Investors will be given access to a deal area where they can view the property and investment information. Upon evaluation of the project if they decide to invest we will issue a promissory note made out to them. The funds will then be used to secure the property and make improvements to it. Once the property is improved either a refinance or a sale of the asset will occur. When this is complete the investor will be given their funds back, with interest. Depending on the investment, interest may be paid in increments over the life of the project. Each project is different and your specific payback of both interest and your principal will be stated in your promissory note.
In order to accommodate those who are new to investing we offer an entry level investment of $10,000. Investors can invest according to the amount the particular deal allows and based on our availability. When we secure a property we send out an announcement and investors have an opportunity to express their interest, including their funding amounts.
The property and project is managed by our broker Jose Belman. The collection and distribution of investor funds is handled by Reesha Capital, LLC. We can be reached via email or phone any time.
Reesha Capital often invests in the deals alongside investors. Deals are vetted and then funded by Reesha Capital, LLC many times upfront. Investors can then come in and obtain a promissory note with terms outlined in the note. Reesha Capital is paid a fee by the broker for arranging and managing the investors. Reesha Capital, LLC is not required to fund any particular deal, and may not if investor interest is high and the allocation is full. Potential Investors are encouraged to contact us for further discussion on this topic.
Many well-developed best practices for corporate governance have been established and promoted by leading organizations in the fund industry. One such organization is INREV, which has summarized many of the key best practices at http://www.inrev.org/guidelines/inrev-guidelines/corporate-governance-self-assessment.
PMMG believes in adhering to these and other industry best practices as much as possible in terms of fund governance, oversight, transparency, and communication with Investors. While the Manager has the flexibility to modify its practices over time to meet the needs of the Fund, we have endeavored to incorporate whatever INREV best practices we can into the way in which we manage the Fund. Among others, we accomplish this objective in the following ways:
We encourage you to measure and score the Reesha Capital I using the tool available at the link provided above and to ask the Manager any questions you might have pertaining to these governance standards. CONFIDENTIAL 8 Private Placement Memorandum v4.0
The Manager recognizes that one of the main concerns of Investors in a 506 Reg D Private Placement such as the Fund is what would happen in the event the Manager (or its “Key Man”) is not available to manage the Fund for whatever reason. Therefore, we have proactively attempted to address and mitigate this concern as much as we possibly can, including the following:
The Fund shall receive as income:
50% of all loan origination fees collected (with the other 50% going to the Manager to help pay its loan agents and referral sources),
The Manager shall receive as income:
As hard as we may try to adhere to governance best practices, it is impossible to eliminate every conceivable potential conflict of interest between the Manager and the Fund. Please see the “CONFLICTS OF INTEREST” section for more details.
Investors who wish to purchase Units must complete and sign the Subscription Agreement, a signature page to the Operating Agreement and other such documentation as is deemed appropriate by the Manager, and send them together with a check or wire for the purchase price of the Units to the Manager. Upon receipt of appropriate executed documents, the Fund will immediately deposit Investor funds into its holding account (the “Subscription Account”), the date of which shall be the “Deposit Date.” Investors may execute the Unit Subscription documents at any time throughout a calendar month. However, an investment in the Units would only become effective as an equity investment upon the Company’s transfer of an Investor’s funds into its operating account (the “Operating Account”) and as of the first day of the calendar month (the “Effective Date”) immediately following the Deposit Date. Investor funds held in the Subscription Account shall pay no interest to the Investor. The Fund may utilize a new Investor’s funds for its operations between the Deposit Date and the Effective Date by transferring all or a portion of such funds as determined by the Manager (the date of which shall be the “Transfer Date”) from the Subscription Account to the Operating Account. Any such amounts transferred shall be treated as a loan to the Fund for which the Investor shall receive interest at 7% (annualized) during the period between the Transfer Date and the Effective Date, and for which the Investor will receive a 1099 Statement for passive interest income. The Fund will pay the accrued interest (running from the Transfer Date of any funds to the Effective Date) on any funds transferred from the Subscription Account to the Operating Account in the form of a check to the Investor to be prepared and mailed on the Effective Date. An Investor’s obligation to purchase Units with their full deposited amount shall be irrevocable during the time between the Deposit Date and the first day of the subsequent calendar month.
