected to continue to pay rent on the unoccupied spaces until they relet or until the original master lease expires in December 2019.
- The property management and leasing team, an affiliate of the borrower, is one of the largest private owner-operators of office properties in the Atlanta MSA, having completed over 50 investments to date including the sale of a 28-property portfolio to Blackstone in 2015.
- The asset was originally purchased in 2004 and the Borrower reports that they have added an additional $1.1 million in equity since then. $800,000 of additional fresh equity was injected into the deal during the June 2017 refinance.
- In a previous financing with a major bank, the Property was cross-collateralized and cross-defaulted with another asset that suffered the loss of a major tenant. That loan entered special servicing in early 2012 and was eventually sold in December 2014. The sponsor filed bankruptcy to protect the assets and ultimately sold the problem asset, bringing the loan out of default.
Investment Summary
- On June 24, 2019, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 12%.
Original Investment Highlights
- MogulREIT I has acquired a $1,250,000 preferred equity investment related to the acquisition of a 207,404 square foot grocery-anchored retail shopping center located in Jonesboro, GA (the “Property”). Jonesboro is approximately 16 miles south of Atlanta.
- The Property is located approximately seven miles south of Atlanta’s Hartsfield Jackson International Airport, named the busiest passenger airport in the world in 2016 for the 19th year in a row, with over 100 million annual passengers and an estimated $35 billion regional economic impact annually (according to a recent CNN report).
- The preferred equity investment (the “Investment”) has a fixed interest rate of 12.0% and a remaining term of approximately 36 months as of the acquisition date of August 3, 2017. The Investment also features two 1 year extensions.
- The Investment is interest-only throughout the entirety of the initial 36 month term.
- As of July 2017, the Property was 91% leased to 34 tenants and anchored by Kroger, Rose’s Express, Badcock Furniture and Planet Fitness. The tenants occupy 28.5% of rentable square footage (“RSF”), 16.4% of RSF, 13.8% of RSF, and 9.6% of RSF, respectively.
- Kroger, who occupies 59,134 square feet, is one of the world's largest grocery retailers with a market capitalization of $21.3 billion and annual sales in 2016 of more than $115.3 billion, according to its annual reports. Kroger has nearly 2,800 grocery retail stores in 35 states under nearly two dozen banners.
- Upon acquisition the Sponsor intends to gradually increase cash flow by leasing up the remaining vacant space and increasing rents upon renewal for existing tenants who are currently paying below-market rent. Additionally, the Sponsor intends to pursue opportunities to optimize cash flow and/or proceeds on several outparcels on the site, which they believe are currently being underutilized.
- The Sponsor is a vertically-integrated real estate investment and property management company, whose partners have over 80 years of combined experience in real estate investment management, commercial property management and leasing. They own and operate 32 class A and B grocery and discount anchored neighborhood and community shopping centers totaling 3.2 million square feet, primarily located in secondary markets in the Southeast US.
Investment Summary
- On July 2, 2019, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 14%.
Original Investment Highlights
- MogulREIT I has acquired a $3,549,300 mezzanine debt investment related to the acquisition and redevelopment of a proposed 114,858 square-foot community center located in Corona, CA.
- The mezzanine debt investment is interest-only throughout the full 84 month term of the loan.
- Approximately $661,000 of the mezzanine loan is recourse to the sponsorship group. The Sponsor has a 25 year track record at a prominent real estate firm and has equity interests in over $250MM of assets. The Sponsor states he has personally brought the equity to this transaction without syndicating any portion to third parties.
- The Property is currently 64% pre-leased to four tenants including Chuze Fitness and Aldi.
- Chuze Fitness (“Chuze”) is a growing gym operator that was founded in 2008 in Carlsbad, California and is family owned and operated. According to the company website, as of August 2017, Chuze has twenty-three total gyms: eight gyms in San Diego County, four gyms in Orange County, two in the Inland Empire, four gyms in Tucson and five gyms in the Denver area.
- Aldi is a leading global discount supermarket chain with almost 10,000 stores in 18 countries. The chain is based in Germany and founded in 1946 by brothers Karl and Theo Albrecht. It is one of the world's largest privately owned companies. According to the company website, Aldi has doubled its presence in the United States over the past decade, to bring its total number of stores to 2,000, not including its associated Trader Joe’s brand. In June 2017, the company announced they plan to invest $5 billion to open nearly 900 stores and remodel hundreds more in the United States over the next five years.
