This summary is subject in all respects to the Company’s Investor Offering Memorandum. You should not make any investment decisions based on this summary, but only after reading the full Investor Offering Memorandum.
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This summary is for informational purposes and not intended to be a general solicitation or a securities offering of any kind. Prior to making any decision to contribute capital, all investors must review and execute all private offering documents.
Potential investors and other readers are cautioned that these forward-looking statements are predictions only based on current information, assumptions and expectations that are inherently subject to risks and uncertainties that could cause future events or results to differ materially from those set forth or implied by such forward looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, such as “may,” “will,” “seek,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe” or the negatives thereof or other variations thereon or compara- ble terminology.
These forward-look-ing statements are only made as of the date of this Business Plan and Sponsor undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
An investment in Prestige Fund D VI, LLC will be a speculative investment and subject to significant risks and therefore investors are encouraged to consult with their personal legal and tax advisors. Neither the Company nor its representatives, officers, employees, affiliates, sub-contractor or vendors provide tax, legal or investment advice. Nothing in this document is intended to be or should be construed as such advice.
1. Executive Summary
The following summary provides a concise high-level summary overview of the pertinent investment points for an investment with PFD VI, LLC (“PFD VI”) in the public exchange space (kiosks interacting with consumers in ATM and advertising monetization). We are submitting this separately from the Private Placement Memorandum to separately discuss salient elements of investment and provide specific clarity on the high performing Metro Small-Mid Retail Portfolio return. This summary document focuses on providing key points, profiles, opportunities, risks and characteristics of the space.
1.1. ATM Investment / Monetization of Asset Overview
ATM MODEL OVERVIEW
Our core strategy is to participate in the mature and stable ATM space that has historically demonstrated strong operating margins. By accessing attractive real estate locations for ATMs, we also strategically position for capitalizing on next generation revenue opportunities through advertising monetization of ATM assets/location, thereby augmenting the core healthy surcharge operating margins.
PFD VI owns the ATM assets and outsources the placement and management of ATMs to a qualified, third-party management company through “best in class” negotiated commercial agreements. These types of contracts have been historically owned and controlled by private equity or hedge funds that are attracted to this sector due to ATMs strong operating margins, and the tangible collateral of the hard-asset title to the ATM. A third- party management company may be an affiliate of PFD VI or its affiliates.
The Role of the Management Company
A management company will source lucrative contracts and then provides a turnkey, plug and play, fully managed program for ATMs. All operating, maintenance, replacement, insurance, liability and general management are the responsibility of a management company. Management companies typically contract with Fiserv, Elan, CDS, etc for processing, Bancsource, Burroughs, ASI etc for maintenance, Loomis, Garda, Brinks, etc for the armored services, and US Bank and WSFS to provide the cash for ATMs.
Management Companies/Competitive Advantages
The management companies we contract are winning these lucrative contracts based on various strategic and competitive advantages as listed below. Following are a few of the competitive advantages of the management companies we contract that present a strong value proposition to merchant retailers:
On average the management companies we contract perform above 98.8% continued operational status compared with the industry standard at less than 96%.
New & Compliant ATMs
All ATMs in the portfolio are PCI, ADA and EMV compliant compared to over 20% of non-Financial Institutions ATMs in US that are not compliant.
Digital Media Screens
For certain ATMs we can provide retail merchants short advertising slots on digital media screens as part of package to promote retail merchant in-store products/sales.
Sharing in monetization of ATM locations (paid a percentage of advertising revenue) through various monetization technologies.
Philanthropic opportunity as seen below for locations interested in social awareness. Management companies we contract have concluded through historical comparative field results and benchmarks that when wrapping ATM in the right charitable brand they will realize over 12% increase to usage and thus can provide a percentage of surcharge to charity and remain margin neutral.
The investment is backed with a hard asset (ATM Title) that has long usable life cycles. Additionally, we have negotiated assignment of the location agreements (where ATM is placed) in the event of a default by a management company we have contracted which have substantial market valuation thereby mitigating risk.
