Red Oak Capital has rolled out a retail-oriented debt fund that will make small balance commercial real estate loans across sectors throughout the US in primary and secondaries markets. The debt fund will originate loans of $2 million to $15 million on income-producing commercial real estate properties and portfolios.
This hybrid fund comprises two distinct products, a bond offering that accepts qualified investors with a minimum purchase of $10,000 and a preferred unit that is open to taxable investors and offers a higher yield.
“It allows us to take in both qualified and taxable investments while increasing returns for both,” said Raymond Davis, chief business development officer at the Grand Rapids, Michigan-based manager.
The firm is distributing the fund via a broker-dealer channel, with Davis noting the structure accounts for different risk profiles as well as the need to comply with ERISA regulations.
As a lender that focuses mainly on small balance loans, the roughly $400 million manager has been working to expand its lending platform. “For a little company, we’ve got two different product platforms,” said Davis. “We have everything from a BB-plus investment grade rated fund to a distressed fund. We cover the whole gamut.”
The Red Oak holds all underwiring of loans on the balance sheet with good quality, focusing on providing insurance company-standard lending. “The quality of our underwriting is the quality that insurance companies would expect across the boards,” Davis said.
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