Redemptions are not refunded automatically or on any specific time-frequency. We are not currently liquidating redemptions.
Please know that if/when your request is processed, to stay in compliance with SEC and IRS guidelines, the amount you are redeemed will be equal to your ending capital balance cited on your most current Schedule K-1.
Since there is no public trading market for our interests, you may never be able to liquidate your investment or otherwise dispose of your interests. The redemption program is currently in place as a guide to determine if and when a redemption request is approved. However, the Company cannot guarantee that a redemption request or “buy back” of your interests will be approved.
Keep in mind the following:
The Company will use its best efforts to honor requests for a return of capital subject to, among other things, the Company’s then available cash flow, financial condition, and approval by the Manager. The maximum aggregate amount of capital that the Company will return to the Members each calendar year is limited to 5.0% of the Interests of the Company as of December 31 of the prior year. Notwithstanding the foregoing, the Manager may, in its sole discretion, waive such withdrawal requirements if a Member is experiencing undue hardship.
Expect redemption updates to be emailed on or before the 15th day of the second month of each fiscal quarter: February 15, May 15, August 15, and November 15.
The key concepts are the following:
- If and when the Company does liquidate redemptions, we will only redeem up to 5.0% of the total Fund interests as calculated on December 31st of the prior year. Per our Offering Circular, we do not set aside funds to pay distributions or redeem interests. We rely on revenue derived from operations and other sources to fund dividend distributions, profit distributions and redemption requests. At this time, the Company will not establish a reserve from which to fund withdrawals of Members' capital accounts.
- The Company will use its best efforts to honor requests for a return of capital subject to, among other things, the Company’s then available cash flow, financial condition, and approval by the Fund Manager.
- There is no public trading market for TREF member interests. The redemption program is currently in place as a guide to determine if and when a redemption request is approved. However, the Company cannot guarantee that a redemption request or “buy back” of your interests will be approved.
- Regarding financial hardships, in Section 1.4 and 1.5 of the Subscriber Agreement, the Investor acknowledges that the purchase of the membership interests involves a high degree of risk in that (i) an investment in the Issuer is highly speculative and only investors who can afford the loss of their entire investment should consider investing in the Issuer and the Interests. Further, the Subscriber acknowledges that they are either an “accredited investor,” and able to bear the economic risk of an investment (OR) the purchase price tendered by Subscriber does not exceed 10% of their annual income or net worth whichever is greater.
Please also consider:
- Real Estate is a long-term investment with multi-year hold periods. The period of the highest profit for commercial properties is typically achieved in 3-7 years.
- Unregulated, early withdrawals could over deplete the Fund's capital base. This action could have a net dilutive effect on the value of your own percentage interests. But far more adverse and further-reaching is that unregulated early withdrawal requests could dilute the value of other Member’s interest and the overall ability of the Fund to maximize profits.
Real Estate investment cycle:
After successfully raising capital, we deploy that capital toward acquiring properties and issuing loans. Next, we do what we call “stabilizing” the properties. Let's use the Legacy Center as an example. In late 2018, we acquired the Legacy Center in dilapidated condition. It required upgrades such as new flooring, a new electrical infrastructure, landscaping, painting, etc. This rehab process, along with getting the building occupied with new, quality tenants with an established rent roll, is referred to as "stabilizing" the property. We are now in the process of securing tenants for the building that will likely produce revenue and rental income.
The life cycle of Real Estate suggests that maximum value is derived after the property has been stabilized and is producing the highest profit. Standard industry projections estimate reaching mature stabilization for commercial properties in five to seven years from the date of purchase.
Now let us repeat this disclaimer: these are forward-looking statements. Please read our full disclaimer below. We are sharing the current history of the Legacy Center as an example of the common life cycle of Real Estate, not as a certain statement of future results.
Real Estate is a long-term investment, which is why we project an investment hold period of approximately 5-7 years. This time range is typically when newly acquired and renovated properties reach their highest IRR (internal rate of return) potential because the upgrades have been completed, the buildings have tenants paying rent and the Fund's assets (buildings) have had an opportunity to appreciate in value.
If we follow that logic to a plausible conclusion, after completing stabilization, the Legacy Center may command a higher sales price than when the Fund initially acquired it. So, if and when a property that the Fund owns were to sell, and a profit was realized by the Fund, then that is the ideal time for the Fund to pay out dividends, profit distributions, and redemptions.
Profitability is not guaranteed, and an unregulated stream of early withdrawals could foreclose on the Member and Fund's ability to participate in the upside realized during the period of highest profit.
Fund investors can earn:
Preferred Returns are paid, pro-rata, in accordance with their percentage interests in the Fund, until all Investors have received a cumulative, non-compounded preferred return of 8% per annum. Profit Distributions are paid Fifty Percent (50%) to Class A Members (you); and Fifty Percent (50%) to the Manager.
The Fund, at the outset of 2022, is still in the process of stabilizing properties, and hasn't reached its theoretical high point for the rate of return. Selling properties to liquidate redemptions before this point could harm fellow TREF Investors through dilution.
We've provided this information to help explain our current decision not to immediately liquidate all requests, and to provide a framework to assist our Member Investors understand the Fund's current position and future prospects.
Thank you for being a part of the Tulsa Real Estate Fund -- The People's Fund.
The information contained herein is general in nature and not intended as financial advice. We guarantee neither the accuracy nor completeness of any information and we're not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Tulsa Real Estate Fund, LLC. assumes no obligation to inform the reader of any changes in the material accuracy of the information or other factors that could affect the reliability of the information contained herein. This publication does not, and is not intended to, provide financial advice, and readers should consult their own financial advisers regarding investment decisions.