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WHY INVEST IN INTEGRIS SECURED CREDIT FUND III?
Earn 12% per-annum interest rate, payable quarterly.
Collateralized by a pledge of certain promote distributions from, and limited liability company interests in, a separate affiliated real estate venture, as described in the Memorandum, with an estimated net present value of $40 million – four times the total of the $10 million in equity being raised by the fund.
The current economic climate including inflation and recession fears, as well as rising interest rates, has investors asking where to invest now?4
Recent turmoil in the banking sector has also led to a re-evaluation of exactly how much money investors want sitting in banks. Bellwether real estate asset classes including multifamily apartments, commercial and industrial projects are still viable, though there seems to be a flight to quality with accredited investors. Factors such as the sponsor’s track record and previous experience navigating rising interest rates have taken on higher importance. BTR or build to rent projects increased in popularity as of late and continue to be of interest to investors.
Alternatively, many investors are looking for shorter duration investments, yet the desire for high yield still remains. Investment options with a short or shorter term than traditional real estate projects and high yield are a particular interest as investors seek places to ride out the economic uncertainty. Some investors simply want a fixed return in periods of uncertainty.
While short-term and high yield don’t typically go hand in hand, changes in interest rates and the underlying real estate market have created market dynamics not seen in other economic cycles.
Options available include high-yield corporate bonds, private debt funds and short-term notes among others. Maturities of 18 to 36 months seem popular with investors seeking yield in the short term but wanting liquidity to coincide with improving market conditions. It’s important for investors seeking high yield and short-term to play close attention to the collateral behind these investments or how they are secured as well as thorough review of offering documents. Market conditions have investors looking for the best of both worlds, however they should understand that investments with higher yields may be considered riskier investments and success is not guaranteed.
We invite you to register for access to review the offering materials for the Integris Secured Credit Fund III with a 12% fixed interest rate.1
What is the Integris Secured Credit Fund III?
Integris Secured Credit Fund III offers accredited investors an opportunity to invest in a collateralized note that will earn them passive income via a fixed annual interest rate of 12%, paid quarterly.1 Return of investor capital will be realized by May 31, 2025, the maturity date of the fund.2
Why is it called a “secured credit” fund?
The investments are collateralized by loans made by the fund that are secured by a pledge of certain promote distributions from, and limited liability company interests in, a separate affiliated real estate venture, as described in the Private Placement Memorandum, with an estimated net present value of $40 million.3
Is Integris Secured Credit Fund III a short-term investment?
Definitions of short-term offerings vary. This particular fund matures May 31, 2025, with an option to extend one-year by mutual consent.2 Many traditional real estate offerings have investment hold periods of five years or more. The Integris Secured Credit Fund III will mature in a shorter timeframe.
Is this a short-term note or secured note?
Though definitions of short-term vary, the Integris Secured Credit Fund III is a collateralized note earning the investor passive income at a fixed rate through a term of 24 months – from the end of the initial offering period of March 15, 2023.2
What is the intended use of the capital being raised by the fund?
Proceeds from Integris Secured Credit Fund III will be used by the borrower for general corporate needs, including the funding of working capital and debt refinancing; to fund a reserve to provide bridge financing for the acquisition of assets by Shopoff Realty Investments L.P. (“Shopoff”) and its affiliates; and to fund a reserve for the payment of Interest and other expenses related to the borrower’s operations and repayment obligations to the Company. Please see the Private Placement Memorandum for details.
Is the 12% annual interest rate a targeted internal rate of return (IRR)?
No. IRR, or internal rate of return, is a term used in some real estate investments that reflects a calculated return before any fees or expenses of the fund are included. The “annual interest rate” expressed for the Integris Secured Credit Fund III is the actual amount we intend to pay investors.
What type of investment is this? Is this similar to a corporate bond, high yield bond or note?
The Integris Secured Credit Fund III is a private placement sometimes referred to as a private real estate offering and as such, information about the fund and risks are contained in the PPM. The offering is not a corporate bond, high yield bond or note.
What is the term of this investment?
The maturity date of this investment is May 31, 2025.
Is the investor charged any fees, commissions, or expenses for this investment?
The Integris Secured Credit Fund III has no upfront sales charge, nor does it charge any fees or expenses to investors.
When will investors’ capital investment be returned?
The maturity date of the Integris Secured Credit Fund III is May 31, 2025, with an option to extend one-year by mutual consent, at which point the capital invested will be returned to investors.
How long has Integris been in business? What is the track record of Integris?