ATM Deployment Cycles
Deployment cycles generally take 65-75 days until ATMs are installed and operational at retail merchant location and will play out as follows. Capital is wired to the management company we contract on or around the 20th of each month. ATMs are then procured and shipped to warehouse by the management company. ATMs are then staged (upgraded to bank standard vaults, wraps installed, programmed for user options, implemented with monetization technology, etc.). ATMs are then shipped to a geo-specific warehouse where the installation company will pick up to install. Subsequent to installation, PFD VI receives Bill of Sales inclusive of an ATM’s serial number.
“CORE ATM FUNCTION” VIABILITY OVERVIEW
While we intend to monetize the ATM location with advertising revenue, the core financial model and practicable relevance of an ATM is very strong. While it’s not typically our peer demographic that uses an ATM, there is a large demographic of people who are increasingly using ATMs. This demographic could be generally characterized under one or multiple of the following summary points:
- Underbanked or unbanked demographic
- Lack credit and thus credit card access Has credit capacity, however distrusts credit card given security and hack breaches evidenced by an uptick in usage with security breaches at larger retailers in the past few years
- Use ATMs for EBT debit cards which is growing demographic, especially in tier 1 cities*
- Use Prepaid debit cards as they fall under the underbanked or unbanked demographic**
- Use ATM for transferring funds or other bank functions in lieu of doing online given security concerns
*Electronic Benefit Transfer – government system for issuing welfare payments electronically, by way of debit card which recipients use to make purchases **Approximately 9.9 million households are unbanked and use ATMs with prepaid debit cards, etc and approximately 25.6 million households are underbanked, which means they have a bank account; however primarily use AFS (alternative financial services) such as prepaid debit cards
Other users that generally do not fall in this demographic yet frequently use ATMs are those that:
- Are heavy cash users and use convenience of ATMs vs going into a branch
- Use ATM in lieu of bank branch given the migration from employers over the last decade to ACH of weekly paycheck. These users no longer go to a bank branch to cash payroll check biweekly, and now use ATM for convenience. ATMs are beginning to be considered a “bank branch in a box” as every bank is seeing branch traffic decreasing over the last decade thus increasingly embracing this kiosk model. Moreover, many banks now view an ATM as a bank vault on the street that can distribute cash and provide quick/easy access
Immediate and near future ATM users:
- We all know the popularity of a bank drive thru, however, drive thru options are only available during banking hours. An ATM replaces the need to go to a bank drive thru as it operates 24 hours a day, 365 days a year without the cost of employees
- Mobile access to ATMs, which we will have the future capability of implementing this technology into all our ATMs. This technology allows users to utilize ATMs to
access cash using mobile phones versus traditional ATM cards
EMERGING TECHNOLOGY RISK OVERVIEW
There is inherent technology obsolesce risk with every investment, however, we have characterized the summary points below as to why the risk profile is quite low with ATMs, regardless of the legacy aspect of an ATM:
- Ethnic groups in large Cities use as banking system and will continue to do so
- Majority of demographic using ATMs will always use cash, regardless of other options
- Monetary (cash) system is growing annually regardless of new mobile technologies, etc.
- Analysts project increase to ATMs (bank branch in a box) over the coming years based on the economic system we are under and the growth to the lower and middle class that is forthcoming, as well as the increasing online security breaches
New Technologies Risk Assessment:
- New mobile and other payment technologies (apple pay, etc.) are primary risks for credit card companies, not ATM and cash users
- The current credit distressed demographic, who are heavy ATM users, will have the same credit challenges with any new mobile or alternative technologies that they had with credit card access, thus will not change from using ATMs
- Adoption of any new disruptive technology takes 5-7 years to hit stride and, in our continued due diligence, we are finding nothing on the horizon that could usurp ATM relevance.
ATM MONETIZATION OVERVIEW
While we are engaged in many different forms of ATM monetization, below provides some context in areas we are/will be monetizing.
Regional or national banks paying $50-$200/month for branding in strategic locations
Working with hardware/software companies to integrate electronic gift card distribution into our ATMs screens
Advertising on transaction receipts with bar codes that can be utilized as coupons for specific product discount (i.e. $1 off a foot-long sub at Subway)
ATM providing opportunity for user to donate to favorite charity, and subsequently the charity will pay a small percentage of that donation back to us
The ATM core investment model generates surcharge revenue and provides a predictable and strong return however, various forms of advertising monetization will hopefully augment returns as we move forward in the coming years.
