PART II - OFFERING CIRCULAR

Gratus Capital Properties Fund III, LLC

(the “Company”)

Updated Offering Circular dated February 16, 2024 (Post-Qualification Amendment No. 2) 

The Company is hereby providing the information required by Part I of Form S-11 (17 9 CFR 239.18 and is following the requirements for a smaller reporting company as it meets the definition of that term in Rule 405 (17 CFR 230.405).

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission (“Commission.”) Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. The Company may elect to satisfy its obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

Our offering pursuant to Regulation A (the “Offering”) of up to $75,000,000 in Class A Interests and Class B Interests (collectively “Investor Interests” or “Interests”) began on December 1, 2021. Through November 30, 2022, our offering has raised $6,278,025.47 in capital through the sale of approximately 484,216 Class A Units and 143,586 Class B Units for $10 per Unit. Through February 16, 2024, our offering has raised an additional $ $2,548,011.22 (total of $8,826,036.69) in capital through the sale of an additional 161,014 Class A Units (645,230 total Class A Units sold in this Offering) and 89,036 Class B Units (232,622 total Class B Units sold in this Offering). We are continuing to offer additional Class A and Class B Units for between $11.08 and $11.79 per Unit, depending on the sales channel and financial intermediaries utilized in each sale.

Purchasers shall, upon acceptance by the Manager of their Subscriptions, become Class A or Class B Members in the Company. Since the Company has already raised its minimum of $1,000,000 (“Minimum Offering”), Funds will be made immediately available to the Company once the associated deposits have been received into the Company’s escrow account, and the deposits and associated subscription agreements are accepted as being in good order. Funds will be used for acquiring real estate assets throughout the United States as well as for working capital.

The Minimum Investment Amount is $10,000. However, the Manager, in its sole discretion, may accept less than the Minimum Investment Amount. Subscription funds may remain in the Company’s escrow account for up to 180 days from the first date of deposit. Unless terminated by the Manager earlier, this Offering terminates in 365 days after commencement of this Offering (the “Offering Period”). The Manager may extend this Offering Period in its sole discretion, at which time, the Manager will file the appropriate Offering Circular for qualification with the Commission. As the Minimum Offering amount has already been raised there are no provisions for the return of funds.

The Company has engaged WealthForge Securities, LLC member FINRA/SIPC (“WealthForge”), to act as the Managing Broker-Dealer in connection with this offering. The Sellers’ Commission reported in the table above includes a three-quarters of one percent (0.75%) percent commission on all the Investor Interests being offered payable to WealthForge for performing administrative and compliance related functions. It does not include per transaction fees paid to SEI Altigo for Units purchased through its platform by certain Registered Investment Advisers (expected to be $50 per transaction), or other fees payable by the Company to Wealthforge which are not determined by the amount raised. See “Plan of Distribution” and “Use of Proceeds” for additional details.

The Company will pay an upfront selling commission in connection with the purchase of Units through a registered broker-dealer. The Company has entered into (and will enter into) arrangements to pay a placement fee of up to six (6%) percent of Gross Offering Proceeds (“Placement Fee”) to participating brokers. This Placement Fee may be divided among multiple brokers, and is in addition to the three-quarters of one percent (0.75%) commission payable to WealthForge for administrative and compliance related functions, for a total Sellers’ Commission of up to six and three-quarters percent (6.75%).

The Manager, its employees, officers and directors, will advertise the offering to investors directly. Investors who purchase Units directly from the Company will purchase at the Base Price with no Commission Adjustment, and will receive Class A or Class B Units.  Investors will receive Class A Units if they either (a) purchase at least One Hundred Thousand Dollars ($100,000) worth of Investor Interests; or (b) have previously invested in Affiliates of the Manager and the Manager agrees to admit them as Class A Members, in the sole discretion of the Manager. All other direct investors shall be admitted as Class B Members. Investors who are admitted as Class B Members and later purchase additional Units resulting in a total Unreturned Capital Contribution of $100,000 or higher will have their Class B Units converted to Class A Units as of the date the Capital Contribution bringing their total above $100,000 is received in the Company’s escrow account and determined to be in good order. No commissions will be paid for the sale of these interests beyond the three-quarters of one percent (0.75%) commission to WealthForge discussed above.

Investors who purchase Units through an investment adviser registered under the Investment Advisers Act of 1940, as amended (RIAs) and who have been advised by such adviser on an ongoing basis regarding investments other than in the Company, but do not utilize a broker-dealer, will purchase at the Base Price with no Commission Adjustment and will receive Class A Units. The Company will pay a per transaction fee of approximately $50 per transaction (billed as $1,250 initially and an additional $50 for each transaction after the first 25) to SEI Altigo for Units purchased through SEI Altigo’s platform by certain Registered Investment Advisers. The Company will also pay the three-quarters of one percent (0.75%) commission payable to WealthForge for administrative and compliance related functions.

Investors who purchase Units through a registered broker-dealer will receive Class A Units and will purchase at the Base Price plus a Commission Adjustment, calculated as described below. The Company will pay an upfront selling commission in connection with the purchase of these Units. The Company has entered into (and will enter into) arrangements to pay a placement fee of up to six (6%) percent of Gross Offering Proceeds (“Placement Fee”) to participating brokers. This Placement Fee may be divided among multiple brokers, and is in addition to the three-quarters of one percent (0.75%) commission payable to WealthForge for administrative and compliance related functions, for a total Sellers’ Commission of up to six and three-quarters percent (6.75%).

The Commission Adjustment will be calculated as (100% / 100% - (Placement Fee Amount) – 1) * Base Price, rounded to the nearest cent. For example, since the Base Price for a particular transaction is $11.08, if the Placement Fee is 6%, the Commission Adjustment will be ((100/(100-6 = 94))-1) * $11.08 = $0.71, for a total cost of $11.79 per Unit, and an investor investing the minimum $10,000 will receive 848.18 Class A Units. If the Placement Fee is 2%, the Commission Adjustment will be ((100/(100-2 = 98))-1 = ) * $11.08 = $0.23, for a total cost of $11.31 per Unit, and an investor investing the minimum $10,000 will receive 884.17 Class A Units.

Investors who purchase at least $500,000 in Class A Units, who purchase Units through a RIA, who purchase units through a registered broker-dealer, or who are current employees of the Manager or any Development Partner with whom the Company does business are also eligible to take advantage of the Company’s Side Letter Agreement, the Form of which is attached to as Exhibit 6.2 hereto. Under this Side Letter Agreement, eligible investors (referred to as Class A+ Investors) are assigned cashflows from the Company’s Class C Members (who are also members of the Manager) such that the Class A+ investors will receive eighty-five percent (85%) of eligible Distributable Cash instead of eighty percent (80%). Any disputes under the Side Letter Agreement are subject to the same dispute resolution process as disputes under the Company’s Operating Agreement. While this Agreement shall be open to all Class A Members during the duration of this offering, the Side Letter Agreement shall terminate for with regards to any Class A Unit assigned, sold, or transferred (including involuntary transfers by operation of law) from the Class A+ Investors to any other Person, unless the Manager consents to the transfer of this Agreement in its sole and unlimited discretion. The terms full terms of the Side Letter Agreement are found in Exhibit 6.2 hereto.

No public market currently exists for our Interests. The Company will be managed by GCPF Management LLC, (the “Manager”) a Delaware limited liability company, which is managed by Jason Weimer and Robert Barlau. The Company has set a minimum investment requirement of $10,000. We intend to place the funds into an escrow account, which will not be released to the Company until the Minimum Offering of $1,000,000 is raised, deposited, and determined to be in good order. All payments in connection with subscriptions for Units are to be made payable to: South State Bank for the benefit of Gratus Capital Properties Fund III, LLC and sent by check, wire, or ACH transfer to South State Bank, N.A., in its capacity as escrow agent for the Company, where they will be held in a non-interest-bearing escrow account until the subscription agreements are accepted by the Company and the deposited funds are determined to be in good order. Purchasers of our Interests qualified hereunder may be unable to sell their securities, because there may not be a public market for our securities, and any proposed sale of securities is subject to a right of first refusal on the part of the Manager and other Company Members. Any purchaser of our securities should be in a financial position to bear the risks of losing their entire investment.

The transfer of Interests is limited. A Member may assign, his, her or its Interests only if certain conditions set forth in the Company’s Operating Agreement are satisfied. Our Operating Agreement provides that you may sell your Investor Interests to us in limited circumstances. The Manager does not have an exit strategy currently as it intends to operate the Company for at least eight years, and to continue operating in perpetuity as long as the liquidity needs of the Members are met. By the end of 2029, the Manager intends to communicate with the Members and use reasonable efforts to formulate and execute a plan to allow Members who wish to liquidate their Interests to do so within approximately two to three years.  Sample exit strategies the Manager may employ at the appropriate time as part of this plan are discussed on page 45.  However, there are currently no provisions for the return of funds except pursuant to our Withdrawal Policy which is discussed at on page 53, and there is no guarantee that the Company will liquidate Member interests by the end of 2032, or by any other date.

The Company has been formed to acquire various real estate assets throughout the United States. The Company seeks to capitalize on undervalued and value add multi-family properties, acquire stabilized multi-family properties, and enter into joint ventures to develop new multi-family properties.  The Company will primarily target Class A- to C+ assets throughout the Midwest, South, and Southeast, and currently has investments in four new construction Properties in North Dakota and Minnesota (see the section entitled “Description of Business” on page 36 for more information).  However, the Company may, from time-to-time, invest in other cash flowing and potentially cash flowing multi-family, commercial (e.g., senior living, mobile home parks, self-storage, mixed use, office and/or retail), new development property, and single-family assets as well as real estate backed loans and other real estate backed investments anywhere in the United States when compelling opportunities arise.  The Company will focus on new construction in underserved markets, as well as value add and distressed properties, including but not limited to REO’s, foreclosures, off-market, pulled from market, concession sensitivity, price reduced and post COVID 19 properties.

The Manager is not an investment adviser registered with the SEC, will not be governed by the Investment Advisers Act of 1940, and will not be acting as an investment adviser with respect to the Company because the Company will only be investing in real estate backed investments, and will not fall within the definition of an Investment Company under U.S. federal securities laws.

The Company is considered an “emerging growth company” under Section 101(a) of the Jumpstart Our Business Startups Act (the “JOBS Act”) as it is an issuer that had total annual gross revenues of less than $1.235 billion during its most recently completed fiscal year.

Since the Company is an emerging growth company certain Risk Factors include:

By purchasing Interests, Subscribers are bound by the dispute resolution provisions contained in our Operating Agreement which limits your ability to bring class action lawsuits or seek remedy on a class basis. The dispute resolution process provisions do not apply to claims under the federal securities laws. By agreeing to the dispute resolution process, including mandatory arbitration, investors will not be deemed to have waived the company’s compliance with the federal securities laws and the rules and regulations thereunder.

See the section entitled “RISK FACTORS” beginning on page 10 for a more comprehensive discussion of risks to consider before purchasing our Interests.

INVESTMENT IN SMALL BUSINESSES INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. SEE THE SECTION ENTITLED “RISK FACTORS.”

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THESE AUTHORITIES HAVE NOT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR SELLING LITERATURE. THESE SECURITIES ARE OFFERED UNDER AN EXEMPTION FROM REGISTRATION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THESE SECURITIES ARE EXEMPT FROM REGISTRATION.

THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING. INVESTORS WILL BE REQUIRED TO REPRESENT AND WARRANT THAT THEY MEET THESE SUITABILITY REQUIREMENTS PRIOR TO BEING ADMITTED AS MEMBERS OF THE COMPANY. NEITHER THE COMPANY NOR ITS MANAGER WILL CONDUCT AN INDEPENDENT ANALYSIS OF WHETHER POTENTIAL MEMBERS MEETS THE SUITABILITY REQUIREMENTS FOR THIS INVESTMENT.

GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

NOTICE REGARDING AGREEMENT TO ARBITRATE

THIS OFFERING MEMORANDUM REQUIRES THAT ALL INVESTORS ARBITRATE ANY DISPUTE, OTHER THAN THOSE RELATED TO CLAIMS UNDER FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, ARISING OUT OF THEIR INVESTMENT IN THE COMPANY. ALL INVESTORS FURTHER AGREE THAT THE ARBITRATION WILL BE BINDING AND HELD IN THE STATE OF DELAWARE. EACH INVESTOR ALSO AGREES TO WAIVE ANY RIGHTS TO A JURY TRIAL. OUT OF STATE ARBITRATION MAY FORCE AN INVESTOR TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. OUT OF STATE ARBITRATION MAY ALSO COST AN INVESTOR MORE TO ARBITRATE A SETTLEMENT OF A DISPUTE.

TABLE OF CONTENTS

OFFERING CIRCULAR SUMMARY

This summary contains basic information about us and the Offering. Because it is a summary, it does not contain all the information that you should consider before investing. You should read the entire Offering Circular carefully, including the risk factors and our financial statements and the related notes to those statements included in this Offering Circular. Except as otherwise required by the context, references in this Offering Circular to "we," "our," "us," “the Company,” and “Gratus Capital Properties Fund III" refer to Gratus Capital Properties Fund III, LLC, a Delaware limited liability company.

We were formed on November 10, 2020 and commenced operations on February 17, 2022.

We are not a blank check company and do not consider ourselves to be a blank check company as we:

Since our inception through December 31, 2023, we have not generated any revenues and have made investments of $10,707,702. We anticipate the commencement of generating revenues in the next twelve months. The capital raised in this Offering has been budgeted to cover the costs associated with beginning to operate our company, marketing expense, and acquisition related costs. We intend on using the majority of the proceeds from this Offering for the acquisition of properties. However, closing and other acquisition related costs such as title insurance, professional fees and taxes will likely require cash. We have only a limited ability to quantify the future expenses of the Company as they will all depend on size of deal, price, and place versus procuring new financing, due diligence performed (such as appraisal, environmental, property condition reports), legal and accounting, etc. There is no way to predict or otherwise detail expenses.

We intend on engaging in the following activities:

1. The Company’s primary focus is to invest in new development properties built at costs below current market values via joint venture agreements with real estate developers or investors who may have certain resources or opportunities not otherwise available to the Company. The properties are then managed by a well-established third-party property management company to maximize the appreciation for the investors.

2. Invest in value add or stabilized multi-family properties that it expects to appreciate in value. The properties are selected based on criteria that includes positive cash flow potential, good location and purchase price is less than replacement cost. The properties are then managed by a well-established third-party property management company to maximize the appreciation for the investors.

3. Invest in any opportunity our Manager sees fit within the confines of the market, marketplace and economy so long as those investments are real estate related and within the investment objectives of the Company. To this end, at some time in the future, the Company may also purchase additional properties or make other real estate investments that relate to varying property types including multi-family, commercial, single-family, hospitality, and senior housing.

4.   The Company may also make real estate backed loans. The Company will only be investing in real estate backed investments. The Company may also elect to loan money to real estate developers or investors.

