Red Oak Capital Fund III, a Regulation A+ bond offering sponsored by Red Oak Capital Group, has sold out after reaching the maximum statutory investment capacity of $50 million. The company noted that the fund sold out in 58 days.
“We knew there would be a lot of interest in this offering based upon the quick sell-out of Red Oak Capital Fund II just a few months ago, but this was certainly astonishing,” said Chip Cummings, chief executive officer of Red Oak. “It shows how strong of a partnership we have with our broker-dealers, RIA’s and industry partners.”
The $50 million Reg A+ Tier II bond offering was qualified by the SEC on, September 18, 2019, and was scheduled to be open for 12 months. The firm had 15 selling agreements with industry partner firms.
However, the company said that “strong interest in the structured bond product, secured through senior commercial real estate mortgage loans and widespread industry support, led to the early closing.”
The offering was structured as a general solicitation income bond product with a fixed quarterly distribution and defined maturity. The bonds which are securitized by senior commercial mortgage loans, are backed by existing income producing commercial real estate properties.
Series A bonds offered a 6.50 percent annual yield, and the Series B offered an 8.50 percent annual yield. Both also included potential future contingent interest payments at maturity based upon performance.
As a bridge-bank lender, Red Oak Capital focuses on short-term gaps in the traditional commercial finance markets. They specialize in the origination, underwriting and acquisition of commercial real estate debt instruments.
Established by the SEC in 2015 under the JOBS Act, Regulation A+ Tier II offerings allow companies to sell up to $50 million in securities in a 12-month period. They require regular financial filings and audited financial statements.
Red Oak’s next product, Red Oak Capital Fund IV LLC is currently in review, with an anticipated release early next year.
Crescent Securities in Dallas served as the managing broker-dealer for the offering. UHY is the national auditing firm, and Kaplan Voekler Cunningham & Frank serves as counsel.
The Red Oak Capital Group is a private equity firm specializing in commercial real estate financing and manages several different funds. The firm was founded in 2015 to serve the capital finance and investment markets, and has experience in the development, management, financing and syndication of commercial real estate.