1.2. Financial Summary Overview
Metro Small-Mid Retail Portfolio
Overview of Portfolio: PFD VI is comprised of small-mid retail in large metro areas. The vast majority are small chain c-stores and retail stores, bodega and sundry shops (deligrocery stores in tier 1 markets), travel plazas and other high traffic locations. The locations are very attractive markets for national and regional ad campaigns for future potential monetization.
Most of these ATMs are replacing existing ATMs, and the management company we contracted has performed diligence on 24+ months of transactional data. This portfolio is blended which means that management company has aggregated all locations to normalize the return for investors thereby adjusting for performance variances of ATMs (location geo, seasonality, etc.) within the portfolio as you will find in Financial Terms section below. This will allow all investors in The Fund to have equitable returns.
- Monthly – $2,162
Annual – $25,944
Term – $181,608 (Not including depreciation impact)
- Depreciation Benefit – $41,600 (Projected at
40% tax rate)
- Total Projected Returns, Including Depreciation -
$225,708 (plus any residual value of ATMs)
- For illustrative purposes, attached under appendices you will find financial summaries which reflects the economics for Metro Small-Mid Retail Portfolio
- Appendix A Projections at $104,000 invested reflects 80% Bonus Depreciation in Year 1
Appendix A – PFD VI Projected Return Summary
IMPORTANT: The projections or other information generated by the cash flow model above regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.
THIS DOCUMENT IS FOR INFORMATIONAL PURPOSES ONLY
This document does not convey an offer of any type and is not intended to be, and should not be construed as, an offer to sell, or the solicitation of an offer to buy, any interest in any entity or other investment vehicle. If such an investment opportunity should become available, a confidential private offering memorandum outlining such investment opportunity would be provided to you, and the information in this document would be qualified in its entirety by reference to all of the information, including without limitation the risk factors, in the confidential private offering memorandum.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Executive Summary contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are therefore entitled to the protection of the safe harbor provisions of these laws. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “could,” “envision,” “estimate,” “expect,” “forecast,” “guidance,” “indicate,” “intend,” “may,” “might,” “outlook,” “plan,” “possibly,” “potential,” “predict,” “probably,” pro-forma,” “project,” “seek,” “should,” “target,” “will,” “would,” “will be,” “will continue” or the negative of or other variation on these words or comparable terminology. Management cautions that the forward-looking statements contained in this Executive Summary are not guarantees of future performance, and we cannot assure that these statements will be realized or the forward-looking events and circumstances will occur. The risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated or implied in our forward-looking statements include, but will not limited to, those set forth in the “Risk Factors” section of a PPM when distributed. The forward-looking statements include, but are not limited to, statements discussing the following matters:
- Our status as a new company with no prior operations;
- Our ability to manage the investment successfully with a view towards long-term appreciation;
- The Investment Fund’s anticipated cash needs;
- Changes in economic conditions generally and the financial markets specifically; and
- The other risks described in the “Risk Factors” section of the PPM when distributed.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. Nevertheless, the Investment Fund’s business involves risks and uncertainties (many of which are beyond the Investment Fund's control) that may affect its actual operating and financial performance and cause its performance to differ materially from the performance anticipated in the forward-looking statements. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as may be required by law, to re-issue this Executive Summary or otherwise make public statements updating our forward-looking statements whether as a result of new information or future events or developments or to conform those statements to actual results.
KEY PRINCIPAL AND OPERATOR BIOS
Daryl F. Heller, CEO
Daryl Heller is an entrepreneur, founding more than twelve companies within the telecom, technology, agriculture, real estate, and energy sectors. Daryl is an innovative and highly respected leader, providing visionary leadership, strategic direction and serving as the lead on merger & acquisition activities within all of his business entities. Daryl is also a philantro-capitalist, co-founding a humanitarian organization with seven business leaders from North America that works to rescue AIDS orphans in Africa.
Jerry D. Hostetter, President
Jerry Hostetter has achieved many successful results throughout his career starting in the management and consultancy of swine farms. He developed a thriving entrepreneurial management company in 1993, in his area of expertise, which he sold to Hatfield Meats in 2004. Jerry has traveled extensively throughout the United States, Canada and the Far East on a wide range of consultancy and trade missions with corporations as well as former Pennsylvania Governor Tom Ridge.
