Questions? Feedback? powered by Olark live chat software

iintoo Kerrville RREAF LP

YouTube Video Preview

Funded

Offering completed on November 30, 2017.

Share this pitch


* This private placement investment is only suitable for potential investors who are familiar with and willing to accept the high risk and illiquidity associated with private placement investments. Please review Terms of Use for full disclosures. Also, please review iintoo Kerrville RREAF LP offering documents for full detailed disclosures/risks before you make any investments.


High Concept Pitch

Purchasing a 6.42-acre site in Kerrville, Texas, building a 120-unit multi-family complex on the land, renting the units within 15 months and selling the property within 36 months.

Executive Summary

Image result for kerrville, texas

Image result for kerrville, texas

Kerrville, Texas

Purchasing a 6.42-acre site in Kerrville, Texas, building a 120-unit multi-family complex on the and, renting the units within 15 months and selling the property within 36 months.

Asset Type Min. Investment            Term                              Projected Annual Returns
Multi Family Development $25,000 36 Months 13.70%

 

Location:

Amelia Ct Kerrville, Texas USA 

Investment Summary:

Purchasing a 6.42-acre site in Kerrville, Texas, building a 120-unit multi-family complex on the land, renting the units within 15 months and selling the property within 36 months.‏

Milestones:

            9/9/2017                  Closing                  15 Months               18 Months               36 Months

            Raise                                              Projected End of          Contractual        Projected Project

                                                                      Construction         Buy-Out Option          Completion

Capital Stact:

Source of Finance Amount
iintoo Equity $1,698,000
iintoo Debt $1,302,000
Sponsor $1,528,500
Property Owner Mortgage $8,348,500
Total $12,877,700

 

Profit Distribution: 60/40

Profit distribution for the project will be 60% for all equity investors and 40% for the sponsor.

Preferred Returns: 10%

Pursuant to the legal structure and payout schedule, all equity investors will be entitled to a preferred return equal to a 10% annual yield on its investment. 

Investment Structure:

iintoo's Investment in JV Deal Initiation Costs Total Capital Raise Min. Investment
$1,930,000 $232,000 $2,162,000 $25,000

Project Costs:

Acquisition        Associated Costs Total    
$1,650,000 $512,000 $2,162,000      
 

Key Points:

  • Sixth investment with an experienced sponsor 
    • RREAF Holdings is an experienced sponsor company, specializing in the development, renovation, and management of multi-family assets. In its five deals with iintoo, the company has performed according to the principles set out in its business plans. 
    • Contractual obligation by the sponsor company to meet all business plan goals, including deadlines, expenses, cash flow distribution, and reporting. 
  • High demand for new rental units in the multi-family market 
    • A new multi-family property - during the last two years, the average occupancy rate in the vicinity of the property has been approximately 98%, due to a lack of new multi-family developments in the area (the average age of multi-family properties in Kerrville is 14 years). 
    • Occupancy rates in the market were relatively high (approximately 88%) even during the crisis of 2008-2010.
    • Cash flow distribution after the construction phase - the asset is expected to generate quarterly income 15 months from the start of the investment and until exit.
  • A growing market
    • Kerrville is a part of Texas Hill Country, an area with one of the highest economic growth rates in the United States.
    • Stable market - the unemployment rate in the city of Kerrville has been consistently lower than the United States average, including during the crisis of 2008.
    • Rent prices on the rise - during the last two years, rent prices increased by an average of 2% per year.
  • Investor Protections
    • Ownership of the asset via a designated company held by the investors.
    • The principal of the sponsor has provided a personal guarantee of the obligations of the sponsor under the JV agreement.
    • iintoo will oversee and monitor the project until its completion and provide investors with quarterly progress reports.

Property Summary:

Sendero Ridge Apartments:

  • Number of Units: 120
  • Land (Acres): 6.42
  • Rentable Square Feet: 99,991
  • Gross Square Feet: 111,031
  • Density (Units/Acres): 18.69

The city of Kerrville is approximately one hour northeast of San Antonio and two hours west of Austin. It is considered the capital of Texas Hill County, an area with one of the highest economic growth rates in the United States.