- The mezzanine loan proceeds will be used to partially fund a $9.4 million capital expenditure plan that the sponsor intends to execute to redevelop the property to meet Class-A standards. The capital expenditure plan includes the renovation of the main building’s interior and exterior, implementation of seismic and structural upgrades, and the addition of new shop space and a new fast food outparcel.
- The mezzanine loan will be disbursed in phases upon completion of certain benchmarks by the sponsor. Of the total $3,549,300, approximately $819,196 was funded at close and the additional $2,730,104 will be distributed throughout the term of the loan.
- The mezzanine debt investment has a fixed interest rate of 14.0% and a remaining term of approximately 82 months as of the acquisition date of August 17, 2017.
Investment Summary
- On February 6, 2020, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 8.5% from November 15, 2017 to January 31, 2019 and LIBOR plus 8.5% from February 1, 2019 to February 6, 2020.
Original Investment Highlights
- MogulREIT I has acquired a $4,490,000 senior loan investment (the “Investment”) related to the refinance and renovation of a 16-unit multifamily property located in Chula Vista, CA. (the "Property").
- The business plan is to rehabilitate the property by addressing all deferred maintenance items and substantially improving and modernizing the townhomes' interiors, exteriors, and landscaping. Upon completion of the capital expenditure plan, the Property is anticipated to offer unique features including townhouse style units, a two-car garage, gated entry, and a dog run.
- The Borrower acquired the asset in April 2017 from the original owner and anticipates using the refinance proceeds to (1) pay off an existing seller carry and (2) to repair and renovate the Property.
- The Borrower is a San Diego native with over ten years of real estate experience and has facilitated over $200 million in real estate transactions over his career. The Property will be managed by an affiliate of the Sponsor.
- The initial term of the loan is 24 months with one 12-month extension option.
- The Investment has a remaining term of 24 months as of the acquisition date of November 15, 2017.
- The Investment is interest-only throughout the entire term.
Investment Summary
- On July 29, 2020, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 8%.
Original Investment Highlights
- MogulREIT I has acquired a $4,750,000 senior loan investment (the “Investment”) related to the acquisition and renovation of a mixed use property located in the Sunset District of San Francisco, CA (the "Property"). The Property features 11 multifamily units above two commercial retail spaces on the ground floor.
- The business plan is to add value to the Property by converting the five existing garage spaces into two additional multifamily units via the City of San Francisco's Accessory Dwelling Unit ("ADU") ordinance. The Real Estate Company also plans to convert four currently vacant one-bedroom/one-bathroom units into two-bedroom/one-bathroom units.
- The Real Estate Company acquired the asset in February 2018 and intends to complete the proposed business plan, stabilize the Property, and exit the investment before loan maturity in three years.
- The Real Estate Company is based locally in San Francisco and focuses on finding and executing value-add multifamily and mixed-use real estate opportunities in primary urban cores within the Bay Area.
- The initial term of the loan is 36 months with one 12-month extension option.
- The Investment is interest-only throughout the entire term.
Investment Summary
- On January 31, 2020, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 11% for the current pay interest and 3% for the payment-in-kind interest.
Original Investment Highlights
- MogulREIT I has acquired a $1,900,000 preferred equity interest (the "Investment") related to the acquisition and redevelopment of an existing 27,080 square feet retail center located in La Habra, CA (the "Property").
- Upon close, the Real Estate Company intends to execute a value-add business plan which is expected to renovate and reposition the Property into a lifestyle center tenanted with popular modern food concepts which cater to the surrounding demographics. The business plan includes a $1,100,000 renovation budget and anticipated future leasing dollars.
- The Real Estate Company intends to vacate the Property in its entirety. MogulREIT's investment has been structure to provide current distributions of its accrued preferred return.
- The preferred equity will be contribued in phases to the Real Estate Company upon completion of certain benchmarks. Of the total Investment, approximately $1,500,000 million was funded at close and the additional $400,000 is anticipated to be distributed throughout the term of the hold period for capital expenditures. The senior lender has additional funds reserved for the remainder of the capital expenditure budget, as well as all anticipated future leasing costs.
- The Real Estate Company is based in Southern California. The two principals grew up just a few miles from the Property and thus have extensive knowledge of the immediate area.
- The Real Estate Company is personally funding all of the equity.
- The Investment has a remaining term of approximately 48 months as of the acquisition date of March 16, 2018.
Investment Summary
- On July 16, 2019, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 12%.