Integris and its affiliated companies have a 31-year history5 and track record of serving individual and institutional investors. A detailed track record is available within the Integris Secured Credit Fund III private placement memorandum, which all prospective investors should review thoroughly.
Is the Integris Secured Credit Fund III considered crowdfunding?
The Integris Secured Credit Fund III is a 506(c) offering often used in crowdfunding. 506(c) offerings, also known as private placements, are only available to accredited investors.*
Is real estate crowdfunding only for multifamily?
No. Crowdfunded offerings can be virtually any asset class. BTR or Build-to-Rent, Industrial, Hospitality and Fixed Rate Credit Funds can utilize the 506(c) or any crowdfunding model.
Will I receive a 1099 or K-1 for my taxes?
The Integris Secured Credit Fund III will issue a K-1.
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1. 12% per annum, non-compounded, payable no less frequently than quarterly. First payments commencing with the period ending on June 30, 2023.
2. 24-month term from end of initial offering period March 15, 2023. The maturity date is May 31, 2025, with an option to extend one-year by mutual consent. May be prepaid at the Manager’s discretion. (If prepayment occurs within 9 months of the Offering Termination date, Investors are entitled to payment as if the note was repaid 9 months after the Offering Termination date.)
3. The loans made by the fund are secured by a pledge of certain promote distributions from, and limited liability company interests in, a separate affiliated real estate venture as described in the Memorandum. The estimated value is internally created by management based on assumptions they believe are correct. Please refer to the Private Placement Memorandum for details of the net present value calculation.
4. Bob Sullivan, “Top 9 Investing Trends for 2022,” Forbes (Forbes Magazine, December 30, 2021).
5. As of February 28, 2023. See Private Placement Memorandum for complete track record. Full-cycle assets include land hard and loan assets, and commercial hard and loan assets. 1992-present as Asset Recovery Fund, Eastbridge Partners and Shopoff Realty Investments (formerly known as The Shopoff Group). William Shopoff is the Founder and Principal of all these entities. Performance has varied in this time frame with certain offerings having generated losses that are detailed in the track record. Past performance is not indicative of future results.
*An “accredited investor:”
- Has income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence), OR visit the SEC website for more information on what is an accredited investor.
You should read the Memorandum for any prospective investment and examine the suitability of this type of investment in the context of your own needs, investment objectives, and financial capabilities and should make your own independent investigation and decision as to suitability and as to the risk and potential gain involved. Also, you are strongly encouraged to consult with your own tax advisor and your own attorney, accountant, financial consultant or other business advisor regarding the risks and merits of the proposed investment. This communication and any Memorandum do not constitute tax advice to any prospective investor.
Integris Secured Credit Fund III, LLC is a 506(c) offering, as defined by the U.S. Securities and Exchange Commission, for accredited investors only. This is neither an offer to sell nor a solicitation of an offer to buy any security. An investment in a limited partnership involves a high degree of risk, including the possible loss of your investment, and is illiquid with an uncertain liquidity date. Past performance is not indicative of future results. Securities offered through Shopoff Securities, Inc., member FINRA/SIPC.
Important Information – Risk Factors
An investment in Integris Secured Credit Fund III, LLC (the “Fund”) must be considered speculative and adds a high degree of risk. There are no guarantees of distributions or returns, and an Investor may lose all or part of their investment. There are various risks related to an investment in the Fund which are described in the Private Placement Memorandum. These risks include, but are not limited to:
The Interests may not be suitable for certain Investors.
The Interests will be highly illiquid, no trading market exists or will ever develop, and withdrawals of capital contributions are prohibited.
The Fund is a recently formed entity with no operating history and no assurance of success.
Success is dependent on the performance of the Fund’s Managers, as well as individuals that are affiliates of the Fund’s Managing Members.
The Fund depends on key personnel of the Manager and its affiliates, the loss of any of whom could be detrimental to the business.
Proceeds from the Pledge may not be available to repay the Note at the Maturity Date. The Note may be repaid from the general cash flows of the Guarantors.
Economic, market, and regulatory changes that impact the real estate market generally may decrease the value of a Fund’s investments and weaken operating results.
The Note may be prepaid in whole or in part at any time.
The repayment strategy may not be successful.
The Company is not substantially capitalized and its sole asset, consisting of the Note, is secured only by the Collateral.
Members will have no right to participate in the management of the Company.
The ability of the Borrower to make the Note payments to the Company, and thus the ability of the Company to make distributions to the Members, will be dependent on the repayment strategy set forth below in the section on “Repayment Strategy,” which may not be successful.
Certain tax risks.