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INVESTMENT FOCUS

Residential Condos
Small-Flex Office Suites
Office Condominiums
Investment Criteria #1
All Projects Located
Within a 30-Minute Drive from Downtown Nashville
– Adjacent to South of Broadway (SoBro) Convention Center & Symphony
Investment Criteria #2
Focus on Desirable Urban Infill Locations: Walking Distance from Restaurants, Sports and Entertainment
– Proximity to Broadway Honky Tonks & Bridgestone Arena
– Walking Distance to Titans Stadium & Nashville Sounds Sports Arenas
Investment Criteria #3
Develop Undersupplied Asset Classes with Strong Demand
– Residential Condominiums
– Small Flex-Office Suites
– Office Condominiums

Specializing in Undersupplied Niches

• Residential Condominiums
• Office Condominiums
• Medical Office
• Flex-Office / Warehouse
Sponsor, Megan Epstein
California South Development
Sponsor’s Press Publicity
Sponsor’s Previous Transactions

FUND ASSETS UNDER DEVELOPMENT

Music City Industrial Park

140,000 Square Feet –Flex Office Industrial Park

This project provides desperately needed “flex office” space for small businesses owners requiring between 2,000 and 10,000 SF for warehouse / light-industrial / office space use. While tremendous quantities of large scale warehouse space, created for large single-tenant warehouse users requiring 50,000 SF to 1,000,000 SF, there is a tremendous shortage of available space for smaller users, as evidenced by sub-3% vacancy rates and soaring industrial and office rents.

100,000 Square Feet – Office Condominiums

347 South Royal Oaks Blvd, Franklin, Tennesse

Allston East & West will comprise of approximately 104,549 square feet of Class A office space in one of the hottest markets in America, Franklin, TN. The average office condo will consist of 5,067 square feet and will be offered at an average of $1,729,000. Office condos will range from 2,669 square feet for $890,000 to 7,237 square feet for 2,460,000 with a 1,200 SF terrace. Owners will have the benefit of an accommodating 4/1,000 square foot ratio. This will give Owners and guests a surplus of easy access parking to choose from including a 150 space below grade parking garage with elevator access direct to Owners space.

Expertise

Deep Local Knowledge

The Réaliste Fund has partnered with local developer Megan Epstein of CA South Development to fast-track the development of desperately needed residential condominiums, office condominiums, and flex-office space which the market is not currently offering in adequate supply for a variety of tax reasons and the difficulty in getting such projects debt financing.

 

The Fund’s founders and principles have lived and worked in Nashville since 2012 and 2014, and they have a deep understanding of the trends, growth drivers, and geography that drives decision making in real estate in Nashville in 2019.

 

The Fund’s proprietary equity and debt relationships allow for creative deal structuring and financing, which opens a whole universe of transactions not otherwise available to other local developers who are forced to use traditional bank financing.
Mitigating Risk

As sophisticated investors who have been through several economic cycles, we are committed to maximizing returns while responsibly mitigating downside risks such as;

 

1) Macro Economic Risk – It is prudent to assume we are “late” in the current economic cycle, which means that the fund must be extremely selective about the product types in which it invests, as well as the target market which its development projects will serve.  Nashville’s economy with its favorable taxation, affordable cost of living, pro-growth and pro-employer government, is benefiting from the net migration away from “blue” states with less competitive taxation and higher cost of living. Nashville’s affordability, access to world-class entertainment and attractions, and big city amenities make it unlikely to stop growing over the long-term, despite macro-economic challenges. Nashville is one of the “safest bets” due to job growth, household growth, income growth and other important demographic trends, especially when compared to the over-inflated costs of cities like New York, San Francisco, Los Angeles, Chicago, and others (from which many new local residents are coming from).

 

2) Rising Interest Rate Risk – As the cost of capital continues to increase, it is wise to diversify away from projects whose yields are disproportionately driven by exit-cap rates. Both residential and commercial condominium yields are less sensitive to fluctuations in cap rates than traditional stabilized rental assets. While interest rates and the availability of capital certainly impact condo prices and valuations, residential and commercial condos are so dramatically under-supplied that the depth of the market and strength of overall demand serves to mitigate this risk.  This is evidenced by receiving LOIs for office condos prior to any marketing or groundbreaking.

 

3) Oversupply Risk – Many investors are scrambling to invest in Nashville and deploying capital into developing multi-family buildings. While these asset classes are more favorable than condos from a taxation perspective, the market for this product is extremely oversupplied, as evidenced by two-months-free-rent and similar incentives offered by management companies desperate to fill vacant buildings as more and more new supply comes onto the market. The advent of Opportunity Zone tax incentives are only further accelerating this over-supply, and investors who ignore important supply and demand fundamentals will get burned. The Réaliste Fund does not invest in multifamily projects for this reason.

 

The Hospitality sector in Nashville is undergoing a similar, albeit not as dramatic, acceleration of supply of hotels. While the market is still temporarily undersupplied, there are more than a dozen new hotels slated to open in the next 24 months, so the Réaliste fund will not directly invest in Hospitality projects, except in partnership with a Hotel provider to provide condominiums alongside or above a hotel.

 

4) Softening of the Luxury Markets – Residential real estate priced above $1m in Nashville is considered high-end, and the number of homes on the market and the number of days on the market have both recently increased, pointing to a softening in the “high-end”.  This is not the case for residential units priced below $1m.  Over 90% of residential condominiums funded by the Réaliste Fund will be between $400k and $700k which is considered the “sweet spot” of affordability and value where demand is robust and the number of days on the market is shorter.

 

Additionally, this price range and product offering is specifically targeted to migrants moving from more expensive markets such as California and the East Coast where this price point plays extremely favorably.
Global Sophistication Meets an Unsophisticated Market

While an extraordinary amount of investor attention is now newly placed upon Nashville, it wasn’t so long ago that local developers’ only source of capital was from local investors.

 

Today, extremely sophisticated investors from around the globe are deploying capital into Nashville in creative and progressive ways. For the first time ever, several Billion Dollar projects are being constructed simultaneously. However with all of the out-of-town development companies setting up shop in Nashville, there is a scarcity of sophisticated local developers who really understand the market and where the development trends are heading.

 

Anyone can pay top-dollar for a piece of land across the street from the Sounds Stadium or a developable parcel two blocks from Broadway, but what about assembling purchase contracts on a series of parcels near a proposed Soccer stadium prior to the announcement?  Our Sponsor’s local knowledge and deep connections allow the Réaliste Fund to stay one step ahead of the pack and drive yield by “buying smart”.
Specializing in Off-Market Opportunities

Many of transactions sourced and developed by CA South Development are not brokered or listed opportunities. This provides for less competition securing developable parcels, resulting in better overall returns.

 

By having a solid reputation of performing on purchase and sale agreements and performing due diligence and closing quickly, several local commercial brokers often provide a “first look” at their transactions prior to widely marketing them.

 

CA South Development and The Réaliste Fund are thus able to cherry pick excellent opportunities and get valuable land under contract because of their ability to close quickly and perform.

Fund Managers & Board Members

$60M-$100M Equity Fund

Accredited Investors Only

The Fund is a high-risk investment vehicle which is available only to Accredited Investors that are willing to assume above-average risk and limited liquidity with a portion of their net worth. There can be no guarantee that the Fund’s objectives will be achieved, and the entire loss of principal may occur. Please refer to the Fund’s final confidential Operating Agreement and related documents for additional information regarding risks and conflicts of interests. This document is neither advice nor a recommendation to enter into any transaction with the Fund.
The Realiste Fund

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