Secured Real Estate $50M Fund Update
We are excited to provide an update on the past few months of work here at GCA. Click on the image below to watch a video with all of the details.
Key Advantages for Investors
In the next few days, GCA Capital Partners and Good Steward Capital Management will file the required documentation for a public offering of their new fund, Secured Real Estate Income Fund II, LLC, under the SEC’s new Regulation A+.
By adopting the landmark regulation A+ rules that came into effect in June 2015 under the JOBS Act, GCA’s Secured Real Estate Income Fund II will offer a number of key advantages to investors and potential borrowers alike.
Benefits to Investors
Investors in the Fund, who will not be restricted to so-called “accredited investors”, can benefit from the passive income generated by a targeted 8% preferred annual return paid monthly, a share of the fund’s profits paid quarterly, and the peace of mind that comes from the knowledge that the fund will be managed by investment professionals who will secure investors’ capital by liens or mortgages on physical real estate. Borrowers will benefit from the larger capital base and efficiencies that the Fund will bring to our lending team.
Rationale for the Fund Approach
The purpose behind GCA’s Secured Real Estate Income Fund II is to provide near-equivalent yields to passive investors whilst maintaining the security of a mortgage or lien in the underlying physical real estate. The Fund has a targeted 8% preferred return.
For investors in the Fund there is little or no “concentration risk”, no time spent stressing over losing their principle from a single bad loan.
By adopting the landmark regulation A+ rules that came into effect in June 2015 under the JOBS Act, GCA’s Secured Real Estate Income Fund II will be available to all potential investors in the USA, and will not be restricted to so-called “accredited investors”.
To be considered an accredited investor, an individual must have earned more than $200,000 (or $300,000 in combination with a spouse) in each of the previous two years and, according to the SEC, “reasonably expects the same for the current year.”
Accredited status may also be determined by an individual’s net worth, which must exceed $1 million.
Accredited investors typically have access to the most potentially lucrative investment opportunities in the nation, however according to the 2016 white paper “The Renaissance of the Retail Investor,” Dara Albright, James A. Jones, and Kim Wales note that “only a paltry 2.8% of all U.S. households are presently considered accredited”. In other words, more than 97% of American households cannot access the same investment opportunities as the 2.8%.
We anticipate that all of the stock sold in the Regulation A+ Secured Real Estate Income Fund II will be freely tradeable and the Fund will become a fully-reporting Regulation A+ company. Our objective is to enable stock in the Fund to be tradeable on the OTCQB once the offering is complete.
By adopting the new Regulation A+ rules for its Secured Real Estate Income Fund II, GCA and Good Steward Capital Management will help bridge the chasm between accredited and non-accredited investors and we will play an important role in the democratization of post JOBS Act investing. Our new Fund will enable non-accredited investors to access previously unavailable secured investment opportunities backed by mortgages and liens on physical real estate. With a targeted 8% preferred return (plus a quarterly profit share), the potential returns can be significantly greater than conventional stocks, bonds, and mutual funds.
For a typical money partner wanting passive income, the Fund can provide similar returns to what they can expect in a single loan, but without the risks associated with asset class concentration and under-diversification, and without the multiple sources of stress associated with an investment in a single loan.
If you are a potential investor or borrower and are interested in finding out more about the Secured Real Estate Income Fund II, please contact Tom Braegelmann or Chuck Tralka.
Please note: Secured Real Estate Income Fund II, LLC must first register and qualify a Regulation A+ offering with the SEC. Prior to doing so, Secured Real Estate Income Fund II, LLC is testing the waters to gauge market demand from potential investors. No money or other consideration is being solicited, and if sent in response to any solicitation, it will not be accepted. No sales of the securities will be made or commitment to purchase accepted until qualification of the offering statement by the Securities and Exchange Commission and approval of any other required government or regulatory agency. An indication of interest made by a prospective investor is non-binding and involves no obligation or commitment of any kind. No offer of securities will be made without a registration statement.