Original Investment Highlights
- MogulREIT I has acquired a $2,275,000 preferred equity interest (the "Investment") related to the acquisition and renovation of a 110-unit apartment community located in Tucson, AZ (the "Property").
- The Real Estate Company’s business plan is to bring in-place units to market rents and renovate all 110 units over a three-year period. The Real Estate Company has budgeted approximately $2.1 million ($19,000/unit) to be allocated towards interior and exterior capital improvements. Unit interior upgrades include new countertops, doors, flooring and refaced cabinets. Exterior/amenity improvements are to consist of new paint and landscaping, roof repairs, new fitness center and renovations to the clubhouse and pool area. Post-renovated rent increases are anticipated to be $1,127 per unit.
- The Property was built in 1981 and is comprised of one, two- and three-bedroom floor plans with an average unit size of 1,274 square feet.
- As of March 2018, the property is 87% occupied with an average in-place rental rate of $978 per unit.
- The Real Estate Company specializes in value-add transactions throughout the Western US with a portfolio of 1,272 multifamily units, 415 of which are in the Tucson market.
- The Real Estate Company has secured a senior loan of $9,100,000, which includes a $2,101,000 holdback for property renovations. The loan has a three-year term with two 12-month extensions.
- The investment has an estimated hold period of approximately three years as of the acquisition date of March 16, 2018.
Investment Summary
- On June 9, 2020, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 12%.
Original Investment Highlights
- MogulREIT I has acquired a $1,700,000 preferred equity interest (the "Investment") related to the acquisition of a 70,760 square foot office building located in Virginia Beach, VA (the "Property").
- The Real Estate Company’s business plan is to hold the Property through tenant renewal, then sell or refinance the asset with a new five-year term.
- The Property is currently 100% leased by a single tenant, Amerigroup. Amerigroup is a wholly owned subsidiary of Anthem Group, a publically traded company that has provided a corporate guarantee for the lease through the entire lease term. Amerigroup has been headquartered at the Property since 1995.
- The Property was built in 1989 and is a 4-story class A office building. Amenities at the Property include ample parking, a café and multiple dining areas.
- The Real Estate Company reports over 30 years of combined experience in real estate and private equity. Individually, they report having acquired and overseen asset management of over $3.5 billion in real estate and provided capital markets advisory services on over $2.0 billion of investments across a multitude of assets including multifamily, office, industrial, hospitality and lodging, and land developments.
- The Real Estate Company has secured a senior loan of $6,500,000. The loan has a three-year term and a 30-month extension.
- The Investment has an estimated hold period of approximately three years as of the acquisition date of 5/21/2018.
Investment Summary
- On December 12, 2017, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of LIBOR plus 8.5%.
Original Investment Highlights
- MogulREIT I has acquired a $1,900,000 bridge loan investment to facilitate the refinancing of an 83.8% occupied 29,381 square foot retail building that is within a shopping center that is anchored by Big Lots and a regional grocery store.
- The interest-only bridge loan has a floating interest rate of 8.5% plus one-month LIBOR with a floor rate of 1.0%.
- The term of the loan is 18 months with one six-month extension which may be exercised by the Borrower upon meeting conditions to extend.
- Fitness Evolution, the largest tenant, has executed a 15-year lease agreement to occupy 51.0% of the leasable square footage. Fitness Evolution has undergone rapid growth in the past few years and now has 50 clubs across five states with 37 locations in Northern California.
- The Borrower has agreed to fund approximately $487,000 in tenant improvements, or $32.50 per square foot. As of April 1, 2017, tenant improvements were underway.
- The Borrower intends to refinance MogulREIT I, LLC out of the transaction once the main tenant’s rental concessions have burned off, which coincides with the loan maturity date.
- The refinance allowed the Borrower to pay off the existing senior loan, secure dollars for tenant improvements and capital improvements to the common areas, as well as to fund an interest reserve that will cover the period until the expiration of Fitness Evolution’s free rent period. The Borrower will be retaining approximately $600,000 of cash equity in the deal.
- The loan is full recourse to the Borrower and includes a carveout guaranty for bad boy acts, environmental matters, and a failure to meet the conditions necessary to fund Fitness Evolution’s tenant improvements.
- Since 2013, the Borrower has acquired four commercial properties in the Fresno market including the acquisition of the Big Lots building, the junior anchor, on the adjacent parcel within the same shopping center.
Investment Summary
- On March 29, 2017, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 11%.