In all cases, the debt on any given property must be such that it fits with the Investment Policies of the Company. The Company intends on leveraging its properties such that its total leverage will not exceed, in the aggregate, eighty percent (80%) of the value of the Company’s Assets.

As of December 31, 2023, the Company has invested $10,707,702 in Real Estate and has $146,064 in Cash, offset by total liabilities of $3,743,430 consisting of money lent to the Company by its Manager. This $3,743,430 is payable on demand, but due to our line of credit with our Manager, we do not believe we need additional capital to meet our ongoing expenses for the next 12 months.

FREQUENTLY ASKED QUESTIONS

Q: What is Gratus Capital Properties Fund III, LLC?

A: Gratus Capital Properties Fund III, LLC is recently formed company created for the specific purpose of identifying and purchasing a diverse portfolio of real estate assets throughout the United States. The Company seeks to enter joint ventures to develop new multi-family properties, capitalize on undervalued and value add multi-family properties, and acquire stabilized multi-family properties. The Company will primarily target Class A- to C+ assets in the Midwest, South and Southeast regions of the United States.  However, the Company may, from time-to-time, invest in other cash flowing and potentially cash flowing multi-family, commercial (e.g., senior living, mobile home parks, self-storage, mixed use, hospitality, office and/or retail), new development properties, and single-family assets as well as real estate backed loans and other real estate backed investments anywhere in the United States when compelling opportunities arise.

The Company intends to purchase properties that it expects to appreciate in value. Through the use of quality third-party management, it is expected that the investments it expects to appreciate due to superior locations and increased net operating income, over time. As of December 31, 2023 the Company has invested $10,707,702 four real estate partnerships: Enclave OG, LLC (Fargo, ND), SOCO Group II, LLC (Grand Forks, ND), Compass Apartments I, LLC (Moorhead, MN) and Current33 Apartments I, LLC (Hastings, MN), after having raised a total of $8,181,075 and borrowed the remainder from an affiliate of its Manager to facilitate these purchases and pay Company expenses. As of December 31, 2023, the Company owed its Manager’s affiliate a total of $3,743,430.

Q: How will Gratus Capital Properties Fund III, LLC identify properties?

A: The Manager will search for properties using traditional methods of using brokers in the markets where the Manager believe there are opportunities. The manager will also pursue properties through proprietary relationships with other owners and sponsors to acquire properties off market.

Q: What kind of return may be expected by a Member?

A: The Company does not currently own any assets; therefore, returns are speculative. However, it is the Company’s intent to pay 80% (eighty percent) of the Distributable Cash out of the Class A Unit Percentage Share to Class A Members and 70% (seventy percent) of Distributable Cash out of the Class B Unit Percentage Share to Class B Members in accordance with their prorata membership interest in the Company. For purposes of illustration, if total units sold were 100,000, 35,000 of which were Class A Units and 65,000 of which were Class B Units, the Class A Unit Percentage Share would be 35% and the Class B Unit Percentage Share would be 65%. Note that the Manager has discretion to reinvest what would otherwise be Distributable Cash in new or currently held Properties or other backed loans and other real estate backed investments (See the “SUMMARY OF OPERATING AGREEMENT” on page 50 for more information.)

Additionally, Investors who purchase at least $500,000 in Class A Units, who purchase Units through a RIA, who purchase units through a registered broker-dealer, or who are current employees of the Manager or any Development Partner with whom the Company does business are also eligible to take advantage of the Company’s Side Letter Agreement, the Form of which is attached to as Exhibit 6.2 hereto. Under this Side Letter Agreement, eligible investors (referred to as Class A+ Investors) are assigned cashflows such that the Class A+ investors will receive eighty-five percent (85%) of eligible Distributable Cash instead of eighty percent (80%). The terms full terms of the Side Letter Agreement are found in Exhibit 6.2 hereto.

Q: What is the minimum investment amount allowed?

A: $10,000.

Q: Who may invest?

A: This Investment is suitable only for persons who can bear the economic risk for an indefinite period of time and who can afford to lose their entire investment. Furthermore, investors must understand that. No public market exists for the securities, and no public market is expected to develop following this offering. Investors will be required to represent and warrant that they meet these suitability requirements prior to being admitted as members of the Company. Neither the Company nor its Manager will conduct an independent analysis of whether potential members meets the suitability requirements for this investment.

In addition to the above suitability requirements, the Manager reserves the right to reject any subscription they wish. Further, non-accredited investors will not be allowed to invest more than the greater of 10% of their net worth or their net income.

Q: Where can I buy Investor Interests?

A: All Interests will be available for purchase directly at gratusfunds.com. Interests may also be purchased through registered broker dealers and registered investment advisers.

Q: Who is the Manager?

A: The Manager is GCPF Management LLC which is controlled by Jason Weimer, Robert Barlau, Skip Johnson, and Austin Schmitt. GCPF Management LLC is an Affiliate of Gratus Capital, LLC, d/b/a Gratus Funds, which was founded in 2008 by Jason Weimer. Prior performance of Gratus Capital’s investments may be found in the section entitled “PRIOR PERFORMANCE.” For more info on the members of our Manager, please see “MANAGER, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS”

Q: How can I sell my Interests?

A: Generally speaking, the Interests will not be transferrable unless the member has submitted a withdraw request. Investors should consider investing for the long-term as disposition of the Interests will be difficult, if not impossible. The Manager does not have an exit strategy currently as it intends to operate the Company for at least eight years, and to continue operating in perpetuity as long as the liquidity needs of the Members are met. By the end of 2029, the Manager intends to communicate with the Members and use reasonable efforts to formulate and execute a plan to allow Members who wish to liquidate their Interests to do so within approximately two to three years. Sample exit strategies the Manager may employ at the appropriate time as part of this plan are discussed on page 45. However, there are currently no provisions for the return of funds except pursuant to our Withdrawal Policy which is discussed on page 53, and there is no guarantee that the Company will liquidate Member interests by the end of 2032, or by any other date. Please note that Members may not be able to withdraw their entire interest, since withdrawals are limited to 5% of the Interest of the Company per year (absent extraordinary circumstances), priority may be given to ERISA plan investors and the estates of deceased Members, and will only be made to the extent there is cash available for withdrawals.

Q: Will I be charged upfront selling commissions?

A: Selling commission of 0.75% to 6.75% will be paid by the Company on capital contributions, depending on the channel through which such investments are made. Investors who invest through broker-dealers will also receive a smaller number of Units for the same investment amount to reflect the fact that the Company is paying an up to 6% additional commission on money invested through that channel.  This may result in a lower return on invested capital for investors who invest through broker-dealer. However, all investors will have their Capital Account credited for the full amount of their investment (regardless of their channel of investment), and be entitled to a full return of their capital when Properties are sold in preparation for liquidation of the fund (e.g., investors who received 940 Units for $10,000 and investors who received 1000 Units for $10,000 will both have Capital Accounts of $10,000).

Q: Do you have a redemption program?

A: Yes, see our Withdrawal Policy on page 53 for more information. Please note that Members may not be able to withdraw their entire interest, since withdrawals are limited to 5% of the Interest of the Company per year (absent extraordinary circumstances), priority may be given to ERISA plan investors and the estates of deceased Members, and are will only be made to the extent there is cash available for withdrawals.

Q: May I make an investment through my IRA or other tax-deferred retirement account?

A: Yes. You may make an investment through your IRA or other tax-deferred retirement account. In making these investment decisions, you should consider, at a minimum, (1) whether the investment is in accordance with the documents and instruments governing your IRA, plan or other retirement account, (2) whether the investment would constitute a prohibited transaction under applicable law, (3) whether the investment satisfies the fiduciary requirements associated with your IRA, plan or other retirement account, (4) whether the investment will generate unrelated business taxable income (“UBTI”) to your IRA, plan or other retirement account, and (5) whether there is sufficient liquidity for such investment under your IRA, plan or other retirement account. You should note that an investment in our Investor Interests will not, in itself, create a retirement plan and that, in order to create a retirement plan, you must comply with all applicable provisions of the Internal Revenue Code of 1986, as amended (the “IRS Code”).

It is the Company’s understanding that IRA and Roth IRA investments can be made through self-directed accounts which are not managed by the Company and most likely will be charged fees to manage the self-directed account. These fees will need to be paid by the investor and are not considered an expense of the Company.

Q: Is there any minimum initial offering amount required to be sold?

A: Yes, but we have already raised the minimum of $1,000,000 in Investor Interests.

Q: Will I be notified of how my investment is doing?

A: Yes, we will provide you with periodic updates on the performance of your investment in us, including:

We will provide this information to you by posting such information on the SEC’s website at www.sec.gov, on the Manager’s website at gratusfunds.com, and via e-mail.

Q: When will I get my detailed tax information?

A: Your schedule K-1 tax information, will be provided by March 31st of the year following each taxable year.

Q: Who can help answer my questions about the offering?

Please contact:

Investor Relations

GCPF Management LLC

718 Washington Ave N,

Suite 400

Minneapolis, MN 55401

Office: (651) 999-5344

Email: hello@gratusfunds.com

EXEMPTIONS UNDER JUMPSTART OUR BUSINESS STARTUPS ACT

We are an emerging growth company. An emerging growth company is one that had total annual gross revenues of less than $1,235,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) during its most recently completed fiscal year. We would lose our emerging growth status if we were to exceed $1,235,000,000 in gross revenues. We are not sure this will ever take place.

Because we are an emerging growth company, we have the exemption from Section 404(b) of Sarbanes-Oxley Act of 2002 and Section 14A(a) and (b) of the Securities Exchange Act of 1934. Under Section 404(b), we are now exempt from the internal control assessment required by subsection (a) that requires each independent auditor that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer. We are also not required to receive a separate resolution regarding either executive compensation or for any golden parachutes for our executives so long as we continue to operate as an emerging growth company.

We hereby elect to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1).

We will lose our status as an emerging growth company in the following circumstances:

RISK FACTORS

Investors in the Company should be particularly aware of the inherent risks associated with our business. As of the date of this filing our management is aware of the following material risks.

General Risks Related to Our Business

We are an emerging growth company organized in November 2020, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

We were organized in November 2020, commenced operations in February 2022, and have yet to earn revenue. As a result of our start-up status we will accumulate deficits due to organizational and start-up activities, business plan development, interest owed on amounts advanced by the Manager, and professional fees since we organized. There is nothing at this time, other than four new construction properties into which the Company has invested and the track record of our Manager and its managing-members, on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. However, projections concerning the success of new-construction properties are based on assumptions, and past results do not guarantee future profitability. Our future operating results will depend on many factors, including our ability to raise adequate working capital, availability of properties for purchase, the level of our competition and our ability to attract and maintain key management and employees.

We are significantly dependent on Jason Weimer, Robert Barlau, Skip Johnson, and Austin Schmitt. The loss or unavailability of any of these individual’s services would have an adverse effect on our business, operations and prospects in that we may not be able to obtain new management under the same financial arrangements, which could result in a partial loss or return of your investment.

The acquisition of properties and the attainment of new investors is significantly dependent on Jason Weimer, Robert Barlau, Skip Johnson, and Austin Schmitt, and on the various Companies with which these individuals are affiliated, collectively referred to as “Gratus Capital” and “Gratus Funds.” We expect that our investor base will be largely drawn from Gratus Capital’s exposure on social media and on media content delivered over the Manager’s website, along with Registered Investment Advisers with whom Gratus Capital has formed relationships. It would be difficult to replace these individuals at such an early stage of development of the Company. Jason Weimer, Robert Barlau, Skip Johnson, and Austin Schmitt have and intend to continue to build a qualified team of individuals that manage the marketing, business operations, property management, acquisitions and dispositions of assets. In the event these individuals leave the Company, it may be difficult to attain new investors or purchase properties, but the management team would be able to manage the Company’s assets until a such time as an exit would occur. Should the Company be unable to replace these individuals, it may be required to cease pursuing business opportunities, which may result in a partial loss or return of your investment.

This offering is a semi-blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

We will seek to invest substantially all of the net offering proceeds from this Offering, after the payment of fees and expenses, in the acquisition of or investment in interests in real estate assets. However, because, as of the date of this Offering Circular, we have only invested in four real estate properties, and because our Members will be unable to evaluate the economic merit of additional assets before we invest in them, they will have to rely on the ability of our Manager to select suitable and successful investment opportunities. These factors increase the risk that our Members’ investment may not generate returns comparable to the Company’s competitors.

Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

GCPF Management LLC, our Manager, will make all decisions relating to the business, operations, and strategy, without input by the Members. Such decisions may include purchase and sale decisions regarding the assets, the appointment of other officers, managers, vendors and whether to enter into material transactions with related parties.

An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

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. Company Units are also subject to a Right of First refusal, whereby the Manager and existing Company Members must be given an opportunity to purchase Units before they may be sold to third parties. The Company intends to operate the Company for at least eight years, and to continue operating in perpetuity as long as the liquidity needs of the Members are met. By the end of 2029, the Manager intends to communicate with the Members and use reasonable efforts to formulate and execute a plan to allow Members who wish to liquidate their Interests to do so within approximately two to three years, but there is no guarantee that such a plan will be formulated or executed, and there is no guarantee that the Company will liquidate Member interests by the end of 2032, or by any other date. Sample exit strategies the Manager may employ at the appropriate time as part of this plan are discussed on page 45. Members should view investing in the Company as a long-term investment with the ability to withdraw only within the policies outlined in the Withdrawal Policy discussed on page 53.

Our Manager has sole discretion over whether and when to make cash distributions.  You may not receive Distributable Cash on predictable schedule and may never receive any Distributable Cash.

Cash flow Distributions will only be available to the extent there is cash flow from rentals and other operations of the Properties and other investments. Additionally, even if there is cash flow from operations, the Manager of the Company, in its sole discretion, may cause the Company to retain some or all of such funds for further investment, working capital purposes, further renovation and other reserves. Therefore, there can be no assurance as to when or whether there will be any Cash Distributions from the Company to the Members. It is possible that the Company will not achieve any Distributable Cash and that the Members may not receive any Cash Distributions at all.

Risks Related to the Real Estate Business

The profitability of attempted acquisitions is uncertain.

We intend to acquire properties selectively. Acquisition of properties entails risks those investments will fail to perform in accordance with expectations. In undertaking these acquisitions, we will incur certain risks, including the expenditure of funds on, and the devotion of management’s time to, transactions that may not come to fruition. Additional risks inherent in acquisitions include risks that the properties will not achieve anticipated sales price, rents, or occupancy levels and that estimated operating expenses and costs of improvements to bring an acquired property up to standards established for the market position intended for that property may prove inaccurate.

Rising expenses could reduce cash flow and funds available for future acquisitions.

Our properties will be subject to increases in real estate tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance, interest, administrative and other expenses. If we are unable to increase rents at an equal or higher rate or lease properties on a basis requiring the tenants to pay all or some of the expenses, we would be required to pay those costs, which could adversely affect funds available for future cash distributions.

Due to a substantial influxes of capital investment and competition for properties in the multi-family, single-family, or commercial real estate market, the real estate we purchase may not appreciate or may decrease in value.

