Red Oak Capital Group (RED OAK) out-performed expectations, and announced second-quarter returns of 11.35% to investors earlier today on its Red Oak Capital Fund I. This comes after record 12.20% earnings in the first quarter of 2017, and an annualized net yield of 11.78%.
“The market remains strong for short-term commercial real estate notes,” said Chip Cummings, Managing Partner with Red Oak. “and we continue to capitalize on that demand.”
Red Oak Capital Fund I takes advantage of short-term gaps in the traditional commercial finance markets, and specializes in acquisition of smaller commercial real estate debt instruments. Continued growth and demand for capital in the smaller commercial real estate sector has led to expansion of private equity firms like Red Oak.
“While there are certainly Funds out there servicing larger transactions, we have found that the smaller transactions under $3M are being overlooked.” explained Cummings. “With our 20+ years of lending and development experience, we can look at these transactions with a more common-sense approach, and provide an attractive short-term funding solution that provides strong returns and better controlled risk for our investors.”
Consistent with its other sector Funds, the Red Oak Capital Fund I does not own real estate, but rather holds performing debt notes which are collateralized by income producing commercial real estate assets. The average hold term on its assets is only 12 months, allowing faster reaction to changing market conditions.
“Yield is important to investors, but they also want security and liquidity” explains Kevin Kennedy, a Senior Partner at Red Oak, “The shorter term hold and managed risk has been extremely attractive to both our individual investors and our institutional partners.”
Kennedy, as the head of capital acquisition, works directly with Red Oak’s institutional investment partners, RIA’s and broker/dealer partners.
Adds Kennedy, “Savvy investors understand the importance of having a strong Alternative Investment choice as part of their portfolio, and the benefits of these types of assets over a traditional REIT. We’ve been able to demonstrate that strength with solid returns once again to our investor partners.”