Original Investment Highlights
- MogulREIT I has acquired a $3,915,000 mezzanine loan to finance the conversion of an existing industrial asset to a two-level 896-unit self-storage facility in Garden Grove, California.
- The investment has a 11% fixed interest rate through July 2018 and a 12.5% fixed interest rate for the remaining 60 months.
- The property was originally built in 1973 and is situated on a 3.30-acre site. The sponsor of the project intends to perform extensive improvements and convert the property from industrial to self-storage. The first floor will be 383 units and the second floor will be climate controlled with 513 units.
- The sponsor and its affiliates have designed, developed, owned and managed approximately 100 self-storage facilities. Furthermore, they own another storage property close to this property in Westminster.
- The sponsor plans to sell the property after the conversion and has an executed a (non-binding) letter of intent with a self-storage REIT. In the event it cannot sell the property upon conversion, we believe it is equipped to lease up and manage the asset during any extended marketing period.
Investment Summary
- On June 13, 2018, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 11.75% from June 20, 2017 to December 19, 2017 and 12.25% from December 20, 2017 to June 13, 2018.
Original Investment Highlights
- MogulREIT I has acquired a $1,350,000 junior participation in a loan secured by a first mortgage related to the refinancing and redevelopment of a four-property portfolio located in the Bushwick neighborhood of Brooklyn, NY (the “Properties”).
- The 12-month loan has a fixed interest rate of 11.75% throughout the first six months and 12.25% through months seven to twelve. The loan features two six-month extensions at 12.75% and 13.25%, respectively. The investment has a remaining term of approximately 12 months as of the acquisition date of June 20, 2017.
- The loan will be used to fund the completion of an existing renovation plan and retire a construction loan nearing maturity. The Sponsor intends to renovate the exterior, make structural improvements, and reconfigure units. All construction plans have been approved by the city and renovations are currently underway.
- The Properties are within walking distance of multiple subway stops including the Myrtle – Wyckoff Avenue subway station (L train – one block) and the Seneca Avenue subway station (M train – four blocks).
- The Sponsor has over 12 years of experience as owners/operators in the Brooklyn market. The Sponsor reports that they have a current portfolio of 41 properties totaling over 445 multifamily units and over 450,000 commercial square feet. They estimate their assets under management to be $512 million.
- The Properties were originally purchased in 2015 and over $140,000 of additional equity was added during the recent June 2017 refinance. The Sponsor and its limited partners have contributed over $4 million of equity, or roughly 32% of total capitalization.
Investment Summary
- On March 16, 2020, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 12%.
Original Investment Highlights
- MogulREIT I has acquired a $3,000,000 preferred equity investment related to the acquisition of a 382,884-square foot retail center in Waterbury, CT (the “Property”). The Property consists of three multi-tenant strips (totaling 17 suites), three out parcels, and a gas station, situated across 50.5 acres.
- The business plan is to acquire a well-maintained retail asset with value-add potential at a discount to replacement cost. The Real Estate Company plans to add value to the Property by addressing tenant improvements and leasing commissions associated with a retention and lease-up strategy. As of March 2018, the Property is 77.1% leased to tenants including Walmart (on a ground lease) and Stop & Shop. Wal-Mart Stores, Inc. operates 11,593 stores, and occupies 37% of the Property. The Stop & Shop Supermarket Company is one of the region's largest supermarket chains, with approximately 375 outlets, and occupies 18% of the Property.
- The Real Estate Company secured the Property in March 2018 and, upon stabilization, plans to exit this investment via sale or refinance in five years or less.
- The Real Estate Company is based in New York and focuses on finding and executing on commercial investment opportunities primarily in the New York market.
- The preferred equity investment is interest-only throughout the entire term.
Investment Summary
- On March 6, 2020, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 13%.
Original Investment Highlights
- MogulREIT I has provided a $2,500,000 mezzanine debt loan (the "Investment") related to the acquisition and renovation of a five-building, 223,711 square foot office portfolio in Riverside, CA (the "Portfolio").
- The Real Estate Company’s business plan is to execute a lease-up of six suites between 2,000 and 7,000 square feet and one 12,000-square foot suite, as well as a renovation of the common areas. The Real Estate Company has budgeted approximately $3.4 million to be allocated towards tenant improvements and leasing commissions and $1,000,000 for common area renovation.
- The Portfolio was built between 2003 and 2006 and is comprised of four three-story buildings and one single-story building.
- As of October 2018, the Portfolio is 85% occupied with an average in-place rental rate of $27.81 per square foot.