The real estate markets are currently experiencing a substantial influx of capital from investors worldwide. This substantial flow of capital, combined with significant competition for real estate and the strength in the economy, may result in inflated purchase prices for such assets. To the extent we purchase real estate in such an environment, we are subject to the risk that if the real estate market ceases to attract the same level of capital investment in the future as it is currently attracting, or if the number of companies seeking to acquire such assets decreases, our returns will be lower and the value of our assets may not appreciate or may decrease significantly below the amount we paid for such assets.

A multi-family, single-family, or commercial property's income and value may be adversely affected by national and regional economic conditions, local real estate conditions such as an oversupply of properties or a reduction in demand for properties, availability of "for sale" properties, competition from other similar properties, our ability to provide adequate maintenance, insurance and management services, increased operating costs (including real estate taxes), the attractiveness and location of the property and changes in market rental rates. Our income will be adversely affected if a significant number of tenants are unable to pay rent or if our properties cannot be rented on favorable terms. Our performance is linked to economic conditions in the regions where our properties will be located and in the market for multifamily space generally. Therefore, to the extent that there are adverse economic conditions in those regions, and in these markets generally, that impact the applicable market rents, such conditions could result in a reduction of our income and cash available for distributions and thus affect the amount of distributions we can make to you.

If we acquire commercial real estate, we will depend on commercial real estate tenants for our revenue and therefore our revenue may depend on the economic viability of our tenants.

If we acquire commercial real estate, we will be highly dependent on income from tenants. Our financial results will depend in part on leasing space in the properties or the full properties we acquire to tenants on economically favorable terms.

In the event of a tenant default prior to stabilization, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-letting our property. A default, of a substantial tenant or number of tenants at any one time, on lease payments to us would cause us to lose the revenue associated with such lease(s) and cause us to have to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a mortgage. Therefore, substantial lease payment defaults by tenant(s) could cause us to lose our investment or reduce the amount of distributions to Members.

Competition and any increased affordability of single-family homes could limit our ability to lease our apartments or maintain or increase rents, which may materially and adversely affect us, including our financial condition, cash flows, results of operations and growth prospects.

The multi-family industry is highly competitive, and we face competition from many sources, including from other multi-family apartment communities both in the immediate vicinity and the geographic market where our properties are and will be located. If so, this would increase the number of apartments units available and may decrease occupancy and unit rental rates. Furthermore, multi-family apartment communities we acquired compete, or will compete, with numerous housing alternative in attracting residents, including owner occupied single and multi-family homes available to rent or purchase. The number of competitive properties and/or condominiums in a particular area, or any increased affordability of owner occupied single and multi-family homes caused by declining housing prices, mortgage interest rates and government programs to promote home ownership, could adversely affect our ability to retain our residents, lease apartment units and maintain or increase rental rates. These factors could materially and adversely affect us.

We may not make a profit if we sell a property.

The prices that we can obtain when we determine to sell a property will depend on many factors that are presently unknown, including the operating history, tax treatment of real estate investments, demographic trends in the area and available financing. There is a risk that we will not realize any significant appreciation on our investment in a property. Accordingly, your ability to recover all or any portion of your investment under such circumstances will depend on the amount of funds so realized and claims to be satisfied therefrom.

Our properties may not be diversified.

Our potential profitability and our ability to diversify our investments may be limited, both geographically and by type of properties purchased. We will be able to purchase additional properties only as additional funds are raised. Given the limited number of assets we are targeting, our properties will not be well diversified, and their economic performance could be affected by changes in local economic conditions or changes uniquely affecting one or more particular asset classes.

Our performance is therefore linked to economic conditions in the regions in which we will acquire properties and in the market for real estate properties generally. Therefore, to the extent that there are adverse economic conditions in the regions in which our properties are located and in the market for real estate properties, such conditions could result in a reduction of our income and cash to return capital and thus affect the amount of distributions we can make to you.

Competition with third parties in acquiring and operating properties may reduce our profitability and the return on your investment.

We compete with many other entities engaged in real estate investment activities, many of which have greater resources than we do. Specifically, there are numerous commercial developers, real estate companies, foreign investors and investment funds that operate in the markets in which we may operate, that will compete with us in acquiring residential, commercial, and other properties that will be seeking investments and tenants for these properties.

Many of these entities have significant financial and other resources, including operating experience, allowing them to compete effectively with us. Competitors with substantially greater financial resources than us may generally be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of entities in which investments may be made or risks attendant to a geographic concentration of investments. Demand from third parties for properties that meet our investment objectives could result in an increase of the price of such properties. If we pay higher prices for properties, our profitability may be reduced, and you may experience a lower return on your investment. In addition, our properties may be located in a close proximity to other properties that will compete against our properties for tenants. Many of these competing properties may be better located and/or appointed than the properties that we will acquire, giving these properties a competitive advantage over our properties, and we may, in the future, face additional competition from properties not yet constructed or even planned. This competition could adversely affect our business. The number of competitive properties could have a material effect on our ability to rent space at our properties and the amount of rents charged. We could be adversely affected if additional competitive properties are built in locations competitive with our properties, causing increased competition for residential renters. In addition, our ability to charge premium rental rates to tenants may be negatively impacted. This increased competition may increase our costs of acquisitions or lower the occupancies and the rent we may charge tenants. This could result in decreased cash flow from tenants and may require us to make capital improvements to properties which we would not have otherwise made, thus affecting cash available for distributions to you.

We may not have control over costs arising from construction and rehabilitation of properties.

We have invested in four new construction properties and may elect to invest in additional new construction properties and/or in affordable properties that we will rehabilitate and convert to market rate properties. Consequently, we may retain independent general contractors to perform the actual physical rehabilitation and/or construction work and will be subject to risks in connection with a contractor's ability to control rehabilitation and/or construction costs, the timing of completion of rehabilitation and/or construction, and a contractor's ability to build in conformity with plans and specification. The cost of construction materials has risen significantly in the past year, and may rise still further, which may make it difficult or impossible for this construction to be completed within the budgeted dollar amount, which could result in a property requiring the investments of additional funds in order to complete these projects and reduce or even eliminate the overall profitability of our investments.

Inventory or available properties might not be sufficient to realize our investment goals.

We may not be successful in identifying suitable real estate properties or other assets that meet our acquisition criteria, or consummating acquisitions or investments on satisfactory terms. Failures in identifying or consummating acquisitions would impair the pursuit of our business plan. Moreover, our acquisition strategy could involve significant risks that could inhibit our growth and negatively impact our operating results, including the following: increases in asking prices by acquisition candidates to levels beyond our financial capability or to levels that would not result in the returns required by our acquisition criteria; diversion of management’s attention to expansion efforts; unanticipated costs and contingent or undisclosed liabilities associated with acquisitions; failure of acquired businesses to achieve expected results; and difficulties entering markets in which we have no or limited experience.

The consideration paid for our target acquisition may exceed fair market value, which may harm our financial condition and operating results.

The consideration that we pay will be based upon numerous factors, and the target acquisition may be purchased in a negotiated transaction rather than through a competitive bidding process. We cannot assure anyone that the purchase price that we pay for a target acquisition or its appraised value will be a fair price, that we will be able to generate an acceptable return on such target acquisition, or that the location, lease terms or other relevant economic and financial data of any properties that we acquire will meet acceptable risk profiles. We may also be unable to lease vacant space or renegotiate existing leases at market rates, which would adversely affect our returns on a target acquisition. As a result, our investments in our target acquisition may fail to perform in accordance with our expectations, which may substantially harm our operating results and financial condition.

The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

There is no assurance that our real estate investments will appreciate in value or will ever be sold at a profit. The marketability and value of the properties will depend upon many factors beyond the control of our management. There is no assurance that there will be a ready market for the properties, since investments in real property are generally non-liquid. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any property for the price or on the terms set by it, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. Moreover, we may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure any person that we will have funds available to correct those defects or to make those improvements. In acquiring a property, we may agree to lockout provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These lockout provisions would restrict our ability to sell a property. These factors and any others that would impede our ability to respond to adverse changes in the performance of our properties could significantly harm our financial condition and operating results.

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.

Because real estate investments are relatively illiquid, our ability to promptly sell one or more properties or investments in our portfolio in response to changing economic, financial and investment conditions may be limited. In particular, these risks could arise from weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located. We may be unable to realize our investment objectives by sale, other disposition or refinance at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. An exit event is not guaranteed and is subject to the Manager’s discretion.

The ongoing COVID-19 pandemic, and government restrictions adopted in response thereto, could significantly impact the ability of our tenants to pay rent, impede the performance of our properties, and harm our financial condition.

The United States, like the rest of the world, has been adversely affected by the breakout of the COVID-19 virus. The United States government, many states, and cities have periodically instituted certain restrictions on businesses and individuals which has limited their ability to engage in economic activities. These circumstances may continue for an extended period of time and may have an adverse impact on economic and market conditions as well as the Company’s operations and performance. The ultimate economic fallout from the pandemic and the long-term impact on economies, markets, industries, and individual companies are not known. The extent of the impact to the financial performance and the operations of the Company will depend on future developments, which are highly uncertain and cannot be predicted.

Investments in mortgage loans may be affected by unfavorable real estate market conditions, including interest rate fluctuations

                If the Company makes or invests in mortgage loans, it will be at risk of defaults by the borrowers on those mortgage loans as well as interest rate risks. The Company may incur delays in liquidating such defaulted mortgage loans; it may not be able to obtain sufficient proceeds to repay all amounts due to us under the mortgage loan. Further, the values of the properties securing the mortgage loans may decrease after the dates of origination or purchase of those mortgage loans. If the values of the underlying properties fall, the Company’s risk will increase because of the lower value of the security associated with such loans. In addition, interest rate fluctuations could reduce returns as compared to market interest rates and reduce the value of the mortgage loans in the event the Company sells them.

Second mortgage loan investments involve a greater risk of loss than traditional mortgage loans.

                If the Company makes or invests in second mortgages loans, its subordinated priority to the senior lender or lenders will place its investment at a greater risk of loss than a traditional mortgage. In the event of default, any recovery will be subordinate to the senior lender(s). Further, it is likely that any investments made in second mortgages will be placed with private entities and not insured by a government sponsored entity, placing additional credit risk on the borrower, and the Company may not recover some or all of its investment.

Construction loan investments involve a greater risk of loss of investment and reduction of return than traditional mortgage loans.

                If the Company makes or invests in construction loans, the nature of these loans poses a greater risk of loss than traditional mortgages. Since construction loans are made generally for the express purpose of either the original development or redevelopment of a property, the risk of loss is greater than a traditional mortgage because the underlying properties subject to construction loans are generally unable to generate income during the period of the loan. Construction loans may also be subordinate to the first lien mortgages. Any delays in completing the development or redevelopment project may increase the risk of default or credit risk of the borrower, and the Company may not recover some or all of its investment.

Bridge loan investments involve a greater risk of loss of investment and reduction of return than traditional mortgage loans

                If the Company makes or invests in bridge loans secured by first lien mortgages on properties to borrowers who are typically seeking short-term capital to be used in an acquisition or renovation of real estate, these loans pose a greater risk than traditional mortgages. Borrowers usually identify undervalued assets that have been under-managed or are located in recovering markets. If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and the Company may not recover some or all of its investment.

                In addition, owners often borrow funds under a conventional mortgage loan to repay a bridge loan. The Company may therefore be dependent on a borrower’s ability to obtain permanent financing to repay its bridge loan, which could depend on market conditions and other factors. These loans may be highly illiquid investments due to their short life. Bridge loans are also subject to risks of borrower defaults, bankruptcies, fraud, losses and special hazard losses that are not covered by standard hazard insurance. In the event of any default, the Company may not recover some or all of its investment.

Mezzanine loan investments involve a greater risk of loss of investment and reductions of return than senior loans secured by income producing properties.

                If the Company makes or invests in mezzanine loans, they may take the form of subordinated loans secured by second mortgages on the underlying real property or loans secured by a pledge of the ownership interests of either the entity owning the real property or the entity that owns the interest in the entity owning the real property. These types of investments involve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property because the investment may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, the Company may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy the mezzanine loan. If a borrower defaults on the mezzanine loan or debt senior to the Company’s loan, or in the event of a borrower bankruptcy, the mezzanine loan will be satisfied only after the senior debt. As a result, the Company may not recover some or all of its investment. These loans may also be highly illiquid investments due to their short life. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the real property and increasing the risk of loss of principal.

Investments in real estate-related securities may be illiquid, and the Company may not be able to dispose of these assets in response to changes in economic and other conditions

                If the Company invests in certain real estate-related securities that it may receive in connection with privately negotiated transactions, they may be restricted securities, resulting in a prohibition against their transfer, sale, pledge or other disposition for a period of time.  These securities also will not be registered under the relevant securities laws, and thus cannot be transferred, sold pledged, or otherwise disposed except in a transaction that is exempt from the registration requirements of, or is otherwise in accordance with, those laws. As a result, the Company's ability to dispose of these assets in response to changes in economic and other conditions may be extremely limited.

Risks Related to Financing

We might obtain lines of credit and other borrowings, which increases our risk of loss due to potential foreclosure.

We may obtain lines of credit and long-term financing that may be secured by our assets. As with any liability, there is a risk that we may be unable to repay our obligations from the cash flow of our assets. Therefore, when borrowing and securing such borrowing with our assets, we risk losing such assets in the event we are unable to repay such obligations or meet such demands.

We have broad authority to incur debt and high debt levels could hinder our ability to make distributions and decrease the value of our investors’ investments.

Our policies do not limit us from incurring debt until our total liabilities would be at 80% of the value of the assets of the Company. Although we intend to borrow typically no more than 80% of a property’s value, we may borrow a larger amount in some circumstances. High debt levels would cause us to incur higher interest charges and higher debt service payments and may also be accompanied by restrictive covenants. These factors could limit the amount of cash we have available to distribute and could result in a decline in the value of our investors’ investments.

Rising interest rates may make it harder for us to obtain financing for new properties, refinance the properties in which we invest, and the expenses of the Company will increase, as much of our debt was taken out at a variable interest rate. 

Concerns over inflation have caused the Federal Reserve to raise interest rates. As interest rates rise, we may be unable to obtain financing for new properties, or refinancing of existing properties, at attractive rates, which may make it more difficult to complete our business plan and/or our exit strategy. Additionally, the debt secured by the four properties in which the Company has invested has a variable interest rate, and rising interest rates increase the amount of interest that accrues, the Company’s debt service payments, and thereby reduces the profitability of the properties into which the Company has invested. If interest rates continue to rise, the Company’s debt service payments may also rise, which will further reduce profits. These factors could limit the amount of cash we have available to distribute and could result in a decline in the value of our investors’ investments.

Risks Related to Conflicts of Interest

There are conflicts of interest between us, our Manager and its affiliates.