Nestled on the banks of the Guadalupe River, Kerrville is a vibrant community. It is best known for its beautiful parks, such as Kerrville-Schreiner Park, Louise Hays Park, and Flat Rock Park. The parks line the Guadalupe River, which runs directly through the City and is treasured by those who live in and visit Kerrville.

According to the 2016 census, the population of Kerrville is 51,300.

Approximately 25% of the city's residents work in retail, 15% in finance, 7% in education and 5% in healthcare.

  • Swimming Pool
  • Park
  • Offices for Rent to Residents
  • Fitness Center
  • Clubhouse

Major employers include:

  • Schreiner University: A private liberal arts university with an enrollment of approximately 1,300 graduate and undergraduate students
  • Peterson Regional Medical Center: A private healthcare center established in 1949
  • HEB: Supermarket chain with 350 stores throughout Texas
  • James Avery Craftsman: Large jewelry manufacturer and retailer with 270 stores, opened a state-of-art center in Kerrville in 2016
  • Kerrville Independent School District

THe transportation options enable residents to take advantage of Kerrville's central location between Austin and San Antonio.

The property is situated on Texas State Highway Loop 534, which bypasses eastern Kerrville. The highway's major intersections are Interstate 10, a cross-country highway stretching from Santa Monica, California to Jacksonville, Florida and passing through San Antonio and Houston, Texas State Highway 16, Texas State Highway 173, and Texas State Highway 23.

Aerial Maps:

Site Plan:

Building A - Elevation:

Building B - Elevation:

Building C - Elevation:

Sponsor ID:

Seniority:                     Over 40 Years

Expertise: RREAF Holdings is a privately-held commercial real estate firm based in Dallas, Texas, with a history of success in the acquisition, development, asset management, ownership, repositioning, and financing of complex real estate projects throughout the United States.

Unit Track Recor:      Since 2010, the company has built $175M portfolio, including 14 hotel properties totaling over 1,000 rooms, four multi-family properties totaling 510 units, and 150 acres of developable land throughout Texas, Tennessee and Florida. The company has successfully completed several development projects, including a multi-family property and two hotels. During the next few months, the company is going to break ground on two upscale full-service hotels, two senior-living communities, and a self-storage property. It will simultaneously continue to aggressively grow its portfolio via its programmatic multi-family and hospitality asset-acquisition platforms. The company owns a subsidiary that specializes in construction and renovation.

Region of Expertise:  Texas, Tennessee, Florida, Alabama

Kip Sowden - Managing Partner Brandon Miller - Managing Partner
Mr. Sowden has over 30 years of experience in commercial real estate with a strong background in real estate brokerage and mortgage finance, acquisition, development, and asset management. He has been active in sales of more than 11 million square feet of commercial real estate and over 25,000 apartment units throughout the United States Mr. Miller joined RREAF as Partner in 2013 playing an integral role in the strategic vision and growth of company's real estate portfolio. Drawing on years of experience in the real estate finance and capital markets, he is responsible for the oversight of the company's underwriting, structuring, and financing for company's acquisitions and developments.

 

Similar Projects Completed by the Developer:

Developed by RREAF - Lotus Village Apartments, Austin, TX
Developed by RREAF - La Quinta Inn & Suites, Andrews, TX
Developed by RREAF - Marriott Delta Hotel, Southlake, TX

 

Prior Collaboration Between the Sponsor and iintoo:

Funded by iintoo - Bent Tree & Harvard House, Big Spring, TX
Funded by iintoo - Fountaingate Witchita Falls, TX
Funded by iintoo - Arden Ridge & Park on Paint Rock, San Angelo, TX

 

Market Summary:

The multi-family market in Kerrville is characterized by high occupancy rates and a lack of new development to meet growing demand. 

Over the past two years, occupancy rates have averaged 98.45%.  Due to the lack of new supply in the market, occupancy rates are expected to maintain a high average of over 95% in the near future.

The asking rent price has increased by over 2% annually over the past two years, with the asking rent in the area averaging $741/unit.

The market is strong and stable; during the crisis of 2008 and the two years following the crisis, occupancy rates remained relatively high at 88%. 