- The Real Estate Company specializes in investments throughout the Western US, with a focus on Arizona, California, Colorado, Nevada and Texas, with a portfolio of 1.5 million square feet of office, multifamily and hotel properties.
- The Real Estate Company has secured a senior loan of $39,625,000, which includes a $6,120,000 holdback for tenant improvements, leasing commissions, and common area renovations. The loan has a two-year term with three 12-month extensions.
- The investment has an estimated hold period of approximately two years as of the acquisition date of 10/22/2018.
Investment Summary
- On September 18, 2018, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 10.5%.
Original Investment Highlights
- MogulREIT I has acquired a $1,450,128 preferred equity investment related to the acquisition of a 111,451 square foot flex building that is 100% leased to the Animas Corporation on a triple net basis through March 2021.
- The Animas Corporation is a wholly owned subsidiary of Johnson & Johnson and specializes in the design, development, and distribution of insulin pumps for patients with diabetes. Johnson & Johnson acquired Animas in a cash-for-stock merger for an estimated $518 million in 2006.
- The preferred equity investment has a fixed preferred return of 10.5%. With nearly four years of term remaining, the preferred equity investment fully amortizes in October 2020, five months prior to the tenant’s lease expiration date.
- The Animas Corporation has leased the premises since 2003 and their lease features annual increases of approximately 3.0%.
- The sponsor and its affiliates have previously acquired 12 assets with a combined value of $56 million, and specialize in acquiring office and retail assets with long term investment objectives. This is Realty Mogul’s second transaction with the sponsor. Synchrony Financial, the first transaction with the sponsor, was previously acquired by MogulREIT I.
- The Sponsor plans to hold the asset long term.
- The lease is a triple-net lease. As typical with such leases, the tenant carries all property taxes, insurance, and maintenance expenses, typically resulting in lower landlord expenses when compared to other types of leases.
Investment Summary
- As of April 17, 2020, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of LIBOR plus 11%.
Original Investment Highlights
- MogulREIT I has provided a $3,600,000 secured second mortgage (the "Investment") related to the acquisition of an existing 153,840 square foot grocery anchored retail center located in Fresno, CA (the "Property").
- The Property is currently 91% leased to a diversified rent roll that provide a variety of uses to customers including grocery, discount shopping, gasoline, and fast food. The tenant roster includes SaveMart, Starbucks, Dollar Tree, and dd's Discounts.
- Dollar Tree and dd's Discounts comprise roughly 20% of the Property's rentable square footage and possess investment grade credit ratings.
- Upon close, the Real Estate Company intends to execute a value-add business plan to sell off individual outparcels before selling or re-financing the remaining collateral.
- The Real Estate Company is based in the Central Valley and reports a real estate portfolio of over $136 million. The Real Estate Company has gone full cycle on another $41 million of real estate properties.
- The Investment has a remaining term of approximately 21 months as of the acquisition date of November 19, 2018.
Investment Summary
- On October 15, 2020, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of LIBOR plus 6.5%.
Original Investment Highlights
- MogulREIT I has acquired a $3,950,000 senior mortgage loan in connection with the acquisition of a 20,000 square-foot Class C office building located in Portland, Oregon.
- At closing, the property was 100% owner-occupied by the seller. The borrower executed a 10-year lease for the entire building with American Medical Concepts (AMC), a medical device company located in nearby Wilsonville, Orgeon.
- The business plan is to (i) acquire the property and execute a light capital improvement plan to prepare AMC's space for occupancy, (ii) deliver the space to AMC per the lease agreement and (iii) refinance the senior loan in order to hold the property long-term for cash flow.
- The initial term of the loan is 36 months with one six-month extension option.
- The Investment is interest-only throughout the entire term.
Investment Summary
- On June 3, 2019, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 11%.
Original Investment Highlights
- MogulREIT I has acquired a $1,500,000 preferred equity investment related to the acquisition of a 55,000 square foot Class-A flex building located in Syracuse, NY (the “Property”).
- The preferred equity investment has a fixed interest rate of 11.0% and a remaining term of approximately 60 months as of the acquisition date of June 28, 2017.
- The preferred equity investment features 24 months of interest-only followed by a 10-year amortization schedule.
- The Property is currently 100% leased to JADAK Technologies (“JADAK), a wholly-owned subsidiary of Novanta, Inc. (“Novanta”), on a NNN basis through 2029. The Property serves as JADAK’s headquarters and primary manufacturing hub.