As soon after the Effective Date as is practicable (typically on or around the 15th of the month), the Fund shall issue Units to the Investor at the prevailing Unit Price for any and all amounts transferred into the Operating Account since the Deposit Date (i.e., funds that were treated as loaned to the Fund between the Transfer Date and the Effective Date). On the Effective Date, the Fund shall also be obligated to transfer some or all of any remaining Investor funds from the Subscription Account into the Operating Account and issue Units at the prevailing Unit Price, and/or to notify the Investor of any amounts it intends to let remain in the Subscription Account. Upon notice to the Investor of any such amounts it does not intend to transfer to the Operating Account and issue Units, the Investor shall have ten (10) days to decide to either leave the money with the Company in its Subscription Account, or to have the Company reimburse the remaining funds in the Subscription Account to the Investor. If an Investor chooses the reimbursement option, the Investor shall have no further right or obligation to use these remaining funds to purchase Units. If an Investor chooses to leave the remaining funds in the Subscription Account, the Investor’s obligation to utilize such funds to purchase Units (and the Company’s right to transfer the funds to its Operating Account) shall once again be irrevocable, and the funds shall again be treated during each successive month as detailed in this section.
The initial Unit Price shall be $1,000. The Unit Price will fluctuate once the first amounts have been raised pursuant to this Offering. The Fund will set the Unit Price on a monthly basis, based on the collective Stated Value of the individual Fund Assets. The Stated Value of each Fund Asset shall be determined on the last day of each calendar month by the Manager in its sole discretion. The Manager, however, shall establish and follow a methodology for determining the Stated Value of each Asset and may modify, alter or improve the methodology from time to time in its sole discretion. The Stated Value of the Fund Assets shall be used to assist in the determination of the Unit Price of the Membership Units as well as the AUM. For more information on the Stated Value, the Unit Price, and the AUM, please see the section “Risks Specific to Members.”
The Units are restricted as to sale and transfer. Some of the factors that prevent Investors from transferring the Units include:
Subject to the Fund’s performance and sufficient cash flow, the Manager intends to pay the Preferred Return, as well as the allocable portion of any Excess Distributable Cash (as the Manager deems to be in the best interests of the Fund), to the Members on a monthly basis. Members will share Distributions in proportion to their respective Ownership Interests.
No, there are significant restrictions on the Redemption of Units. Members will be required to hold their Units for a minimum of twelve (12) months (the “Lock-up Period”) before they may request Redemption. Redemption requests for reasons of financial hardship or emergency during the Lock-up Period may be considered on a case by case basis subject to a penalty (the “Redemption Fee”) of three percent (3%) of the then current Unit Price for the initial twelve (12) month period. The Manager shall have no obligation to consider any hardship Redemption requests during the Lock-up Period and shall be entitled to charge a higher or lower Redemption Fee. All Redemption Fees charged and collected will be considered income to the Fund. After the Lock-up Period, Redemption requests will be considered on a first come, first served basis. Members who have held their units for five (5) years will be given priority over Members who have held their units less than five (5) years. A Member shall be required to provide the Manager a 60 day notice for any Redemption request and any Redemption actually provided shall be done only on the first day of a calendar month at the then current Unit Price as determined by the Manager. Any return of capital to the Fund from the disposition, sale, or repayment of any Fund Asset may not be reinvested by the Fund in additional Assets unless and until any outstanding Redemption requests from Members seeking to redeem Units owned for more than twenty four (24) months have been honored.
Redemption requests from Members on Units owned for five (5) years will take immediate priority above any Redemption requests on Units owned for less than five (5) years. The Manager may also choose to redeem all Members Pari Passu even if there is a queue of requested Redemptions and may redeem Membership Units Pari Passu at any time at the then current Unit Price in its sole discretion without penalty to the Manager or the Fund. All of the above parameters notwithstanding, the Manager will endeavor to manage the Fund in such a manner as to be able to accommodate Redemption requests at any time after the Lockup Period as consistently as possible.