THE REAL ASSET INVESTOR TEAM
Founder and CEO
Dave is a successful Business owner, Syndicator and an Investment and Tax Strategist. Dave and his team at The Real Asset Investor have placed more than $800M across various asset classes which offer Cash Flow, Tax Impact and Equity Growth for investors. These asset classes include ATMs, Car Washes, Energy, Self-Storage and more.
He and his team are one of the Top 5 ATM Fund Operators in the country. Dave was an early investor in Bitcoin and Digital Assets, and he holds an advisory role at Off the Chain Capital, one of the top performing funds in the world for the last 5 years.
Dave is a sought-after speaker and has shared his knowledge across various media platforms such as The International Business Conference, The Real Estate Guys Radio Show, Cashflow Ninja and others. Dave and his wife Susan along with their 4 children live in Lancaster, PA..
Chief Operating Officer
Jack serves as Chief Operating Officer for The Real Asset Investor and has a strong background in financial analysis and real estate acquisitions.
Jack has worked for some of the nations top Self Storage acquisition firms and operators where he was mainly responsible for the valuation of potential acquisitions across the country. He has assisted in the acquisition of more than $450M in Self Storage properties.
At The Real Asset Investor, Jack oversees all day-to-day operations and works closely with the firm’s portfolio companies/operating partners.
Brett Van Gorden
Brett serves as Portfolio Manager for The Real Asset Investor. He has merged his experience creating tailored solutions for clients in the marketing industry with his strong understanding of financial markets to help facilitate a seamless investing process. Brett is responsible for monitoring current investments within the portfolio and working with investors to ensure a positive investment experience.
Frequently Asked Questions
There is liability insurance. Although we have never had any claims or liability issues, we do have several Million Dollars of liability insurance protecting investors. It’s also important to note that investors are limited partners meaning that their losses are limited to their initial investment.
In airports, high foot traffic Deli’s in Manhattan and multiple other cities, food courts, grocery store chains etc..
Approximately 99% of the time we are going into a location where there is an existing ATM machine and taking over that location. We can see the historical data and tell exactly how that location has been performing over the last several years which greatly reduces the risk. Because we focus on providing premium service to our clients and to ensure that all of our ATMs meet full compliance, we replace most ATMs within the locations we acquire with brand new ATMs that we provision with our proprietary software.
Most investors own ATM machines in their personal name because the ATMs are held inside an entity already and the management company carries a big Insurance policy on them for liability. You have a few firewalls between you and the asset. We have more than $450 Million dollars worth of ATMs placed and in service and while there have been no liability issues to date we certainly do not discourage holding your assets in an entity.
At the end of the 7 year period the contract is over and your monthly distributions will stop. At that point the management company will sell the ATM machines at fair market value and you will receive your pro rata share of those proceeds. To be conservative, we do not believe there will be much value left in your ATMs at that time due to wear and tear and we therefore
assumed that each machine would be worth $500 in liquidation value at the end of the 7 year period.
ATM orders get turned in around the 15th of each month, from that day forward we have 75 days to order your machines and place them in service. The first full month after that is when your machines are producing and building cashflow, you will then receive an email on the 25th day of the following month with your investor statement and notification that a deposit has been made into your account via ACH. If the 25th is on a weekend this process will be delayed until the following Monday. It’s therefore best to assume that there will be an approximate 4 month delay between when you invest and when you will receive your first distribution.
The management company will go in, remove the machine and put it in a new location at no charge to the investor and there will be no lapse or reduction in the distribution amount. Remember you are in a blended pool with more than 1000 other ATMs and you are receiving a blended return.
Our management company commits to each investor that each unit ($104,000 investment) is projected to receive $2,162 per month. Investors get paid on a blended performance of the entire fund and in the rare occasion that the fund performance is lagging, management will share their portion of the revenue to bring the distribution up to the proforma amount. In the event that the fund over performs, management retains the revenue above the fixed investor return.
No, all expenses are covered by our management team.
We have paid distributions in full and on time in all funds since we got involved in this business back in 2012.