We expect that a third-parties related to the Manager will provide asset management, accounting, and other services to our Manager and the Company. Prevailing market rates are determined by Management based on industry standards and expectations of what Management would be able to negotiate with a third-party on an arm’s length basis. All of the agreements and arrangements between such parties, including those relating to compensation, are not the result of arm’s length negotiations. Some of the conflicts inherent in our Company’s transactions with the Manager and its affiliates, and the limitations on such parties adopted to address these conflicts, are described below. Our Company, Manager and their affiliates will try to balance our interests with their own. However, to the extent that such parties take actions that are more favorable to other entities than the Company, these actions could have negative impact on our financial performance and, consequently, on distributions to Members and the value of our Interests. See “Conflicts of Interest.”

The interests of the Manager, our principals and their other affiliates may conflict with your interests.

The operating agreement provides our Manager with broad powers and authority which may result in one or more conflicts of interest between your interests and those of the Manager, the principals and its other affiliates. Potential conflicts of interest include, but are not limited to, the following:

Risks Associated with Joint Ventures/Co-Investors

The terms of joint venture agreements or other joint ownership/co-investor arrangements into which the Manager may enter could impair operating flexibility and results of operations.

In connection with the purchase of real estate or making real estate-related investments, the Manager may enter into joint ventures with affiliated or unaffiliated partners. In addition, the Company may also purchase or develop properties in arrangements with affiliates of tfshe Manager, the sellers of the properties, developers and/or similar persons. These structures involve participation in the investment by outsiders whose interests and rights may not be the same as the Company’s. These joint venture partners or co-tenants may have rights to take some actions over which the Manager has no control and may take actions contrary to the interests of the Company. For example, joint ownership of an investment, under certain circumstances, may involve risks not associated with direct ownership of such investment, including the following:

If the Company has a right of first refusal or buy/sell right to buy out a co-investor/venturer or partner, we may be unable to finance such a buy-out if it becomes exercisable or we may be forced to exercise those rights at a time when it would not otherwise be in our best interest to do so. If the Company’s interest is subject to a buy/sell right, we may not have sufficient cash, available borrowing capacity or other capital resources to allow the purchase of such an interest of a co-investor/venturer subject to the buy/sell right, in which case we may be forced to sell the interest when otherwise we would have preferred to retain such interest. The Manager may not be able to sell a Company’s interest in a joint venture on a timely basis or on acceptable terms if an exit from the venture is desired for any reason, particularly if the interest is subject to a right of first refusal of the co-investor/venturer or partner.

The Manager may structure a joint venture/co-invest relationships in a manner which could limit the amount the Company participates in the cash flow or appreciation of an investment.

The Manager may enter into joint venture agreements, the economic terms of which may provide for the distribution of income to the Company otherwise than in direct proportion to ownership interest in the joint venture. For example, while a co-investor/venturer may invest an equal amount of capital in an investment, the investment may be structured such that the Company has a right to priority distributions of cash flow up to a certain target return while the co-investor/venturer may receive a disproportionately greater share of cash flow than the Company is to receive once such target return has been achieved. This type of investment structure may result in the co-investor/venturer receiving more of the cash flow, including appreciation, of an investment than the Company would receive. If the Manager does not accurately judge the appreciation prospects of a particular investment or structure the agreement appropriately, the Company may incur losses on joint venture/co-invest investments and/or have limited participation in the profits of a joint venture/co-invest investment, either of which could reduce the ability to make cash distributions to the Members.

Co-investments with other parties will result in additional risks.

The Company may co-invest in various investments with other investors obtained by an affiliate of the Manager. It is possible that a co-investor would be unable to pay its share of costs, which could be detrimental to the Company’s investment in a property unless an alternative source of capital could be obtained. In the event a third-party co-investor was to become bankrupt, third party creditors could become involved in the property affairs. In addition, the co-investors could have economic or business interests or goals which are or which may become inconsistent with the Company’s business interests or goals.

If the Manager enters into joint ventures with affiliates, the Company may face conflicts of interest or disagreements with the joint venture partners that will not be resolved as quickly or on terms as advantageous to the Company as would be the case if the joint venture had been negotiated at arm’s-length with an independent joint venture partner. As a result, Member returns may be decreased by entering into such joint ventures with affiliates of the Manager.

In the event that the Company enters into a joint venture with any other program sponsored or advised by the Manager or one of its affiliates, the Company may face certain additional risks and potential conflicts of interest. Joint venture partners may not desire to sell properties at the time the Company desires. Joint ventures between the Company and other Manager programs will not have the benefit of arm’s-length negotiation of the type normally conducted between unrelated co-venturers. Under these joint venture agreements, none of the co-venturers may have the power to control the venture, and an impasse could be reached regarding matters pertaining to the joint venture, including the timing of a liquidation, which might have a negative impact on the joint venture and decrease returns to the Members. Joint ventures with other Manager programs would also be subject to the risks associated with joint ventures with unaffiliated third parties.

Risks Related to Our Corporate Structure

We do not set aside funds in a sinking fund to pay distributions, so you must rely on our revenues from operations and other sources of funding for distributions. These sources may not be sufficient to meet these obligations.

We do not contribute funds on a regular basis to a separate account, commonly known as a sinking fund, to pay distributions on the Interests. Accordingly, you will have to rely on our cash from operations and other sources of liquidity, such as borrowed funds and proceeds from sale of the assets, for distribution payments. Our ability to generate revenues from operations in the future is subject to general economic, financial, competitive, legislative, statutory and other factors that are beyond our control. Moreover, we cannot assure you that we will have access to additional sources of liquidity if our cash from operations are not sufficient to fund distributions to you. Our need for such additional sources may come at undesirable times, such as during poor market or credit conditions when the costs of funds are high and/or other terms are not as favorable as they would be during good market or credit conditions. The cost of financing will directly impact our results of operations, and financing on less than favorable terms may hinder our ability to make a profit. Your right to receive distributions on your Interests is junior to the right of our general creditors to receive payments from us. If we do not have sufficient funds to meet our anticipated future operating expenditures and debt repayment obligations as they become due, then you could lose all or part of your investment. We currently do not have any revenues. 

You will have limited control over changes in our policies and operations, which increases the uncertainty and risks you face as a Member.

Our Manager determines our major policies, including our policies regarding financing, growth and debt capitalization. Our Manager may amend or revise these and other policies without a vote of the Members. Our Manager’s broad discretion in setting policies and our Members’ inability to exert control over those policies increases the uncertainty and risks you face as a Member. In addition, our Manager may change our investment objectives without seeking Member approval.

Our ability to make distributions to our Members is subject to fluctuations in our financial performance, operating results and capital improvement requirements.

Currently, our strategy includes paying a quarterly distribution to investors. under this Offering that would result in positive annualized return on investment, net of expenses, of which there is no guarantee. Class A Members will receive 80% (eighty percent) of the Distributable Cash out of the Class A Unit Percentage Share to Class A Members and 70% (seventy percent) of Distributable Cash out of the Class B Unit Percentage Share to Class B Members, as defined in the Company’s Operating Agreement. (See “SUMMARY OF OPERATING AGREEMENT” at page 50) In the event of downturns in our operating results, decision by our Manager to acquire additional properties or other investments, capital improvements to our properties, or other factors, we may be unable, or may decide not to pay distributions to our Members. The timing and amount of distributions are the sole discretion of our Manager who will consider, among other factors, our financial performance, any debt service obligations, any debt covenants, and capital expenditure requirements. We cannot assure you that we will generate sufficient cash in order to pay distributions.

Investors will not receive the benefit of the regulations provided to real estate investment trusts or investment companies.

We are not a real estate investment trust and enjoy a broader range of permissible activities. Under the Investment Company Act of 1940, an “investment company” is defined as an issuer which is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities; is engaged or proposes to engage in the business of issuing face-amount certificates of the installment type, or has been engaged in such business and has any such certificate outstanding; or is engaged or proposes to engage in the business of investing, reinvesting, owning, holding, or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40 per centum of the value of such issuer’s total assets (exclusive of Government securities and cash items) on an unconsolidated basis. Under the Investment Advisers Act of 1940, an “investment adviser” is defined, in relevant part, as any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.

We intend to operate in such manner as not to be classified as an "investment company" within the meaning of the Investment Company Act of 1940 as we intend on primarily holding real estate. In addition, the Manager is not an investment adviser registered with the SEC, will not be governed by the Investment Advisers Act of 1940, and will not be acting in such capacity with respect to the Company because the Company will only be investing in real estate backed investments. The management and the investment practices and policies of ours are not supervised or regulated by any federal or state authority. As a result, investors will be exposed to certain risks that would not be present if we were subjected to a more restrictive regulatory situation.

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted

If we are ever deemed to be an investment company under the Investment Company Act of 1940, or our Manager is ever deemed to be an investment adviser under the Investment Advisers Act of 1940, we may be subject to certain restrictions including:

In addition, we may have imposed upon us certain burdensome requirements, including:

The exemption from the Investment Company Act of 1940 may restrict our operating flexibility. Failure to maintain this exemption may adversely affect our profitability.

We do not believe that at any time we will be deemed an “investment company” under the Investment Company Act of 1940 as we do not intend on trading or selling securities. Rather, we intend to hold and manage real estate. However, if at any time we may be deemed an “investment company,” we believe we will be afforded an exemption under Section 3(c)(5)(C) of the Investment Company Act of 1940, as amended (referred to in this Offering as the “1940 Act”). Section 3(c)(5)(C) of the 1940 Act excludes from regulation as an “investment company” any entity that is primarily engaged in the business of purchasing or otherwise acquiring “mortgages and other liens on and interests in real estate”. To qualify for this exemption, we must ensure our asset composition meets certain criteria. Generally, 55% of our assets must consist of qualifying mortgages and other liens on and interests in real estate and the remaining 45% must consist of other qualifying real estate-type interests. Maintaining this exemption may adversely impact our ability to acquire or hold investments, to engage in future business activities that we believe could be profitable, or could require us to dispose of investments that we might prefer to retain. If we are required to register as an “investment company” under the 1940 Act, then the additional expenses and operational requirements associated with such registration may materially and adversely impact our financial condition and results of operations in future periods.

NOTICE REGARDING AGREEMENT TO ARBITRATE

THIS OFFERING MEMORANDUM REQUIRES THAT ALL INVESTORS ARBITRATE ANY DISPUTE, OTHER THAN THOSE CLAIMS UNDER FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER, ARISING OUT OF THEIR INVESTMENT IN THE COMPANY. ALL INVESTORS FURTHER AGREE THAT THE ARBITRATION WILL BE BINDING AND HELD IN THE STATE OF DELAWARE. EACH INVESTOR ALSO AGREES TO WAIVE ANY RIGHTS TO A JURY TRIAL. OUT OF STATE ARBITRATION MAY FORCE AN INVESTOR TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. OUT OF STATE ARBITRATION MAY ALSO COST AN INVESTOR MORE TO ARBITRATE A SETTLEMENT OF A DISPUTE.

The Operating Agreement contains a mandatory dispute resolution process which may limit the rights of investors to some legal remedies and forums otherwise available. This Agreement contains a provision which requires that all claims arising from Member's investment in the Company be resolved through arbitration.

For Members’ information:

(a) Arbitration is final and binding on the parties;

(b) The parties are waiving their right to seek remedies in court, including the right to jury trial;

(c) Pre-arbitration discovery is generally more limited than and potentially different in form and scope from court proceedings.

(d) The Arbitration Award is not required to include factual findings or legal reasoning and any party's right to appeal or to seek modification of a ruling by the arbitrators is strictly limited;

(e) The panel of arbitrators may include a minority of persons engaged in the securities industry. Such arbitration provision limits the rights of an investor to some legal remedies and rights otherwise available.

The dispute resolution process provisions do not apply to claims under the federal securities laws. By agreeing to the dispute resolution process, including mandatory arbitration, investors will not be deemed to have waived the company’s compliance with the federal securities laws and the rules and regulations thereunder.

Insurance Risks

We may suffer significant losses that are not covered by insurance.

The geographic areas in which we invest in properties may be at risk for damage to property due to certain weather-related and environmental events, including such things as severe blizzards, fires, thunderstorms, flooding, sinkholes, earthquakes, tornadoes, and hurricanes. To the extent possible, the Manager may but is not required to attempt to acquire insurance against some of these risks. However, such insurance may not be available (or may only be available at cost-prohibitive costs) in all areas, nor are all hazards insurable as some may be deemed acts of God or be subject to other policy exclusions.

Furthermore, an insurance company may deny coverage for certain claims, and/or determine that the value of the claim is less than the cost to restore the property, and a lawsuit could have to be initiated to force them to provide coverage, resulting in further losses in income to the Company. Additionally, properties may now contain or come to contain mold, which may not be covered by insurance and has been linked to health issues.

Environmental and Litigation Risks

We may be required to mitigate or compensate others for certain environmental issues, resulting in increased costs.

Under various federal, state and local environmental and public health laws, regulations and ordinances, the Company may be required, regardless of knowledge or responsibility, to investigate and remediate the effects of hazardous or toxic substances or petroleum product releases (including in some cases natural substances such as methane or radon gas) and may be held liable under these laws or common law to a governmental entity or to third-parties for property, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the real or suspected presence of these substances in soil or groundwater beneath a Property. These damages and costs may be substantial and may exceed insurance coverage the Company has for such events.

Structures on a property may have contained hazardous or toxic substances, or have released pollutants into the environment; or may have known or suspected asbestos-containing building materials, lead based paint, mold, or insect infestations (such as roaches or bed bugs), that the Company may be required to mitigate. Undetected or unmitigated conditions such as these may cause (or be suspected to cause) personal injury and/or property damage, which could subject the properties, the Manager, and/or the Company to litigation with and liability to third parties.

The Manager will attempt to limit exposure to such conditions by conducting due diligence on a property, however, all or some of these conditions may not be discovered or occur until after that property has been acquired by the Company.

We may be subject to liability for alleged or actual harm to third parties and costs of litigation.

Owning and operating the properties subjects the Company to the risk of lawsuits filed by tenants, past and present employees, contractors, competitors, business partners, and others in the ordinary course of business. As with all legal proceedings, no assurance can be provided as to the outcome of these matters, and legal proceedings can be expensive and time consuming. The Company may not be successful in the defense or prosecution of these lawsuits, which could result in settlements or damages that could result in substantial Losses to the Company. Even if the Company is successful, there may be substantial costs associated with the legal proceeding, and the Manager may be delayed or prevented from implementing the business plan of the Company.

We may acquire properties which are not in compliance with the Americans with Disabilities Act

Under the Americans with Disabilities Act of 1990 (the ADA), all public accommodations are required to meet certain federal requirements related to access and use by disabled persons. A determination that a property owned and operated by the Company is not in compliance with the ADA could result in imposition of fines or an award of damages to private litigants. Furthermore, modifications made to comply with the ADA may result in unforeseen costs, which may impair the Company’s ability to make Distributions to its Members.

Federal Income Tax Risks

The Internal Revenue Service may challenge our characterization of material tax aspects of your investment in the Interests.