Members shall have the option to receive any Distributions either paid to them via check or ACH or to use these funds to automatically purchase additional Units at the prevailing Unit Price. Members shall make such an election at the time of subscription and may change this election with a 90-day notice to the Manager and not more frequently than twice per year.
This is a private Offering which is being made only by delivery of a copy of this PPM. Both U.S. and foreign Investors may invest in the Fund. With respect to U.S. Investors, the Offering and sales of the Units offered hereby will be made only to persons or entities meeting or exceeding certain suitability standards which have been adopted by the Fund. These standards are imposed by the SEC and other state securities law administrators and by the Manager, since there are risks associated with the investment in the Units, including an Investor’s inability to easily liquidate the investment. The Manager has the right to reject any potential Investor for not meeting the Investor suitability standards, or for any other reason in its sole discretion.
Although the Fund does not expect to do so, the Fund and/or any SPV(s) of the Fund may use debt or leverage for the purposes of acquiring assets, or for obtaining cash to use to acquire other assets, to cash out Investors, for working capital, or for any other purpose in the ordinary course of operating the Fund. The Fund may pledge one, some, or all of its Fund Assets for such borrowing. Any such borrowing may increase the risk to Members in the Fund as the repayment of any debt shall be made prior to the repayment of Member’s capital account.
The following outlines the priority (“Waterfall”) for the distribution of cash from the Fund:
The following outlines the priority for the distribution of cash from the Fund in the event of any liquidation:
The Manager will not charge a commission or any load for the purchase of the Units. However, the Fund may be a party to a subscription which pays amounts to broker/dealers, financial advisors, or other licensed parties in connection with the sale of Units. The Manager shall endeavor to pay commercially reasonable commissions or loads but shall retain sole discretion as to the actual commissions it pays. Any commission or loads actually paid shall be considered a Fund Expense and thus borne by the Fund as a whole rather than specific to any particular Member.
The Fund shall begin making its investments as summarized herein immediately upon receipt of investment capital, or as soon thereafter as is practicable in the judgment of the Manager. The relative size of the initial Fund Assets may be smaller than in the future depending on the amount of capital available to the Fund. However, the Fund expects to raise capital on an ongoing basis and thus shall begin making investments immediately.
The Fund shall seek to raise a maximum total of up to $50,000,000 in Member capital, which amount may be increased in the sole discretion of the Manager. The Manager may or may not raise the full total during the life of the Fund. Subject to any limitations in the Operating Agreement, the Manager shall be entitled to sell additional Membership Units at any time and on an ongoing basis so long as it does not exceed the Maximum Offering, which may be increased as described above. Upon reaching the Maximum Offering, if there are Redemption requests that are granted that bring the Fund’s total capital below the Maximum Offering, the Manager may again raise additional Investor capital and may do so at any time during the life of the Fund up to the Maximum Offering.
The Fund is an open-ended, “evergreen” fund with no set end date. The Manager expects to originate and acquire Fund Assets on a frequent and ongoing basis and will continue to do so indefinitely until the Maximum Offering has been reached, or until the Manager believes market conditions do not justify doing so. The Manager intends generally to utilize the return of capital from the disposition of Fund Assets to originate and acquire new Fund Assets rather than return the capital to Members, subject to the limitation set forth below for Members requesting Redemption after having held Units for twenty four (24) months. However, the Manager expects to manage the Fund’s investments and capital structure in such a manner as to attempt to provide a reasonable level of capability for the Fund to accommodate Redemption requests given the relatively illiquid nature of real estate based investments in general.
If the Manager deems it appropriate based on evolving market conditions and dynamics, the Manager shall cease to originate and acquire new Fund Assets and shall distribute any return of capital from the disposition of Fund Assets back to the Members in accordance with the OLP until all Fund Assets have been liquidated. The Manager may choose to return capital to the Members at any time during the life of the Fund.
A copy of the Operating Agreement shall be provided to Members as part of the Unit Subscription Booklet. In the event of any conflict between the terms of this PPM and the Operating Agreement, the Operating Agreement shall be controlling.
The Fund will be treated as a partnership for federal tax purposes. Investors considering a purchase of the Units should consult their own tax advisor for advice on any personal tax consequences that may be associated with investment in the Units.