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Monday, 24 June 2019

Non-Traded REITs Sponsored by Crowdfunder Buys El Paso, Texas, Apartments

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Commercial Real Estate Direct Staff Report

A pair of non-traded REITs sponsored by Realty Mogul have made their first direct acquisitions.

The Los Angeles company, one of the first real estate crowdfunding firms, purchased two apartment properties with 550 units in El Paso, Texas, from Philip Salley, a Del Mar, Calif., investor.

It bought the 240-unit La Privada Apartments through MogulREIT I Inc., which launched in 2016, and the 310-unit Terrace Hill Apartments through MogulREIT II Inc., which was formed a year later. La Privada, at 9030 Betel Drive, was 93 percent occupied at the end of April, while Terrace Hill, at 4111 Westcity Court, was 94.8 percent occupied. Realty Mogul plans on renovating units and common areas at both properties.

Until now, the crowdfunding platform and its REITs provided only debt against properties, as well as made joint venture or preferred equity investments. Jilliene Helman, Realty Mogul's chief executive, said the company will continue to pursue those strategies, but it also wanted the option to acquire properties on its own, especially if it couldn't find a partner to operate the asset.

"We were getting transactions submitted by individuals who we didn't think had the experience to operate and manage the properties," said Helman, who co-founded the company in 2013. "We're very much still in the business of working with third-party operating partners, but we now have the ability to step in and do our own deals."

RealtyMogul's direct acquisitions team is led by Michael Schoellhammer, who has been a managing director at the company for the past two years. He previously worked at Standard Management Corp., a Los Angeles real estate investment firm, where he focused on multifamily acquisitions.

For its direct acquisitions unit, Realty Mogul is pursuing apartment properties valued at $10 million to $30 million throughout the United States. The company has not hired additional staff for the unit, but it has transitioned existing employees to serve as underwriters and asset managers.

Realty Mogul has retained FPI Management as the property manager for the El Paso apartments it recently acquired. It plans on hiring property managers for future acquisitions.

Since its founding six years ago, Realty Mogul has invested $420 million in 304 properties through its crowdfunding platform and REITs. Helman said 172 of the company's investments have gone full cycle, but she would not disclose the average rate of return.

The company offers accredited investors an opportunity to invest in individual properties through private placements on its crowdfunding platform, while accredited and non-accredited investors can have access to a diversified portfolio with the REITs, which have a minimum investment of $5,000. MogulREIT I and II are perpetual-life vehicles, meaning they're not planning to list shares or liquidate holdings.

Realty Mogul has raised $52.7 million from 4,812 investors through MogulREIT I. The REIT's portfolio consists of 18 common equity, preferred equity and debt investments in office, retail and apartment properties in Arizona, California, Colorado, Connecticut, Florida, Georgia, Ohio, Oregon, Texas and Virginia. It also has completed three debt and two preferred equity investments.

MogulREIT II, meanwhile, only makes equity investments in apartment properties. It has raised $17.3 million. The REIT's current portfolio consists of seven apartment properties with 1,538 units in Connecticut, New York and Texas. It completed its first investment earlier this month, paying off the balance of a $1.5 million preferred equity investment in the 31-unit Ashland Apartments in Chicago.

Comments? E-mail Tim Casey or call him at (267) 397-3347.



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Additional Info

  • Syndicate to Realpoint: No
  • Cities: El Paso
  • States: Texas
  • Sector: Multifamily
  • Subject: Property Acquisitions (ACQ)
  • Private: No
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Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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