An investment in Interests involves material income tax risks which are discussed in detail in the section of this offering entitled “TAX TREATMENT OF COMPANY AND ITS SUBSIDIARIES” starting on page 47. You are urged to consult with your own tax advisor with respect to the federal, state, local and foreign tax considerations of an investment in our Interests. We may or may not seek any rulings from the Internal Revenue Service regarding any of the tax issues discussed herein. Accordingly, we cannot assure you that the tax conclusions discussed in this offering, if contested, would be sustained by the IRS or any court. In addition, our legal counsel is unable to form an opinion as to the probable outcome of the contest of certain material tax aspects of the transactions described in this offering, including whether we will be characterized as a “dealer” so that sales of our assets would give rise to ordinary income rather than capital gain. Our counsel also gives no opinion as to the tax considerations to you of tax issues that have an impact at the individual or partner level.

You may realize taxable income without cash distributions, and you may have to use funds from other sources to fund tax liabilities.

As a Member of the Company, you will be required to report your allocable share of the Company’s taxable income on your personal income tax return regardless of whether you have received any cash distributions from us. It is possible that your Interests will be allocated taxable income in excess of your cash distributions. We cannot assure you that cash flow will be available for distribution in any year. As a result, you may have to use funds from other sources to pay your tax liability.

You may not be able to benefit from any tax losses that are allocated to your Interests.

Interests may be allocated their share of tax losses should any arise. Section 469 of the Internal Revenue Code limits the allowance of deductions for losses attributable to passive activities, which are defined generally as activities in which the taxpayer does not materially participate. Any tax losses allocated to investors will be characterized as passive losses, and, accordingly, the deductibility of such losses will be subject to these limitations. Losses from passive activities are generally deductible only to the extent of a taxpayer’s income or gains from passive activities and will not be allowed as an offset against other income, including salary or other compensation for personal services, active business income or “portfolio income”, which includes non-business income derived from dividends, interest, royalties, annuities and gains from the sale of property held for investment. Accordingly, you may receive no benefit from your share of tax losses unless you are concurrently being allocated passive income from other sources.

We may be audited which could subject you to additional tax, interest and penalties.

Our federal income tax returns may be audited by the Internal Revenue Service. Any audit of the Company could result in an audit of your tax return. The results of any such audit may require adjustments of items unrelated to your investment, in addition to adjustments to various Company items. In the event of any such audit or adjustments, you might incur attorneys’ fees, court costs and other expenses in contesting deficiencies asserted by the Internal Revenue Service. You may also be liable for interest on any underpayment and penalties from the date your tax was originally due. The tax treatment of all Company items will generally be determined at the Company level in a single proceeding rather than in separate proceedings with each Member, and our Manager is primarily responsible for contesting federal income tax adjustments proposed by the Internal Revenue Service. In such a contest, our Manager may choose to extend the statute of limitations as to all Members and, in certain circumstances, may bind the Members to a settlement with the Internal Revenue Service. Adjustments to Company items would continue to be determined at the Company level however, and any such adjustments would be accounted for in the year they take effect, rather than in the year to which such adjustments relate. Our Manager will have the discretion in such circumstances either to pass along any such adjustments to the Members or to bear such adjustments at the Company level.

State and local taxes and a requirement to withhold state taxes may apply, and if so, the amount of net cash from open payable to you would be reduced.

The state in which you reside may impose an income tax upon your share of our taxable income. Further, states in which we will own properties may impose income taxes upon your share of our taxable income allocable to any Company property located in that state. Many states have implemented or are implementing programs to require companies to withhold and pay state income taxes owed by non-resident Members relating to income-producing properties located in their states, and we may be required to withhold state taxes from cash distributions otherwise payable to you. You may also be required to file income tax returns in some states and report your share of income attributable to ownership and operation by the Company of properties in those states. In the event we are required to withhold state taxes from your cash distributions, the amount of the net cash from operations otherwise payable to you would be reduced. In addition, such collection and filing requirements at the state level may result in increases in our administrative expenses that would have the effect of reducing cash available for distribution to you. You are urged to consult with your own tax advisors with respect to the impact of applicable state and local taxes and state tax withholding requirements on an investment in our Interests.

Legislative or regulatory action could adversely affect investors.

In recent years, numerous legislative, judicial and administrative changes have been made in the provisions of the federal income tax laws applicable to investments similar to an investment in our Interests. Additional changes to the tax laws are likely to continue to occur, and we cannot assure you that any such changes will not adversely affect your taxation as a Member. Any such changes could have an adverse effect on an investment in our Interests or on the market value or the resale potential of our properties. You are urged to consult with your own tax advisor with respect to the impact of recent legislation on your investment in Interests and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our Interests.

DETERMINATION OF OFFERING PRICE

Our initial Offering Price was arbitrary with no relation to value of the company. Since the beginning of this offering, the Manager has calculated a reasonable estimate of the value of the Unit of the Company, revising the Base Price up from $10 to 10.19 in December 2022 and 11.08 in January 2024, using a process which considers:

(1) estimated values of each of our commercial real estate assets and investments, including related liabilities, based upon

(a)     market capitalization rates, comparable sales information, interest rates, net operating income,  

(b)    with respect to debt, default rates, discount rates and loss severity rates,  

(c)     for properties that have development or value add plans, progress along such development or value add plan  

(d)    in certain instances, reports of the underlying real estate provided by an independent valuation expert

(2) the price of liquid assets for which third party market quotes are available;

(3) accruals of our periodic distributions; and

(4) estimated accruals of our operating revenues and expenses.

Note that the determination of the value of our Units is not based on, nor intended to comply with, fair value standards under GAAP, and our valuation may not be indicative of the price that we would receive for our assets at current market conditions. The majority of our assets consist of commercial real estate investments and, as with any commercial real estate valuation protocol, the conclusions reached by our Manager’s internal asset management team are based on a number of judgments, assumptions and opinions about future events that may or may not prove to be correct. The use of different judgments, assumptions or opinions would likely result in different estimates of the value of our commercial real estate assets and investments, and therefore in a different valuation of our Units. In addition, this per Unit value may not fully reflect certain material events involving the Company, its real estate investments, or the real estate market as a whole. Such unreflected events could include events which have already taken place that are not yet known to Management or for which the financial impact of such events is not immediately quantifiable, as well as future events which occur after the qualification of this Offering Circular. Any potential disparity in our Unit valuation may be in favor of either Members who buy new units, or existing Members who already purchased Units.

This Offering is a self-underwritten offering, which means that it does not involve the participation of an underwriter to market, distribute or sell the Investor Interests offered under this offering.

If the maximum amount of Investor Interests are sold under this Offering, the purchasers under this Offering will own 100% of the Investor Interests outstanding.

If the minimum amount of Investor Interests are sold under this Offering, the purchasers under this Offering will own 100% of the Investor Interests outstanding.

If some amount of Investor Interests are sold under this Offering, between the above maximum and minimum amount of this Offering, the purchasers under this Offering will own 100% of the Investor Interests.

PLAN OF DISTRIBUTION

This Offering shall remain open for one year following the Qualification Date of this Offering unless earlier terminated by the Manager in its sole and absolute discretion, provide that the Manager may extend the Offering for additional periods so long as it is compliant with the qualification requirements of the Commission.

The Investor Interests (Interests) are self-underwritten and are being offered and sold by the Company on a minimum/maximum basis. Each Unit will be sold for the Base Price, which is currently $11.08 but may be adjusted by amendments of this Operating Circular, plus a Commission Adjustment (if a broker-dealer other than WealthForge is involved in the transaction). Units are being offered through three separate channels:

No compensation will be paid to any principal, the Manager, or any affiliated company or party with respect to the sale of Investor Interests. This means that no compensation will be paid to Jason Weimer, Robert Barlau, Skip Johnson, Austin Schmitt or affiliated companies with respect to the sale of the Investor Interests. We are relying on Rule 3a4-1 of the Securities Exchange Act of 1934, Associated Persons of an Issuer Deemed not to be Brokers. The applicable portions of the rule state that associated persons (including companies) of an issuer shall not be deemed brokers if they a) perform substantial duties at the end of the offering for the issuer; b) are not broker dealers; and c) do not participate in selling securities more than once every 12 months, except for any of the following activities: i) preparing written communication, but no oral solicitation; or ii) responding to inquiries provided that the content is contained in the applicable registration statement; or iii) performing clerical work in effecting any transaction. Neither the Company, its Manager, nor any affiliates conduct any activities that fall outside of Rule 3a4-1 and are therefore not brokers nor are they dealers. All subscription funds which are accepted will be deposited directly into the Company’s escrow account. Subscription funds placed in the Company's escrow account may only be released if the Minimum Offering Amount is raised within the Offering Period. The purchase price for Investor Interests will depend on the way the investor invests as described above, with a minimum investment of $10,000. The Company has raised its minimum of $1,000,000. Subscription Agreements are irrevocable.

The Company plans to use Gratus Capital’s current network of real estate investors to directly solicit investments as well as various forms of advertisement. The Company, subject to Rule 255 of the Securities Act of 1933 and corresponding state regulations, is permitted to generally solicit investors by using advertising mediums, such as print, radio, TV, and the Internet. We will offer the securities as permitted by Rule 251 (d)(1)(iii) whereby offers may be made after this Offering has been qualified, but any written offers must be accompanied with or preceded by the most recent offering circular filed with the Commission for the Offering. The Company plans to directly solicit investors using the Internet through a variety of existing internet advertising mechanisms, such as search based advertising, search engine optimization, and the Manager’s website at gratusfunds.com.

Please note that the Company will not communicate any information to prospective investors except as may be permitted under applicable securities laws without providing access to the Offering. The Offering may be delivered through the website that is in the process of being developed, through email, or by hard paper copy.

However received or communicated, all of our communications will be Rule 255 compliant and not amount to a free writing prospectus. We will not orally solicit investors and no sales will be made prior to this offering statement being declared qualified and a final Offering is available.

Investments will be processed on a first come, first served basis, up to the total Offering Amount of $75,000,000.

The minimum accepted from any Subscriber is $10,000. Subscription funds may remain in the Company’s escrow account up until such time of a purchase of real estate asset or the repayment of a Manager Advance note payable to the Manager or an affiliate of the Manager in which the proceeds were used to purchase a real estate asset or pay the Company’s expenses (such advances to be repaid with simple annualized interest of up to ten percent (10%)).

The Offering Period will commence upon the Offering Statement being declared qualified.

This Investment is suitable only for persons who can bear the economic risk for an indefinite period of time and who can afford to lose their entire investment. Furthermore, investors must understand that such investment Is illiquid and is expected to continue to be illiquid for an indefinite period of time. No public market exists for the securities, and no public market is expected to develop following this offering. Investors will be required to represent and warrant that they meet these suitability requirements prior to being admitted as members of the Company. Neither the Company nor its Manager will conduct an independent analysis of whether potential members meets the suitability requirements for this investment.

No sale will be made to a prospective investor if the aggregate purchase price payable is more than 10% of the greater of the prospective investor’s annual income or net worth. Different rules apply to accredited investors and non-natural persons.

Periodically, the Manager will report to the Members and will supplement this Offering with material and/or fundamental changes to our operations. We will also provide updated financial statements to all Members and prospective Members.

In compliance with Rule 253(e) of Regulation A, the Manager shall revise this Offering Statement during the course of the Offering whenever information herein has become false or misleading in light of existing circumstances, material developments have occurred, or there has been a fundamental change in the information initially presented. Such updates will not only correct such misleading information but shall also provide update financial statements and shall be filed as an exhibit to the Offering Statement and be requalified under Rule 252.

WealthForge is not participating as an underwriter of the offering and under no circumstance will it, as part of this offering, solicit any investment in the company, recommend the company’s securities or provide investment advice to any prospective investor. Rather, WealthForge’s involvement in the offering is limited to acting as Managing Broker Dealer and an accommodating broker-dealer for the investments solicited by the Company. WealthForge does not expressly or impliedly affirm the completeness or accuracy of the Offering Circular. All inquiries regarding this offering or services provided by WealthForge and its affiliates should be made directly to the company.

Investors should be aware that FINRA and FINRA members may receive the following compensation in connection with this offering:

USE OF PROCEEDS

The net proceeds to us from the sale of up to $75,000,000 in Investor Interests will vary depending upon the total number of Investor Interests sold. Regardless of the number of additional Investor Interests sold, we expect to incur additional Offering expenses estimated between approximately $118,481 and $124,481 for legal, accounting, marketing, and other costs in connection with the continuation of this offering. The table below shows the intended net proceeds from this offering, indicating scenarios where we sell various amounts of the Investor Interests. There is no guarantee that we will be successful at selling any additional securities being offered in this Offering. Accordingly, the actual amount of proceeds we will raise in this offering, if any, may differ.

The offering scenarios presented below are for illustrative purposes only and the actual amounts of proceeds, if any, may differ. 

The Use of Proceeds sets forth how we intend to use the funds under the various percentages of the related offering. All amounts listed are estimates.

The net proceeds will be used to pay off a loan from an affiliate of the Manager used to “pre-fund” the Company’s real estate investments, make additional investments in real estate, as well as for ongoing legal, accounting, and other professional fees, working capital for the maintenance of an investor portal for the next 12 months, and for the costs associated with acquiring properties, such as broker price opinions, closing costs, title reports, recording fees, accounting costs and legal fees. We determined estimates for ongoing professional fees based upon consultations with our accountants and lawyers, and operating expenses and due diligence costs based upon the Manager’s real estate industry experience. Our Manager will not receive any compensation for their efforts in selling our Investor Interests.

The Company will pay the offering expenses regardless of the amount of Investor Interests we sell. Even if we do not raise any capital, we believe that we will have sufficient funds to continue our filing obligations as a reporting company for the next 12 months. We intend to use the proceeds of this offering in the manner and in order of priority set forth above. We do not intend to use the proceeds to acquire the assets of or finance the acquisition of other businesses. At present, no material changes are contemplated. Should there be any material changes in the projected use of proceeds in connection with this Offering, we will issue an amended Offering reflecting the new uses.

In all instances the Company will need some amount of working capital to maintain its general existence and comply with its reporting obligations. In addition to changing allocations because of the amount of proceeds received, we may change the use of proceeds because of required changes in our business plan. Investors should understand that we have wide discretion over the use of proceeds. Therefore, management decisions may not be in line with the initial objectives of investors who will have little ability to influence these decisions.

SELECTED FINANCIAL DATA

The following summary financial data should be read in conjunction with “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION” and the Financial Statements and Notes thereto, included elsewhere in this Offering Circular. The statement of operations and statement of assets, liabilities, and members' equity data from inception through the period ended December 31, 2022 are derived from the audited financial statements.  The interim statement of operations and the statement of assets, liabilities, and members' equity from January 1, 2022 to June 30, 2022 and January 1, 2023 to June 30, 2023 are derived from the unaudited interim financial statements attached hereto. The interim statement of assets, liabilities, and members' equity as of December 31, 2023 is derived from the Company’s internal records.

* The value of “Real Estate Partnership Investments” reflects the amount of money invested by the Company in the relevant real estate assets. Management has elected not to adjust its valuation of these assets or record the operating activities of its investments in these interim financials. The operating activities of these investments is expected to be included in the Company’s audited December 31, 2023 financials, which will be filed on Form 1-K once available.

