Reshape Family Office

The Company intends to primarily acquire Investments for which the Manager reasonably believes it can increase cash flows and value over the projected hold period for such Investments, generally through completion of certain capital upgrades and/or improved operations. The Manager anticipates that the Company will target Investments whose owners may be selling the Investments at a point in the cash flow cycle which is not optimal to achieving the highest sales price, but which have a physical condition and operating potential which are otherwise sound. Additionally, the Company may take advantage of certain distressed opportunities that exist in the multi-family marketplace, including opportunities to acquire multifamily properties from distressed sellers at significant discounts to previous pricing due to the COVID-19 pandemic. Such opportunities may include properties in college-dependent markets that have experienced the negative effects of pandemic related closures and hybrid remote learning as well as general over-construction, creating market conditions the Manager believes hit a low point in 2020 21, but expects to improve over the next few years.

The Manager anticipates that it will target Investments that are valued at between $10 million and $50 million, with a total acquisition portfolio valued at approximately $325-$350 million if the Maximum Offering Amount is sold. The Manager believes that this Investment size will target a market segment not traditionally targeted by large, institutional investors who are looking for larger transactions, while also being too large for many local owners to buy. The Manager intends to identify for acquisition Investments that are priced at significant discounts compared to current construction costs, and that may benefit from certain capital upgrades and/or increased management oversight in order to increase property cash flows and values.

There is no assurance that any of these objectives will be achieved.

• Class A-/B+ properties generally built after the year 2000 which allow for apartment unit interior upgrades generally costing between $1,250 and $2,500 per unit that will result in immediate rental increases of $30 to $60 per month and help maintain strong occupancy and tenant credit quality.
• Acquisition cost below replacement cost. An attractive basis below replacement cost has been a fundamental tenet of the Manager’s investment strategy.
• Located in market growth corridors where population and employment growth are significant. • Unique property features, such as strong access, visibility, location, quality and value.
• Financial barriers to entry into the local market, including cost of land and construction costs relative to market rental rates.
• Meaningful rental discounts to the newest class A rental communities that allow for rental increases at the newly upgraded acquisition property while remaining the less expensive renter option. • Properties where the Property Manager’s property and market intelligence and experience has helped identify shortcomings in a potential acquisition’s existing management enabling the Company to potentially reduce expenses and increase revenue.

Company will opportunistically acquire properties in situations where the Manager believes at least one or more of the following characteristics exists that provides the Company an opportunity to acquire attractively priced assets:

• Acquire from sellers with whom the Manager and/or its personnel have a transactional relationship enabling the Company to benefit from the Manager’s relationships.
• Acquire from sellers who need to sell at what the Manager believes to be a non-optimal point in the property cash flow cycle, due to reasons such as hold term limitations and debt maturity.
• Acquire from sellers who have held the property through a 10-year hold period and loan term, many of which are no longer sufficiently capitalized to keep the property well-maintained or take advantage of market rental upgrade potential. The Manager will take the following steps to enable successful deal consummation:
• Complete significant due diligence prior to making the offer to purchase allowing for tight closing timeframes and earnest money deposits that become non-refundable quickly, which assures speed and certainty of closing thereby alleviating seller’s omnipresent concern of a potential “broken” sale.
• Benefit from the strong lender relationships of the Company which allow it to often close acquisitions within forty-five (45) days from the execution of the purchase and sale agreement.

Cash from Operations shall be distributed by the Manager, at such times as the Manager may determine, in the following order and priority:

(1) First, 100% to the Members, in proportion to their accrued but undistributed Preferred Return, until the Members have been distributed an amount equal to their accrued but undistributed Preferred Return;

(2) Second, 100% to the Manager up to the unpaid portion of its accrued Asset Management Fee

(3) Third, 100% to the Members in proportion to their Net Capital Contributions until the Members’ Net Capital Contributions are reduced to zero; and

(4) Thereafter, 75% to the Members, pro rata in accordance with their Percentage Interests (as defined below), and 25% to the Manager.

Investors are encouraged to read and review all risk factors located in the PPM and Memorandum.

