Go-Jo Single Family Tourist hotspot

Summary

  1. IRR:
  2. Equity purchase
  3. Class A, Multi-family
  4. 5 years hold period
  5. $10,000 minimum investment

INVESTMENT

Investment Strategy: Buy and Hold
Projected Hold Period: 5 years
Total Project Budget: ¥2,872,541
Property Type: Single
Distributions to iShinChi Kyoto 168,Goudou-Gaisha: 8% Preferred Return, then 70/30 split
Going-In Cap Rate (Year 1): (NOI/Property price) xxx%
Projected First Distribution: May 2016
Distribution Schedule: Quarterly
Investor Funding Deadline: December 27, 2015
Estimated Closing Date: Feb 15, 2016

Note: Goudou-Gaisha, Japan equivalent of LLC, hereinafter GG

INVESTMENT DETAILS

iShinChi Management Co., Ltd (“Sponsor”) plans to acquire, renovate and stabilise the 2 storey property located at XXX, Shimogyo-Ku, Kyoto City, Kyoto (“the Property”). The Property is located in the Kyoto City, Kyoto, one of the best tourist location in world, with 13 UNESCO World Heritage sites, Japan Cultural Centre and other demand drivers.

  • 10 mins from the train station
  • 40 minute direct train ride to Osaka and Nara.
  • 1.5 hours from Kansai International Airport
  • Less than 5 mins to bus stops – with buses to xx Attractions
  • 15 miles to Port Authority of New York & New Jersey

The Sponsor will handle all aspects of the investment including acquiring the property, implementing a capital improvement plan to renovate interiors, implementing operational efficiencies, and eventually selling the Property. The Sponsor has budgeted ¥1,000,000 for capital improvements and hotel license application. We believe that now is to invest in Vacation rental. With the implementation of professional management, the Sponsor believes that the Property’s operations should improve during the hold period.

The Sponsor plans to hold the property for five (5) years before exiting the investment, but the hold period could be longer or shorter. The investors have the opportunity to participate as equity stakeholders and earn a share of the cash-flow and appreciation. Investors may expect to receive quarterly updates and distributions, with the first distribution expected in June 2016 and on a quarterly basis thereafter.

INVESTMENT HIGHLIGHTS

  • Kyoto has been voted as the world’s best city to visit by Travel + Leisure magazine 2 years in a row.
  • There is shortage of hotel accomodation in Kyoto
  • In Place Cash Flow With Value-Add Potential targeting medium to high value tourist
  • The Property Should Benefit From Implementation of Professional Management and Leasing

 

RISKS AND RISK MITIGATION*

  • Forward-Looking Statements: Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated,” “projected”, “forecasted”, “estimated”, “prospective”, “believes,” “expects,” ”plans” “future” “intends,”, “should,” “can”, “could”, “might”, “potential,” “continue,” “may,” “will,” and similar expressions to identify these forward-looking statements.
  • Illiquid Investment – Transfer Restrictions & No Public Market: The transferability of membership interests in iShinChi Kyoto 168,GG are restricted both by the operating agreement for that entity and by Japan securities laws. In general, investors will not be able to sell or transfer their interests without written approval from the Sponsor. There is also no public market for the investment interests and none is expected to be available in the future. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
  • Local Market Conditions May Impact the returns: Local conditions may significantly affect occupancy, rental rates, and the operating performance of a property. Such risks include (but are not limited to): (i) plant closings, industry slowdowns and other facts that affect the local and global economy; (ii) an oversupply of, or a reduced demand for, similar properties and accomodations; (iii) a decline in tourist arrival, (iv) laws that could inhibit the ability to raise rents or to sell a property; (iv) natural disasters such as earthquake and (v) other economic conditions that might cause an increase in operating expenses, such as increases in property taxes, utilities, compensation of on-site personnel and routine maintenance.
  • Management Risk: Investors will be relying solely on the Sponsor for the execution of its business plan. The Sponsor may in turn rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of iShinChi Kyoto 168, GG will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan.
  • Manager of Realty Mogul 54, LLC Will Participate in Sponsors’ Promote Interest: The manager of Realty Mogul 54, LLC will be entitled to a participation in the value of any excess distributable cash flow and any appreciation of the property realised upon its sale. This could lead to a potential conflict of interest between the manager and Realty Mogul 54, LLC. Investors must recognise and agree to waive and bear the risk of this conflict of interest.
  • Uncertain Distributions: The Sponsor cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 54, LLC) from either net cash from operations or proceeds from the sale or refinancing of the asset. Sponsor, in its discretion, may retain any portion of such funds for tenant improvements, tenant refurbishments and other lease-up costs or for working capital reserves. Sponsor expects to make distributions quarterly.
  • Risk of Interest Charges for Sponsor Capital Calls: The amount of capital that may be required by CG Holdings LLC from Realty Mogul 54, LLC is unknown, and although CG Holdings LLC does not require that its members contribute additional capital to it, it may from time to time request additional funds in the form of loans or additional capital.  Realty Mogul 54, LLC does not intend to participate in a capital call if one is requested by CG Holdings LLC, and in such event the manager of CG Holdings LLC may accept additional contributions from other members of CG Holdings LLC.  Amounts that the manager of CG Holdings LLC advances on behalf of Realty Mogul 54, LLC will be deemed to be a manager loan at an expected interest rate of 10%.  Amounts that are contributed by existing or new members will be deemed to be additional capital contributions, in which case Realty Mogul 54, LLC’s interest in CG Holdings LLC will suffer a proportionate amount of dilution.
  • Uncertain Exit Timing: Although it is anticipated that the Property will be sold at the end of the expected five (5) year hold period, Realty Mogul 54, LLC will not have full control over the timing of the sale of the Property, and therefore we cannot offer assurances of when the exit will occur.  If the Property is not sold after ten (10) years, Realty Mogul 54, LLC may have the right, subject to other contractual limitations such as the loan on the property, to force a sale of the Property or force a sale of the interests of Realty Mogul 54, LLC in CG Holdings LLC.
  • General Economic and Market Risks: While the Sponsor has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not investor sentiment and the capital markets will be favorable to the property at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the Sponsor​​.

Financials

EQUITY BREAKDOWN

PROJECT FUNDING

TOTAL CAPITALIZATION
Acquisition Price ¥30,375,000
Closing Costs & Fees ¥459,704
TI/LC/CapEx Reserve ¥100,000
Immediate CapEx Reserve ¥80,000
Working Capital Reserve ¥51,962
Total Uses ¥11,066,666

DISTRIBUTIONS

FEES

 

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