Further note that the Company’s December 31, 2021 balance sheets include an asset referred to as “Organization & Syndication Costs,” which reflected the total amount spent on this Offering prior to the Company breaking impounds. For ease of comparison with more recent periods, that asset has been removed from “Total Assets,” and also the value of that asset has also been subtracted from “Total Members’ Equity.”

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this Offering Circular.

Critical Accounting Policies

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards that have different effective dates for public and private companies. We have elected to take advantage of this extended transition period, and thus, our financial statements may not be comparable to those of other reporting companies. Accordingly, until the date we are no longer an “emerging growth company” or affirmatively opt out of the exemption, upon the issuance of a new or revised accounting standard that applies to our financial statements and has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.

Cautionary Statement Regarding Forward-Looking Statements

With the exception of historical matters, the matters discussed herein are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, projections concerning operations and available cash flow. Our actual results could differ materially from the results discussed in such forward-looking statements. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto appearing elsewhere herein.

Background Overview

Gratus Capital Properties Fund III, LLC was formed in the State of Delaware on November 10, 2020. We have no plans to change our business activities or to combine with another business, and we are not aware of any events or circumstances that might cause our plans to change. The Manager of the Company does not have any plans or arrangements to enter into a change of control, business combination or similar transaction or to change management. On December 2, 2021, the Company began accepting subscription agreements as a part of raising $75 million under Regulation A Plus from over a wide range of investors, with a primary focus on individual non-accredited investors.

On February 16, 2022, the Company broke impounds and acquired its first real estate asset and went on to acquire three additional real estate assets in 2022. Construction has been completed on one of the assets with another expected to be finishing in September 2023 and the remaining two in early 2024.

Management believes the Company is in a strong position to successfully continue operations. Funds raised to date are consistent with the expectations of Management. Currently the ordinary and routine operation of the Company’s business has low overhead and sufficient access to funds through operating capital and line of credit to fund operations until our projects are stabilized. 

As of December 31, 2023 the Company has raised a total of $8,826,036.69. Funds were made available to the Company upon the Company raising the $1,000,000 Minimum Offering Amount. Funds have been used in acquisitions of investments in four real estate partnerships: Enclave OG, LLC (Fargo, ND), SOCO Group II, LLC (Grand Forks, ND), Compass Apartments I, LLC (Moorhead, MN) and Current33 Apartments I, LLC (Hastings, MN).

An affiliate of the Manager has pre-funded the Company’s previous acquisitions, and may “pre-fund” one or more additional real estate investments, acquiring them using its own funds so as to make that investment available to the Company and any Parallel Funds. See “SUMMARY OF OPERATING AGREEMENT. —Parallel Funds, Special Purpose Entities and Co-Investment Opportunities”. If the Manager or its affiliates “pre-funds” one or more properties, it may charge the Company simple annualized interest at the coupon rate on a U.S. 10-year treasury note + five percent (5%) per annum, not to exceed 10% (the “Alternative Base Rate”). This rate adjusts semi-annually on January 1 and July 1 of each year. As of January 1, 2024 the Company has an outstanding balance of  $3,747,368.69 pursuant to this arrangement, with a current interest rate of 8.866%. The Company will use the Capital it continues to raise in this offering to replace that “pre-funding.” Company investments will depend highly on the availability of properties and other real estate investments that meet our investment criteria. As we search for properties, we intend to expend capital in accordance with our Use of Proceeds. We will incur expenses related with the operation of the Company and the continuing expenses related to being a reporting company under the requirements of Tier 2, Regulation A.

Results of Operations

For the period ended June 30th, 2022

Total income

We generated $209 in interest income for the period ended June 30, 2023, we did not have any revenue from operation since the properties we are invested in are currently under construction or are in the process of lease up.

Total expenses

From January 1, 2023, to June 30, 2023, we have generated expenses of $112,451 including Consulting Expenses of $31,826, Management fees of $31,826, and Professional Fees of $79,549.

Office space and services are provided without charge by the Company’s Manager. Such costs are immaterial to the financial statements and, accordingly, have not been reflected.

Assets

As of June 30, 2023, the Company had $10,707,702 in real estate partnership investments, $17,651 in cash, and $1,750 in computer software.

Liabilities

As of June 30, 2023, we had $4,4425,773 in related party advances and $324,627 in accrued interest payable for a total of $4,750,400 in liabilities.

Liquidity and Capital Resources (including Advance from Related Party)

As of June 30, 2023, the Company had $17,651 in cash and total liabilities of $4,750,400, which consist of an advance from our Manager.

As of December 31, 2023, the Company had sold 814,665 Class A and Class B shares as part of our Regulation A Offering, invested $10,707,702 in real estate, holds $ $146,064 in cash, with total liabilities of $ 3,743,430 (consisting of money owed to an Affiliate of the Manager on the Promissory Note described below). The Company hopes to raise $75,000,000 in this Offering. Even if we do not raise any additional funds, we believe that the funds we have raised will be sufficient to fund our expenses over the next twelve months.

The Company has entered into a Promissory Note with an affiliate of the Manager of the Company which provides the Company with a revolving credit line for up to $50,000,000 of funds. The Note is an uncollateralized revolving credit facility which matures October 28, 2030. Under this line of credit, the Company will pay the Manager (8.866%) simple interest, calculated as the coupon rate on a U.S. 10-year treasury + five percent (5%). This interest rate will be readjusted semi-annually on July 1 and January 1 and is capped at 10%. As of December 31, 2022, the Company entered into a Standstill Agreement with regards to this Promissory Note whereby the lender (an affiliate of the Manager) agrees not to demand any payment or take any legal action to recover money owned under the Note until June 30, 2024 (including both monies currently borrowed and any new money which may be borrowed in the future)

The Company has short and long-term liquidity through fundraising and Manager provided credit facility. The Manager currently has sufficient capital in the bank account to cover fixed expenses and will utilize the credit facility if necessary to be opportunistic in pursuing cash flowing investments for the Company.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Changes in And Disagreements with Accountants on Accounting and Financial Disclosure

None.

Employees

Our Manager is GCPF Management LLC, will be managed by Jason Weimer, Robert Barlau, Skip Johnson, and Austin Schmitt, who will devote a significant portion of their working hours to our Company without a salary. For more information on our personnel, please see "MANAGER, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS." Initially Jason Weimer and Robert Barlau will coordinate all of our business operations. GCPF Management LLC, Jason Weimer, Robert Barlau, and/or their affiliates have provided the working capital to cover our initial expenses. We plan to use consultants, attorneys, accountants, and other personnel, as necessary. We believe the use of non-salaried personnel allows us to expend our capital resources as a variable cost as opposed to a fixed cost of operations. In other words, if we have insufficient revenues or cash available, we are in a better position to only utilize those services required to generate revenues as opposed to having salaried employees. Any expenses related to the Offering will be charged to the Company. For example, any costs associated with raising capital such as escrow, transfer, marketing, audit, legal, and technology fees will be borne by the Company.

Our Manager is spending the time allocated to our business in handling the general business affairs of our Company such as legal, tax, and accounting issues, including review of materials presented to our auditors, working with our counsel in preparation of filing our Form 1-A, developing our business plan and researching investment opportunities and possible multi-family property and commercial real estate acquisitions. Upon qualification and successful capital raise, the principals and employees of Gratus Capital, LLC will devote additional working hours to Gratus Capital Properties Fund III LLC.

INVESTMENT POLICIES OF COMPANY

In all types of investment, our policies may be changed by our Manager without a vote by Members.

We will seek out multi-family properties for purchase throughout the Midwest, South and Southeast regions of the United States, but may find opportunities in other states. We expect 100% of our portfolio will consist of real estate properties, real estate backed loans, and other real estate backed investments. The Company will only be investing in real estate backed investments.

We intend to evaluate each property in the following manner:

Further, potential investors should be advised:

As market conditions change, our policies for both investments and borrowing will be evaluated and updated as necessary to safeguard Member equity and increase Member returns. We will update our Members via 1-Us within a few business days, 1-SAs semi-annually, and other Member reports if there are any changes in our investment policy or our borrowing policies.

POLICIES WITH RESPECT TO CERTAIN TRANSACTIONS

Our policy with respect to our Manager concerning certain transactions is as follows:

We do not intend on issuing senior securities but may at some time in the future. We have no interest, currently, in underwriting securities of others or purchasing securities or assets other than real property assets and securities. We may encumber our properties that we acquire with bank financing but we intend that such financing will generally not exceed 80% of the value of the property.

Conflicts of Interest

Our Manager and its affiliates experience conflicts of interest in connection with the management of our business. Some of the material conflicts that our Manager and its affiliates face include the following:

Allocation of Investment Opportunities

We rely on our Manager’s members who act on behalf of our Manager to:

In addition, any decisions by our Manager to renew, extend, modify or terminate an agreement or arrangement, or enter into similar agreements or arrangements in the future, may benefit one program more than another or limit or impair the ability of any program to pursue business opportunities. In addition, third parties may require as a condition to their arrangements or agreements with or related to any one particular program that such arrangements or agreements include or not include another program, as the case may be. Any of these decisions may benefit one program more than another.

Receipt of Fees and Other Compensation by our Manager and its Affiliates

Our Manager and its affiliates will receive substantial fees from us, which fees will not be negotiated at arm’s length. These fees could influence our Manager’s advice to us as well as the judgment of affiliates of our Manager. Among other matters, these compensation arrangements could affect their judgment with respect to:

No Independent Underwriter

As we are conducting this offering without the aid of an independent underwriter, you will not have the benefit of an independent due diligence review and investigation of the type normally performed by an independent underwriter in connection with the offering of securities. See “Plan of Distribution.”

DESCRIPTION OF BUSINESS

Gratus Capital Properties Fund III, LLC is an emerging growth company which was formed on November 10, 2020. We have commenced operations, acquired interests in four new construction properties, and intend on generating revenues from rents to tenants of these properties after completion, as well as through rents from other multi-family, and, in certain circumstances, commercial (e.g., senior living, mobile home parks, self-storage, mixed use, office and/or retail) and single-family assets as well as real estate backed loans and other real estate backed investments. As of December 31, 2023, the Company holds the following real estate investments:

Enclave OG, LLC 

Enclave OG (Wild Oak) a mixed-use residential building composed of multifamily and condominium units, located in Fargo, ND. Wild Oak consists of 14 top-floor condos ranging from 1,200–2,500+ square feet and 119 apartment homes below. The building design maximizes the riverscape setting and includes a private entrance, elevator, and parking for condo owners. Construction of Wild Oak was completed in October of 2023. As of December 31, 2023 the property was 48% leased.  Some amenities at this property include Community Lounge with Fireplace, Conference Room, Yoga & Fitness Studios, Pet Wash Area, Bike Storage, Patio & Mini Market.

SOCO Group II, LLC 

SOCO Group (Ivy at SOCO) is a mixed-use residential building composed of multifamily and condominium units, located in Grand Forks, ND. Ivy at SOCO consists of 74 apartment homes above 14,000 square feet of first-level retail space. Construction of Ivy at SOCO was completed in May 2023. As of December 31, 2023 the multifamily space is 97% leased and lease negotiations are in process for the retail space. Some amenities at this property include Fitness Studio, Rooftop Deck, Bike Storage, Pet Spa, In-Home Washer & Dryer, Conference & Club Rooms & Greenspace.

Compass Apartments I, LLC 

Compass Apartments I is a multifamily apartment building totaling 93 units, to be located near the corner of 30th Ave S and 8th St S in Moorhead, MN. As of December 31, 2023 Construction of the Compass Apartments 90% complete and 4% pre-leased. This new multifamily community in Moorhead will offer 93 studio, one-, two-, and three-bedroom apartment homes. Designed in collaboration with YHR Architects, the building will feature a modern take on old-world charm, creating a comfortable environment with timeless appeal that’s a strong match for the location and market. Its central location offers quick access to I-94 and connectivity to the greater Fargo-Moorhead area. Some amenities at this property include outdoor courtyard with grill, patio, and fire pits, clubroom, 24/7 fitness & yoga studios, coffee & espresso bar, 24/7 minimarket, enclosed parking, bike storage, pet spa & park, connectivity to parks and trails.

Current33 Apartments I, LLC 

Current33 Apartments I is a multifamily apartment building totaling 106 units, located 255 33rd St W, Hastings, MN 55033. As of December 31, 2023 construction of the Current33 Apartments is 95% complete and 7% pre-leased. This new multifamily community in Hastings, MN will offer 106 studio, one-, two-, and three-bedroom apartment homes. Some of the amenities at this property include clubroom with sports simulator, pool table, fireplace, and entertainment center, outdoor community courtyard with pool and outdoor kitchen, 24/7 fitness & yoga studios, business center, 24/7 minimarket, enclosed parking, bike storage, pet spa & park.

Additional Plans

We have no plans to change our business activities or to combine with another business, and we are not aware of any events or circumstances that might cause our plans to change. The Company does not have any plans or arrangements to enter into a change of control, business combination or similar transaction or to change management.

We are offering the Interests herein on a “minimum/maximum” basis and have already raised the minimum of $1,000,000. We expect to use the net proceeds from this Offering to pay off an advance from an Affiliate of the Manager which were primarily used to make our current real estate investments, and then to acquire interests in additional properties in the United States with a specific focus on markets in the Midwest, South and Southeast regions of the United States (although we may also find opportunities in other areas). We will also use the proceeds for our operating costs in connection with this Offering, including marketing costs and on-going legal and accounting fees, and to finance costs associated with acquiring properties, such as broker price opinions, title reports, recording fees, accounting costs and legal fees.

We do not lease any real property, and the only real property which we have an ownership interest in is our real estate investments. The Manager’s website may be found at gratusfunds.com. We do not pay rent for our corporate headquarters which is leased by an affiliate of the Manager. We believe that this space will be sufficient for the long term.

Special Purpose Entities

Throughout the Offering Circular, in reference to “acquisitions,” the Company intends to acquire interests in “special purpose entities,” also known as “SPEs.” The SPEs will hold title to property acquisitions. The Company, in turn, will invest in the SPE.

Objectives

The Company has definite objectives to fulfill its strategy. These include:

The Company will look to buy multi-family properties, in growth areas for the best possible price, thereby giving the Company an instant competitive advantage. A potential investor should note that the above criteria is subject to change according to market conditions.

Generally, the Fund will seek opportunities which meet the following criteria:

Investment Strategy

The Company is seeking to invest in a diversified portfolio of income producing real estate assets and real estate related assets throughout the United States, specifically in the mid-west, south and southeastern United States. Initially, the Company intends to target multi-family properties, but may acquire other property types that meet its investment objectives.

The Company may also purchase additional properties or make other real estate investments in other property types including commercial (e.g., senior living, mobile home parks, self-storage, mixed use, office, hospitaility and/or retail) and single-family assets as well as real estate backed loans and other real estate backed investments when compelling opportunities arise. The Company will only be investing in real estate backed investments. It is expected that the proceeds from this Offering will initially be used to purchase multi-family properties.