Investors should carefully consider the discussion in the PPM Memorandum set forth under “RISK FACTORS.” This Memorandum contains forward-looking statements that involve risks and uncertainties. The Company’s actual results may differ significantly from the results discussed or anticipated in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed under “RISK FACTORS.” In making an investment decision, investors must rely on their own examination of the person or entity creating the Units and the terms of the Offering, including the merits and risks involved.

The economic success of an investment in the Company will depend upon the results of the operations of the Investments, which will be subject to those risks typically associated with investment in real estate. Fluctuations in occupancy rates, rent schedules and operating expenses can adversely affect operating results or render the sale or refinancing of the Investments difficult or unattractive. No assurance can be given that certain assumptions as to the future levels of occupancy of the Investments or future costs of operating the Investments will be accurate because such matters will depend on events and factors beyond the control of the Company and the Manager. Such factors include, among others, the general economic climate, changes in the overall real estate market, local real estate conditions, the continued enforceability of tenant leases, vacancy rates, financial resources of tenants, the availability of financing, changes in interest rates and the availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable, rental rates, rent levels and sales levels in the local areas of the Investments, adverse changes in local population trends, market conditions, neighborhood values, local economic and social conditions, supply and demand for properties such as the Investments, competition from similar properties, interest rates, real estate tax rates, governmental rules, regulations and fiscal policies, including the effects of inflation and enactment of unfavorable real estate, rent control, usage, improvements, environmental or zoning laws, tax laws and hazardous material laws, energy and supply shortages, various uninsured and uninsurable risks including uninsured losses or delays from casualties or condemnation, quality of maintenance, insurance and management services, the attractiveness and location of properties, the quality and philosophy of management, accelerated construction activity, structural or property-level latent defects, acts of God, technological innovations that dramatically alter space requirements, and other risks. Further, if there are commercial tenants at an Investment, to the extent leases at the Investments provide for rents based on a percentage of tenants’ gross receipts, the rental income of the Investments will be dependent, in part, on the level of retail sales achieved by the tenants.

The Units are membership interests in a limited liability company that intends to acquire Investments that are primarily multifamily real estate assets where the Company believes it will be able to add value through certain capital upgrades and/or improved operations or take advantage of certain distressed opportunities that exist in the multi-family marketplace. The Units are being offered until the Offering Termination Date, which is the earlier of (i) the date on which the Maximum Offering Amount of Units is sold, (ii) May 31, 2023 which date may be extended until July 31, 2023 in the sole discretion of the Company, or (iii) the date on which the Company terminates the Offering in its sole discretion. The Company may, in its sole discretion, increase the Maximum Offering Amount from $150,000,000 to up to $200,000,000 of Units. The Units are being offered by the Company at $5,000 per Unit and the minimum purchase is ten (10) Units ($50,000), except that the Company may, in its sole discretion, permit certain investors to purchase fewer or fractional Units. The Company may, in its sole discretion, increase the minimum purchase amount to ensure that the Company does not become subject to the registration and reporting requirements of the Exchange Act.

Compensation To Managers
 

The Manager and its affiliates are entitled to receive the following substantial fees for their services:
(1) The Manager is entitled to receive an acquisition fee in an amount equal to one percent (1.00%) of the gross purchase price of each Investment (the “Acquisition Fee”).

(2) The Manager is entitled to receive an asset management fee in an amount equal to two percent (2.00%) of the Offering Proceeds, including the Management Investment (the “Asset Management Fee”), which will be subordinated to the receipt by the Members of their accrued but unpaid Preferred Return. The Asset Management Fee will be calculated and paid in arrears on a quarterly basis commencing on the date of the initial closing of the Offering and will be prorated for any partial period. If the Asset Management Fee is not paid in full for any quarter in which it was otherwise payable, then such amount shall be accrued and paid to the Manager, to the extent of available cash, in the next calendar quarter in which the Members’ have received or will concurrently receive the entirety of their accrued but unpaid PreferredReturn.

(3) The Property Manager is entitled to receive a monthly property management fee in an amount of up to four percent (4.00%) of the gross monthly revenues from the Investments (the “Property Management Fee”).