- JADAK provides machine vision, RFID, barcode scanning, printing, and color and light measurement products and services for original equipment manufacturers (OEMs). The company designs and manufactures embedded detection and analysis solutions to help customers solve unique inspection, tracking, scanning, and documenting challenges in the healthcare market.
- The 55,000 square foot flex building consists of 40,000 square feet of office space and 15,000 square feet of industrial space. The industrial portion of the building was originally developed in 2008 as a build-to-suit. The remaining 40,000 square feet of office space was built as part of the tenant’s expansion in 2014.
- JADAK was acquired by Novanta in 2014 for $93.7 million. As of March 2017, Novanta had a market capitalization of approximately $930 million.
Investment Summary
- On December 31, 2021 our investment was paid off via an equity redemption by an affiliate of the Sponsor in the amount of $10,146,051.
- We acquired the Property for $33,350,000, or $114 per square foot. The equity redemption had an implied property value of $49,960,450, or $171 per square foot.
Original Investment Highlights
- On July 9, 2020, we acquired a $6,000,000 investment in NV Energy NNN, a 292,000 square-foot single-tenant office property 100% leased to NV Energy, a Berkshire Hathaway subsidiary.
- We purchased this investment at the height of the pandemic, and we strategically targeted this asset due to its long-term lease with high-quality tenancy to provide cash flow for the REIT.
Investment Summary
- On May 18, 2022, the investment was paid off in full.
- All interest payments were paid in full during the hold period at an interest rate of 8% for the current pay interest and 4% for the payment-in-kind interest.
Original Investment Highlights
- RealtyMogul Income REIT acquired a $2,323,030 preferred equity investment in connection with the acquisition and renovation of Shiloh Park Apartments, a 73-unit apartment community located in Plano, Texas.
- The real estate company sponsoring this transaction viewed it as an opportunity to acquire a well-maintained multifamily asset with value-add potential. The real estate company anticipated using approximately $750,000 to renovate unit interiors, including new flooring and appliances, and complete exterior improvements, including new signs and lighting, painting, HVAC units and landscaping. In addition to the physical improvements, the real estate company planned to implement a number of initiatives to improve operating cash flows, including improving both online and physical marketing, building a stronger tenant profile, controlling operating expenses and driving rent increases through tenant turn-over and conversion of below market rents to market.
- The term of the preferred equity investment was 10 years with a current fixed interest rate of 8% per annum plus 4% per annum of payment-in-kind interest in years one through five, 10% in year six, increasing by 2.0% each year thereafter.
- The investment was 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 have a limited operating history and there is no assurance that we will achieve our investment objectives.
- We may allocate the net proceeds from this offering to investments with which you may not agree.
- This is a blind pool offering as we have not identified all of the investments we intend to make. As such, you will not have the opportunity to evaluate our future investments before we make them, which makes your investment more speculative.
- Our ability to implement our investment strategy is dependent, in part, upon RM Securities’ ability to successfully execute sales of our common shares 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.
- 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.
- 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 RealtyMogul Apartment Growth REIT, Inc., respectively, 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 common 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 the consent of shareholders, which could result in investments that are different from, and possibly riskier than, those described in this offering circular.
- We have paid, and may continue to pay, distributions from sources other than cash flow from operations, including borrowings, proceeds from asset sales or the sale of our securities in this or future offerings, which may reduce the amount of capital we ultimately invest in real estate and may negatively impact the value of your investment in our common shares.
- 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 amount that you might receive for your shares in a market transaction.
- Although we presently intend to complete a transaction providing liquidity to shareholders in the future, our LLC Agreement does not require our board of managers to pursue such a liquidity transaction.
- If we fail to qualify as a real estate investment trust (“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 shareholders 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.
- The compensation arrangements for our Manager, its affiliates and the personnel of our Manager 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 November, 2024.
2 Aggregate value of properties owned by the Income 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 properties underlying investments acquired since the most recent NAV per share was announced are based on the most recent purchase prices. The aggregate value of the properties underlying loans made by the Income REIT is based on independent appraisals dated within six months of the original acquisition dates by RM Adviser, LLC, Realty Mogul, Co. or Realty Mogul Commercial Capital, Co., as applicable. 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 Shares – Valuation Policies.”
3 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 Income 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 Income 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 monthly. Actual returns may differ materially from hypothetical returns. Hypothetical returns are from the Income REIT's inception date through November 15, 2024. There is no substitute for actual returns. Past hypothetical performance is not a guarantee of future returns.