Red Oak Capital Fund III, a Regulation A+ bond offering sponsored by Red Oak Capital Group, has been qualified by the SEC and is now open and receiving subscriptions.
Similar to Red Oak’s second fund, which reached capacity in August, the $50 million Reg A+ Tier II bond offering offers two investment options: Series A with a coupon of 6.50 percent and the Series B with a coupon of 8.50 percent.
The bonds are priced at $1000 each and have a minimum purchase amount of $10,000. Both options include an additional contingent interest payment at the end of the term which potentially increases the yield.
Series A bonds have a selling commission of 1.95 percent, a managing broker-dealer fee of up to 0.95 percent paid to Crescent Securities, a wholesaling fee of up to 0.95 percent, and expense reimbursement of 1 percent. Series A Bonds mature on December 31, 2022.
Series B bonds have a selling commission of 6.50 percent, a managing broker-dealer fee of up to 0.95 percent, a wholesaling fee of up to 0.95 percent, and expense reimbursement of 1 percent. Series B Bonds mature on December 31, 2025.
“This is a great fixed income, alternative investment product,” said Chip Cummings, chief executive officer of Red Oak. “As a general solicitation bond offering, it is attractive to both accredited and non-accredited investors – as well as qualified money.”
The issued bonds are securitized by senior secured commercial mortgage notes, backed by existing income producing commercial real estate properties. As a bridge-bank lender, Red Oak Capital claims to take advantage of short-term gaps in the traditional commercial finance markets and specializes in the acquisition of these smaller commercial real estate debt instruments.
Red Oak noted that its last offering, Red Oak Capital Fund II, sold out nearly two months ahead of schedule. The terms and structure of the new offering are almost identical, except that Red Oak has lowered the overall expenses.
Established by the SEC in 2015 under the JOBS Act, the Regulation A+ Tier II offerings allow companies to sell up to $50 million in securities in a 12-month period and requires regular financial filings and annual audited financial statements.
Red Oak Capital Group, a fintech private equity firm specializing in commercial real estate investments, was founded in 2015 to serve the capital finance and investment markets. The firm has experience in the development, management, financing and syndication of commercial real estate.