We believe that there is an opportunity to create attractive total returns by employing a strategy of investing in a portfolio of such investments which are well-selected, well-managed and disposed of at an optimal time. Our principal targeted assets are investments in properties if compelling opportunities arise that present superior opportunities for above-market returns, that have quality construction and desirable locations which can attract quality tenants. These types of investments are, or relate to, properties primarily located in the mid-west, south, and southeastern United States.

To this end, the Company’s overall strategy is to:

Due Diligence & Financing

When the Company identifies a location or a potential property, it will secure the necessary financing, sign a contract and place an escrow deposit to be held with the designated escrow agent. The Company will take the time necessary to complete all its due diligence to the property including: site inspection, reviewing all leases, income and expenses, as well as securing a first mortgage on the property. After the due diligence process has been completed, the Company will determine whether the property is suitable or not.

If property is not suitable, the Company will cancel the contract and look for the next opportunity.

Refinancing

When it owns and manages Property, the Company will analyze the market conditions in the area where the Property is located. Simultaneously, we will investigate current interest rates. The Company will then decide whether the property should be maintained, refinanced, restructured (i.e., condominium conversion), or sold (disposition).

Real Estate Market Factors (as of December 31, 2023):¹

Since the launch of the fund in 2021, the economy has entered a turbulent time as interest rates have moved up and inflation is very real for consumers.  The likelihood of recession in late 2022 or 2023 is much higher than the beginning of 2022 according to most macroeconomic forecasters. While these factors should be watched, performance of multifamily rent and occupancy remains solid relative to record-breaking highs of 2021. The sharp rise in interest rates has already impacted deal volume as borrowers and investors may have sidelined deals until the volatility levels out. Despite increased uncertainty, the multifamily industry is positioned well, and we forecast solid performance for the year.  The rise in interest rates also creates more opportunity to acquire properties at better valuations as the fund continues acquisitions.   

_________________________

¹ Graphs and Statistics in this section are taken from Freddie Mac Multifamily’s 2024 Multifamily Outlook, available at: https://mf.freddiemac.com/docs/2024_multifamily_outlook.pdf

Key insights include:

In summary, the Midwest multifamily market stands out as an attractive investment area, showing resilience and long-term growth potential amid market challenges.

In 2023, the multifamily market experienced a noticeable slowdown, largely attributed to prevailing economic uncertainties and a significant influx of new supply. This scenario resulted in only modest gains in rent growth, while occupancy rates continued a downward trend. Despite these challenges, the market's performance remained relatively stable, although the pace of growth and occupancy rates decelerated compared to previous years. Looking ahead into 2024, various factors are set to influence the multifamily market:

2023 For-Sale Housing Market and Multifamily Sector Analysis:

For-Sale Housing Market Conditions:

Multifamily Sector as a Value Proposition:

Strategic Investment Implications:

The for-sale housing market in 2023, marked by high mortgage rates and rising home prices, contrasts sharply with the multifamily sector's more moderate rent increases. This disparity underscores the multifamily sector's relative value, positioning it as an increasingly attractive investment option with strong long-term prospects, particularly in the face of ongoing affordability challenges in the for-sale housing market.

The U.S. multifamily market, with its varied regional characteristics, has displayed divergent trends in 2023. Regions like the Sunbelt and Mountain West have faced challenges due to a rapid influx of new supply, leading to notable fluctuations in rent growth and occupancy rates. In contrast, the Midwest multifamily sector has emerged distinctly, demonstrating stability and steady growth. This analysis will delve into the multifamily market's regional differences, underscoring how the Midwest's pragmatic approach to real estate development makes it a standout in the current market landscape.

Key Points of Regional Multifamily Market Analysis:

While each region in the U.S. multifamily market presents distinct characteristics and investment potentials, the Midwest's performance in 2023 stands out for its stability and steady growth. This region's approach serves as a model for managing market dynamics effectively, offering a compelling case for investment in the face of national and regional economic fluctuations.

As we approach 2024, the multifamily real estate market is navigating a path of moderated growth amidst a unique economic backdrop. This period presents both challenges and significant opportunities, particularly for those looking to invest in or refinance properties in the multifamily sector.

Succinct Outlook for the 2024 Multifamily Market:

Conclusion and Investment Perspective:

In 2024, the multifamily market represents a landscape of moderated yet promising growth. The confluence of high supply, economic adjustments, and significant debt refinancing presents a unique set of circumstances. For savvy investors and property owners, this environment offers distinct opportunities to engage in strategic refinancing and investments, especially in regions that show resilience and balanced market conditions. As the market navigates through these changes, the multifamily sector's inherent strengths and the potential for economic recovery position it as an attractive avenue for investment and growth in the medium to long term.

Acquisition of Properties

The Company will invest directly in multi-family investment properties located in the United States. Specifically, the Manager will search for multi-family real estate in stable and growth markets in Midwest, South, and Southeast regions of the United States. Stable and growth market characteristics include job and household formation growth, resulting in rising occupancy levels and rising rents. Numerous other factors contribute to the market determination process including but not limited to population growth, valuation trends, occupancy trends, demographic composition, economic conditions, and supply trends.

The Company intends to employ a rigorous underwriting process including proper due diligence, market valuation studies, and total return analyses. The Company plans to primarily invest in properties with strong cash flow, which are stable with opportunities to immediately improve property value post acquisition. The Company intends to also work to improve the net operating income of each investment by improving revenue and operating margins, thereby raising property value.

The manager will acquire properties that either have cash flow at the time of acquisition or represent the potential to increase that cash flow substantially through an active property management plan.  The manager also intends to acquire joint venture interests in areas where build costs are below market values for existing properties. Upon acquisition, the Manager intends to provide strategic physical and operational improvements to maximize investment return, but these enhancements should function as yield improvements and are not necessary to the safe performance of the investment. In this way, the Company effectively reduces risk and improves performance by assuring that each individual investment has multiple forces working to augment cash flow and property value.

Identifying Properties for Purchase

The Manager will use its extensive network and highly specialized criteria for identifying, quantifying and qualifying investment opportunities.

The Manager intends to saturate its extensive relationships and network in each identified market to identify the very best opportunities. The Manager has established and maintained a comprehensive network of developers, banks, brokers, and other financial institutions which allow a strong market presence in target markets and robust market intelligence, strengthening our ability to identify properties within the Company’s criteria, often before entering into a market. This local knowledge and network of professional with deep knowledge of our target asset classes, we feel, gives the Company a competitive and strategic advantage.

The Managers goal is to identify the right property in the right market and potentially acquire it before it even hits the general market.

Post-Purchase Strategies

The Manager intends that the properties will be held for the duration of the Company until the property is refinanced or sold.

The Company intends to hold properties with the intention of increasing values prior to sale of the property. The Company intends to use third-party management to cure inefficiencies in the management, cure deferred maintenance, and deploy strategic capital upgrades aimed at increasing income and enhancing investor returns (including through extensive construction or rehab).  The increase in cashflow should result in an increase in value so that the Company may sell or refinance the property for a profit.

The Company will look to maximizing cash flow until sale, refinance or other disposition. The Company will also analyze market conditions and support the investment with multiple exit strategies to optimally exit each investment.

Due Diligence & Financing

When the Company identifies a location or a potential property, it will secure the necessary financing, sign a contract and place an escrow deposit to be held with the designated escrow agent. The Company will take the time necessary to complete all its due diligence to the property including: site inspection, reviewing all leases, income and expenses, as well as securing a first mortgage on the property. After the due diligence process has been completed, the Company will determine whether the property is suitable or not.

If property is not suitable, the Company will cancel the contract and look for the next opportunity. If the property is suitable, it will proceed to close, typically within 45 to 60 days.

Joint Venture Partners

The Company may acquire Properties or other real estate related investments from, or invest, co-invest, joint venture or participate with, affiliates of our Manager or other real estate developers and investors, as determined by the Manager in its sole discretion. The purchase price of any Property or real estate related investment acquired from or sold to an affiliated party will be based upon the fair market value of the asset established by a third-party appraisal or fairness opinion that is dated within the last 120 days prior to the transaction.

The Manager has relationships with real estate entrepreneurs (“sponsors”) with whom it may, in some limited circumstances, seek to co-invest, joint venture or otherwise participate in certain investments that either the Company identifies, or the sponsor identifies. In the event of such co-investments or participation, including transactions with affiliates, the Manager will seek to secure such investments on behalf of the Company so that it is within the investment and return goals of the Company.

However, in some instances, these sponsors may require a right to receive a priority or pari-passu of return. In such event, the Manager will have the discretion to decide if the projected returns to the Company, after risk adjusting for such priority, warrant proceeding with the investment.

When and if the Manager utilizes its relationships with such sponsors, separate promote structures may be established between the Manager and the co-investor or participant, which may directly benefit the Manager or an affiliate of the Manager, separate from any compensation the Manager may earn as Manager of the Company. Any separate benefit shall be paid directly to the Manager or by the co-investors and participants, and not from Company funds or its Manager.

In some circumstances, the Manager may elect to co-invest with a third-party that the Manager also controls or has some control. The Company will take the same approach with a third-party as if entering into the transaction with a sponsor as discussed above.

                We expect to use the net proceeds from this offering for ongoing legal, accounting, and professional fees, and working capital and to finance costs associated with acquiring multi-family real estate, such as market appraisals, title and recording fees, broker fees, if any, legal fees and closing costs which, in the aggregate, typically amount to 1% to 3% of the purchase price of the property acquired, with an average of 2%. However, we currently have no real estate acquisitions contemplated. Accordingly, it is difficult to estimate how much will be required in the next 12 months to implement our business plan. 

Financing Strategy

Once the proceeds of this Offering have been fully invested, the Company expects our debt financing will be in the range of approximately 60% to 80% of the aggregate value of real estate investments and other assets. Financing for acquisitions and investments may be obtained at the time an asset is acquired or an investment is made or at such later time as the management determines to be appropriate.

In addition, debt financing may be used from time to time for property improvements, lease inducements, tenant improvements and other working capital needs, including the payment of distributions. Additionally, the amount of debt placed on an individual property or related to a particular investment, including our pro rata share of the amount of debt incurred by an individual entity in which the Company invests, may be less than 60% or more than 80% of the value of such property/investment or the value of the assets owned by such entity, depending on market conditions and other factors.

The Company intends to limit borrowing to no more than 80% of the value of Company assets.

Exit Strategies

The Manager currently intends to operate the Company at least eight years, and to continue operating in perpetuity as long as the liquidity needs of the Members are met. By the end of 2029, the Manager intends to communicate with the Members and use reasonable efforts to formulate and execute a plan to allow Members who wish to liquidate their Interests to do so within approximately two to three years.  Exit strategies that the Manager may employ at the appropriate time include, but are not limited to:

1. Sale of Properties. If the market allows for a successful sale of the properties to third parties or to Affiliate of the Manager so that the Members may realize appreciation, the Company will look to sell some or all of the properties owned by the Company to such third-party or Affiliates of the Manager.

2. Refinance the Properties and hold. The Manager expects the Properties owned by the Partnership will have leverage not to exceed a 80% loan-to-value ("LTV") ratio. If the then appraised values of the Properties show all Members may receive: a) their return of capital, and b) realized appreciation on the properties, the Company may elect to refinance some or all of the properties and return capital and any remaining appreciation.

3. Sale to a Public Real Estate Investment Trust. The Manager may find that the properties are attractive purchases for certain public Real Estate Investment Trusts. The Manager may elect to a) sell some or all of the properties outright to the individual trust; b) sell some or all of the properties to the real estate investment trust in exchange for equity in the trust (stock) and cash (depending on the appreciation value); or c) create its own real estate investment trust to which the properties may be sold or exchanged. Note: if the Members were to receive stock of the purchaser real estate investment trust in exchange for their Interests, the Members may be able to sell their shares on the public exchange of which the public real estate investment trust is traded, so long as it is traded.

4. Bulk Sale to an Institution. The Company may find an institution is interested is interested in purchasing some or all of the Company’s properties. The Manager may elect to take such an option, even at a discount, to ensure that the properties are sold in a timely fashion and so long as it is in the best interest of the Company.

The Company will make a decision regarding the appropriate exit strategy at the time in accordance with market conditions.  There is no guarantee as to what plan will be formulated or the timeline for its execution, so Members should view investing in the Company as a long-term investment with the ability to withdraw only within the Withdrawal Policy outlined below on page 53.

A program managed by the Manager stated that it would endeavor to provide a liquidity event to investors between 2022 and 2027, and would endeavor to sell its properties after approximately 10 years if liquidity could not be provided by refinance.  While this targeted period to provide liquidity has not yet arrived, this program has returned approximately 14% of invested capital to investors via cash out refinances.  See the section entitled “PRIOR PERFORMANCE” on page 62 more information concerning this program. Prospective investors should bear in mind that prior performance does not guarantee future results.

Geographic Scope

The Company will not limit itself geographically, however it intends to invest initially in the Midwest, South, and Southeast regions of the United States. The Company will search multi-family, single-family, and commercial properties that it may purchase at a discount to market value. The Company may acquire properties at market value where it believes that the property represents long-term or strategic value. The Company believes it can successfully identify such a potential target acquisition based upon the depth and the breadth of the industry experience, contacts and industry knowledge of the Company’s Manager. See “MANAGER, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS” on page 56 for a discussion of the Manager’s real estate experience.

Milestones

We hope to reach the following milestones in 2024:

We hope to reach the following milestones in 2025:

Acquisition of properties and other real estate investments will depend highly on our funds, the availability of those funds, availability of assets that meet or investment criteria and the size of the assets to be acquired.

Competition

We will face competition from other owners, investors and developers that are looking to acquire similar properties and who may implement or are already implementing a similar business plan to ours. Further, we may be at a disadvantage to our competition who may have greater capital resources than we do, specifically cash. It has become increasingly difficult to obtain lending on many properties and those developers that are able to close without financing and pay the full purchase price of a property in cash may be able to close on more properties or will be able to negotiate better purchasing terms.

TAX TREATMENT OF COMPANY AND ITS SUBSIDIARIES

The following is a summary of certain relevant federal income tax considerations resulting from an investment in the Company but does not purport to cover all of the potential tax considerations applicable to any specific purchaser. Prospective investors are urged to consult with and rely upon their own tax advisors for advice on these and other tax matters with specific reference to their own tax situation and potential changes in applicable law discussion is a general summary of certain federal income tax consequences of acquiring, holding and disposing of partnership interests in the Company and is directed to individual investors who are United States citizens or residents and who will hold their interests in the Company as “capital assets” (generally, property held for investment). It is included for general information only and is not intended as a comprehensive analysis of all potential tax considerations inherent in making an investment in the Company. The tax consequences of an investment in the Company are complex and will vary depending upon each investor’s individual circumstances, and this discussion does not purport to address federal income tax consequences applicable to all categories of investors, some of whom may be subject to special or other treatment under the tax laws (including, without limitation, insurance companies, qualified pension plans, tax-exempt organizations, financial institutions or broker-dealers, traders in securities that elect to mark to market, Members owning capital stock as part of a “straddle,” “hedge” or “conversion transaction,” domestic corporations, “S” corporations, REITs or regulated investment companies, trusts and estates, persons who are not citizens or residents of the United States, persons who hold their interests in the Company through a company or other entity that is a pass-through entity for U.S. federal income tax purposes or persons for whom an interest in the Company is not a capital asset or who provide directly or indirectly services to the Company). Further, this discussion does not address all of the foreign, state, local or other tax laws that may be applicable to the Company or its partners.