Several factors have contributed to the market's stability, including:

  • Population Growth: Kerr County has an estimated 2016 population of 51,309, which represents an average annual increase of 0.6% over the 2010 census.
  • High Employment Rates:  between year-end 2005 and the present, employment rose by 254 jobs, equivalent to a 3.0% increase over the entire period. There were gains in employment in six out of the past ten years despite the national economic downturn and slow recovery.

5 Fascinating Fact About Texas:

  • Were Texas an independent country, it would have the 10th largest economy in terms of GDP (ahead of Canada, South Korea, Russian, Australia, Mexico and Spain).
  • The largest technology exporter in the United States - for the third year running, Texas has surpassed California's Silicon Valley in terms of hi-tech exports, with $6.3 billion in exports in 2016.
  • The second largest workforce in the United States - between 2005-2015, the population of Texas increased by 1.3 million and created 2.1 million new jobs.
  • Beyond oil - The state of Texas is the largest exporter of goods and services among all the states, with $248 billion in exports in 2015, which constitutes 16% of US exports. The oil industry contributed only 16% of Texas's exports that year. 
  • Top-ranked cities - Texas' 4 largest cities, Houston, Dallas, Austin and San Antonio, are all on Forbes's Top Ten Best US Cities 2016. They are also on Market Watch's list of the 20 best US cities for business.

Kerr County - Lower Unemployment Rate Than the Texas and US Average:

Kerr County - Higher Occupancy Rates Than the US and San Antonio Average:

Projected Cash Flow (US$):
Projected Cash Flow Year 1 Year 2 Year 3
Rental Income - 1,318,598 1,539,564
Payroll - 127,969 130,529
Property Taxes - 160,222 163,426
Insurance - 37,454 38,203
Repairs, Maintenance & Turnover - 31,212 31,836
Utilities - 40,576 41,387
Marketing & Administration - 24,970 25,469
Management Fee - 54,813 64,280
Total Expenses - 477,215 495,131
Net Operating Income - 841,383 1,044,434
Asset Management Fee - (27,407) (32,140)
Debt Service - (459,168) (459,168)
Net Cash Flow Before Tax 140,000 354,809 553,126
Project CoC 3.1% 7.8% 12.2%
Expected Cash Flow for iintoo Investors 140,000 267,759 351,284
Expected Cash Flow for iintoo - Debt Investors (10% interest) 140,000 140,000 140,000
Expected Cash Flow for iintoo - Equity Investors - 127,759 211,284
Expected CoC for iintoo - Equity Investors 0.0% 6.6% 10.9%

 

Profit Calculation and Waterfall:

Projected Profit Calculation and Waterfall  
Distribution Waterfall Between iintoo, Sponsor, and Other Investors in the JV  
Third Year NOI 1,044,434
Residual Asset Value @6.25% CAP 16,068,208
Cost of Sales 2.5% (401,705)
Net Sale Proceeds 15,666,503
Profit Calculation  
Net Sale Proceeds 15,666,503
Proceeds from Operation 1,047,935
Total Proceeds 16,714,438
Bank Loan (8,348,500)
Return of Capital (4,528,500)
Total Profits for Distribution 3,837,438
Distribution Waterfall  
Expected Cash Flow for iintoo PREF Equity 420,000
Expected Cash Flow for iintoo Investors 339,043
Expected Cash Flow for Developer and Other Equity Investors 288,892
Return of Remaining Capital Contribution - iintoo PREF Equity 1,400,000
Return of Remaining Capital Contribution - iintoo Investors - Pro Rata 1,260,957
Return of Remaining Capital Contribution - Developer and Other Equity Investors - Pro Rata 1,239,608
Additional Return to iintoo PREF Equity (6% Annually) 252,000
Hurdle Return to iintoo Investor (10%) - Pro Rata 529,600
Hurdle Return to Developer and Other Equity Investors (10%) - Pro Rata 505,934
Equity Share of Profits Above Hurdle Return (60%) - iintoo Share of Profits (30.69%) 653,575
Equity Share of Profits Above Hurdle Return (60%) - Developer Share of Profit (29.31%) 624,368
Developer Share of Profits (40%) 851,962
Total Proceeds - iintoo Investors 4,855,175
Total Proceeds - Developer and Other Equity Investors 3,510,763.19
Total Project Proceeds 8,365,938

