Redwood Storage Fundraising Re-Opening

Hey everyone,

On November 6th, I sent out an email about an investment offering we were fundraising for to acquire a great class-B industrial property in the Atlanta-MSA. We finished fundraising later that evening on the same day.

Yesterday morning, however, our lender called me and, after wasting our time for the last month, pulled out of the deal because "we have too many LPs". Unfortunately, because our loan was so small we were working with credit unions who simply didn't understand syndication structures. 

The 40% loan served to increase returns by a very small margin, and because loans come with their own risks, many of our investors questioned whether it was worth it from the start. My initial reluctance to go all cash was because I was concerned about raising the extra capital, but my experience presenting this deal has proved me wrong. Thankfully, this is still an attractive deal regardless of the debt we use at the onset.

In terms of underwriting and return metrics, the following items have changed from the last time I presented this deal via InvestNext:

• Total capital required has increased from $1.6m to $2.35m.
  • We are currently subscribed at $1.805m and have $545k left to raise.
• Foreclosure risk has been virtually extinguished.
• Stabilized yield on cost grew from 10% to 10.3%.
  • Reserve requirements have dropped by around 45k because we no longer need an interest reserve, and all lender closing costs have dropped.
• IRR has decreased from 18% to 16.5%.
• MOIC has dropped from 1.75x to 1.57x.
• Cash-on-Cash pre-refinance has increased (no debt to contend with).
• A higher percentage of your capital will be returned during the projected refinance in year 2.
• I have dropped my AUM fee to 0.7% instead of 1%; I am not increasing my fee just because we have to raise more money.

These are the general changes in return metrics. The rest of the plan remains the same: capital call Dec 1st, close mid-December, refinance out the majority of investor capital at stabilization, hold long term, and cash flow.

I have updated the offering memorandum and the underwriting model on our investor portal, which can be found here: https://rwoodstorage.investnext.com/portal/offerings/4700/cumming-ga-multi-tenant-industrial-opportunity/

Today, all our current investors (whom I've connected with) affirmed their commitment to this new strategy and a few even upped their commitments considerably. If you are interested in joining the deal, I would love to have you on; please send me a note or visit the deal room above and click "Invest".

Please let me know if you have any questions, and I hope to work with you soon.

All the very best,
Ryan Auger