 

Profit Distribution - iintoo Investors (US$)

Profit Distribution - iintoo Investors  
Profit Distribution - iintoo Investors (Post Partnership Operating Expenses) 4,846,475
Return of Capital Contribution to iintoo Debt Investors 1,400,000
Interest Payments to Debt Investors 10% Annually (Including iintoo Success Fee) 525,000
Return of Capital Contribution to iintoo Equity Investors 1,930,000
Profit Remaining for Distribution to Equity Investors (Not Including iintoo Success Fee) 991,475
Total Profit Distribution to iintoo Investors 4,846,475

 

Net Cash Flow - Equity Unit ($25,000):

Net Cash Flow - Equity Unit ($25,000) Projected Sale of Asset After 36 Months
Principal 1,930,000
Profit 991,475
iintoo Success Fee (%) 20%
iintoo Success Fee ($) 198,295
Total Return to Investors 2,723,180
Deduction of Principal 1,930,000
Total Profit for 36 Months (Before Tax) 793,180
Target Yield Per Year 13.70%
Net Profit Per Capital Unit 35,274
Expected Profit Per Capital Unit 10,274

 

Ownership:

iintoo's Equity investors are expected to hold a 66.25% stake in the LP associated with the project.

Buy Out:

After 18 months from the beginning of the project, the Sponsor is entitled to a buy-out right at a return to iintoo of 25% IRR upon the equity it invested in the project.

Legal Structure:

The above may include forward-looking statements, including forecasts, evaluations, pro forma figures, estimates and other information relating to future events and issues. Forward-looking statements may relate to, among other things, revenues, earnings, cash flows, capital expenditures and other financial items. Forward-looking statements may also relate to our business strategy, goals and expectations concerning our market position, future operations, profitability, liquidity and capital resources. All statements other than statements of historical facts are forward-looking statements and can be identified by the use of forward-looking terminology such as the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "projected", "will" and similar terms and phrases. Any forward-looking information contained above is based, in addition to existing information of the company, on present company expectations and evaluations regarding future developments and trends and on the interaction of such developments and trends. Although we believe the assumptions upon which any forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our business and operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our performance and whether the forward-looking statements ultimately prove to be correct. Forward-looking statements are based on current expectations and are not guarantees of future performance. Actual results and trends in the future may differ materially from those suggested or implied by any forward-looking statements in the above depending on a variety of factors. All written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. Except for any obligations to disclose information as required by applicable laws, we undertake no obligation to update any information contained above or to publicly release the results of any revisions to any statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of the publishing of the above.

Private placements of securities are intended for accredited investors (for persons residing in the U.S.). Such private placements of securities have not been registered under applicable securities laws, are restricted and not publicly traded, may be subject to holding period requirements, and are intended for investors who do not need a liquid investment. These investments are not bank deposits (and thus are not insured by the FDIC or by any other federal governmental agency), are not guaranteed by the issuer or any third party working on behalf, and may lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the Site. Investors must be able to afford the loss of their entire investment. 

Any real estate investment accessible through the Site involves substantial risks. There can be no assurance that any financial projections, real estate valuations or projected returns viewable through the Site are accurate or in agreement with market or industry valuation, an issuer and/or any third party working on behalf makes no representations or warranties as to the accuracy of such information and accepts no liability therefor whatsoever. Investors should always conduct their own due diligence, not rely on the financial assumptions or estimates displayed on the Site, and should always consult with a reputable financial advisor, attorney, accountant, and any other professional that can help them to understand and assess the risks associated with any investment opportunity accessible through the Site. 

Post a Comment

You must log in to comment.

Comments

No comments yet.

$3,000,000

Raised of $3,000,000
 

Quick Info

  • Investment Goal: $3,000,000
  • Pre-Money Valuation: $12,877,000
  • Security Type: Limited Partnership Interests
  • Location: United States Kerrville, Texas, United States
  • Days Left: Funded
  • Industry: Real Estate

Followers (1) View All