Prospective investors also should be aware that uncertainty exists concerning various tax aspects of an investment in the Company. This summary is based upon the IRS Code, the Treasury Regulations (the “Treasury Regulations”) promulgated thereunder (including temporary and proposed Treasury Regulations), the legislative history of the IRS Code, current administrative interpretations and practices of the Internal Revenue Service (“IRS”), and judicial decisions, all as in effect on the date of this offering circular and all of which are under continuing review by Congress, the courts and the IRS and subject to change or differing interpretations. Any such changes may be applied with retroactive effect. Counsel to the Company has not opined on the federal, state or local income tax matters discussed herein, and no rulings have been requested or received from the IRS or any state or local taxing authority concerning any matters discussed herein. Consequently, no assurance is provided that the tax consequences described herein will continue to be applicable or that the positions taken by the Company in respect of tax matters will not be challenged, disallowed or adjusted by the IRS or any state or local taxing authority.

Prospective investors are urged to consult with and rely upon their own tax advisors for advice on these and other tax matters with specific reference to their own tax situation and potential changes in applicable law.

FOREIGN INVESTORS: NON-U.S. INVESTORS ARE SUBJECT TO UNIQUE AND COMPLEX TAX CONSIDERATIONS. THE COMPANY AND THE MANAGER MAKE NO DECLARATIONS AND OFFER NO ADVICE REGARDING THE TAX IMPLICATIONS TO SUCH FOREIGN INVESTORS, AND SUCH INVESTORS ARE URGED TO SEEK INDEPENDENT ADVICE FROM ITS OWN TAX COUNSEL OR ADVISORS BEFORE MAKING ANY INVESTMENT.

Tax Classification of the Company as a Partnership

General.

The federal income tax consequences to the investors of their investment in the Company will depend upon the classification of the Company as a “Partnership” for federal income tax purposes, rather than as an association taxable as a corporation. For federal income tax purposes, a partnership is not an entity subject to tax, but rather a conduit through which all items of partnership income, gain, loss, deduction and credit are passed through to its partners. Thus, income and deductions resulting from Company operations are allocated to the investors in the Company and are taken into account by such investors on their individual federal income tax returns. In addition, a distribution of money or marketable securities from the Company to a partner generally is not taxable to the partner unless the amount of the distribution exceeds the partner’s tax basis in his interest in the Company. In general, an unincorporated entity formed under the laws of a state in the United States with at least two members, such as the Company, will be treated as a partnership for federal income tax purposes provided that (i) it is not a “publicly traded partnership” under Section 7704 of the IRS Code and (ii) does not affirmatively elect to be classified as an association taxable as a corporation under the so-called “check the box” regulations relating to entity classification. The Company is not currently a “publicly traded partnership” within the meaning of Section 7704 of the IRS Code for the reasons discussed below. In addition, the Manager does not intend to affirmatively elect classification of the Company as an association taxable as a corporation. Accordingly, the Manager expects that the Company will be classified as a partnership for federal income tax purposes.

Publicly Traded Partnership Rules.

Under Section 7704 of the IRS Code, a partnership that meets the definition of a “publicly traded partnership” may be treated as a corporation depending on the nature of its income. If the Company were so treated as a corporation for federal income tax purposes, the Company would be a separate taxable entity subject to corporate income tax, and distributions from the Company to a partners would be taxable to the partners in the same manner as a distribution from a corporation to a shareholder (i.e., as dividend income to the extent of the current and accumulated earnings and profits of the Company, as a nontaxable reduction of basis to the extent of the partner’s adjusted tax basis in his interests in the Company, and thereafter as gain from the sale or exchange of the investors interests in the Company). The effect of classification of the Company as a corporation would be to reduce substantially the after-tax economic return on an investment in the Company.

A partnership will be deemed a publicly traded partnership if (a) interests in such partnership are traded on an established securities market, or (b) interests in such partnership are readily tradable on a secondary market or the substantial equivalent thereof. As discussed in this offering circular, interests in the Company (i) will not be traded on an established securities market; and (ii) will be subject to transfer restrictions set forth in the Operating Agreement, including a right of first refusal on the part of the Manager and other Company Members. Specifically, the Operating Agreement generally prohibits any transfer of a partnership interest without the prior consent of the Manager except in connection with an Exempt Transfer. The Manager will consider prior to consenting to any transfer of an interest in the Company if such transfer would or could reasonably be expected to jeopardize the status of the Company as a partnership for federal income tax purposes.

The remaining discussion assumes that the Company will be treated as a Partnership and not as an association taxable as a corporation for federal income tax purposes.

Allocation of Partnership Income, Gains, Losses, Deductions and Credits

Profits and Losses are allocated to the partners under the Operating Agreement. In general, Profits or Losses during any fiscal year will be allocated as of the end of such fiscal year to each partner in accordance with their ownership interests. Certain allocations may be effected to comply with the “qualified income offset” provisions of applicable Treasury Regulations relating to partnership allocations (as referenced below).

Under Section 704(b) of the IRS Code, a Company’s allocations will generally be respected for federal income tax purposes if they have “substantial economic effect” or are otherwise in accordance with the “member’s interests in the partnership.” The Company will maintain a capital account for each Member in accordance with federal income tax accounting principles as set forth in the Treasury Regulations under Section 704(b), and the Operating Agreement does contain a qualified income offset provision. The Operating Agreement requires liquidating distributions to be made in accordance with the economic intent of the transaction and the allocations of Company income, gain, loss and deduction under the Operating Agreement are designed to be allocated to the members with the economic benefit of such allocations and are in a manner generally in accord with the principles of Treasury Regulations issued under Section 704(b) of the IRS Code relating to the partner’s interest in the partnership. As a result, although the Operating Agreement may not follow in all respects applicable guidelines set forth in the Treasury Regulations issued under Section 704(b), the Manager anticipates that the Company’s allocations would generally be respected as being in accordance with the Member’s interest in the Company. However, if the IRS were to determine that the Company’s allocations did not have substantial economic effect or were not otherwise in accordance with the Members’ interests in the Company, then the taxable income, gain, loss and deduction of the Company might be reallocated in a manner different from that specified in the Operating Agreement and such reallocation could have an adverse tax and financial effect on Members.

Limitations on Deduction of Losses.

The ability of a Member to deduct the Member’s share of the Company’s losses or deductions during any particular year is subject to numerous limitations, including the basis limitation, the at-risk limitation, the passive activity loss limitation and the limitation on the deduction of investment interest. Each prospective investor should consult with its own tax advisor regarding the application of these rules to it in respect of an investment in the Company.

Basis Limitation. Subject to other loss limitation rules, a Member is allowed to deduct its allocable share of the Company’s losses (if any) only to the extent of such Member’s adjusted tax basis in its interests in the Company at the end of the Company’s taxable year in which the losses occur.

At-Risk Limitation. In the case of a Member that is an individual, trust, or certain type of corporation, the ability to utilize tax losses allocated to such Member under the Operating Agreement may be limited under the “at-risk” provisions of the IRS Code. For this purpose, a Member who acquires a Company interest pursuant to the Offering generally will have an initial at-risk amount with respect to the Company’s activities equal to the amount of cash contributed to the Company in exchange for its interest in the Company. This initial at-risk amount will be increased by the Member’s allocable share of the Company’s income and gains and decreased by their share of the Company’s losses and deductions and the amount of cash distributions made to the Member. Liabilities of the Company, whether recourse or nonrecourse, generally will not increase a Member’s amount at-risk with respect to the Company. Any losses or deductions that may not be deducted by reason of the at-risk limitation may be carried forward and deducted in later taxable years to the extent that the Member’s at-risk amount is increased in such later years (subject to application of the other loss limitations). Generally, the at-risk limitation is to be applied on an activity-by-activity basis. If the amount for which a Member is considered to be at-risk with respect to the activities of the Company is reduced below zero (e.g., by distributions), the Member will be required to recognize gross income to the extent that their at-risk amount is reduced below zero.

Passive Loss Limitation. To the extent that the Company is engaged in trade or business activities, such activities will be treated as “passive activities” in respect of any Member to whom Section 469 of the IRS Code applies (individuals, estates, trusts, personal service corporations and, with modifications, certain closely-held C corporations), and, subject to the discussion below regarding portfolio income, the income and losses in respect of those activities will be “passive activity income” and “passive activity losses.” Under Section 469 of the IRS Code, a taxpayer’s losses and income from all passive activities for a year are aggregated. Losses from one passive activity may be offset against income from other passive activities. However, if a taxpayer has a net loss from all passive activities, such taxpayer generally may not use such net loss to offset other types of income, such as wage and other earned income or portfolio income (e.g., interest, dividends and certain other investment type income). Member income and capital gains from certain types of investments are treated as portfolio income under the passive activity rules and are not considered to be income from a passive activity. Unused passive activity losses may be carried forward and offset against passive activity income in subsequent years. In addition, any unused loss from a particular passive activity may be deducted against other income in any year if the taxpayer’s entire interest in the activity is disposed of in a fully taxable transaction.

Non-Business Interest Limitation. Generally, a non-corporate taxpayer may deduct “investment interest” only to the extent of such taxpayer’s “net investment income.” Investment interest subject to such limitations may be carried forward to later years when the taxpayer has additional net investment income. Investment interest is interest paid on debt incurred or continued to acquire or carry property held for investment. Net investment income generally includes gross income and gains from property held for investment reduced by any expenses directly connected with the production of such income and gains. To the extent that interest is attributable to a passive activity, it is treated as a passive activity deduction and is subject to limitation under the passive activity rules and not under the investment interest limitation rules.

Limitation on Deductibility of Capital Losses. The excess of capital losses over capital gains may be offset against ordinary income of a non-corporate taxpayer, subject to an annual deduction limitation of $3,000. A non-corporate taxpayer may carry excess capital losses forward indefinitely.

Taxation of Undistributed Company Income (Individual Investors)

Under the laws pertaining to federal income taxation of limited liability companies that are treated as partnerships, no federal income tax is paid by the Company as an entity. Each individual Member reports on his federal income tax return his distributive share of Company income, gains, losses, deductions and credits, whether or not any actual distribution is made to such member during a taxable year. Each individual Member may deduct his distributive share of Company losses, if any, to the extent of the tax basis of his Units at the end of the Company year in which the losses occurred. The characterization of an item of profit or loss will usually be the same for the member as it was for the Company. Since individual Members will be required to include Company income in their personal income without regard to whether there are distributions of Company income, such investors will become liable for federal and state income taxes on Company income even though they have received no cash distributions from the Company with which to pay such taxes.

Tax Returns

Annually, the Company will provide the Members sufficient information from the Company's informational tax return for such persons to prepare their individual federal, state and local tax returns. The Company's informational tax returns will be prepared by a tax professional selected by the Manager.

SUMMARY OF OPERATING AGREEMENT

The Operating Agreement, in the form attached hereto as Exhibit 2. is the governing instrument establishing the terms and conditions pursuant to which the Company will conduct business and the rights and obligations between and among the Members and the Manager, as well as other important terms and provisions relating to investment in the Company. A prospective Member is urged to read and fully understand the Operating Agreement in its entirety prior to making a decision to purchase Interests. The following is a brief and incomplete summary of the terms of the Operating Agreement and is qualified in its entirety by reference to the Operating Agreement.

Profits and Losses

Losses for any fiscal year shall be allocated among the Members in proportion to their positive Capital Account balances, until the balance of each Capital Account equals zero. Thereafter, all losses shall be allocated in accordance to each Member’s respective Percentage Interest in the Company, giving consideration to their respective ownership period. Profits will first be allocated pro rata to the Members in accordance with the amount of Losses previously allocated if such previous Losses were not offset by Profits. Thereafter, Profits shall be allocated shall be allocated among the Members, in proportion to their Economic Interest. Class A Members will be allocated 80% of Profits proportion to their respective Percentage Interests in the Class A Unit Percentage Share of Profits, and Class B Members will be allocated 70% of Profits proportion to their respective Percentage Interests in the Class B Unit Percentage Share of Profits.  The holder of the Class C Interests (currently Jason Weimer and Robert Barlau, the managers of the Manager) will be allocated 20% of the Profits from the Class A Unit Percentage Share of Profits and 30% of Profits from the Class B Unit Percentage Share of Profits. In all cases, consideration will be given to their respective ownership period.

Operating Cash Distributions

The Company will make Distributions quarterly out of available cash flow from operations equal to the total cash gross receipts of the Company during the quarter derived from all sources (other than capital contributions and capital transactions) together with any amounts included in reserves or working capital from prior periods which the Manager reasonably determines to distribute, or the sale, refinancing or disposition of investments, as determined by the Manager, net of disbursements and less the operating expenses of the Company paid during such period (including, but not limited to, present and anticipated debts and obligations, capital needs and expenses, the payment of any management or administrative fees and expenses, including without limitation the Acquisition Fee, Asset Management Fee, Construction Management Fee, Property Management Fees, or Refinance Fee and reasonable reserves for contingencies) and any increases or replacements in reserves (other than from Capital Contributions) during such period ("Distributable Cash").

Additionally, the Manager may, at its sole discretion, decide to limit or forgo distributions by withholding sufficient what would otherwise be Distributable Cash in order to invest in new or currently held Properties, real estate backed loans, or other real estate backed investments, or to ensure that sufficient cash will be on hand to make such investments when investment opportunities become available.

The Manager will divide Distributable Cash into two categories based on the relative proportion of Class A and Class B units sold.  For purposes of illustration, if total units sold were 100,000, 35,000 of which were Class A Units and 65,000 of which were Class B Units, the Class A Unit Percentage Share would be 35% and the Class B Unit Percentage Share would be 65%.  The Manager will then make distributions of Distributable Cash as follows: (a) to Class A Members 80% of Distributable Cash out of the Class A Unit Percentage Share; (b) to Class B Members, 70% of Distributable Cash out of the Class B Unit Percentage Share; and (c) to Class C Members, all remaining Distributable Cash (20% of Distributable Cash out of the Class A Unit Percentage Share and 30% of Distributable Cash out of the Class B Unit Percentage Share).

In-kind Distributions. The Manager will generally not cause the Company to make in-kind distributions; provided, however, that publicly traded securities (or interests convertible into such securities) may be distributed from time to time if, in the good faith discretion of the Manager, such a distribution will result in a greater return for the Members.

Voting Rights of the Members

The Members will have no right to participate in the management of the Company and will only have the following rights:

Votes Requiring Unanimous Approval of All Members

Unanimous consent of all Members is required for any of the following matters:

Votes Requiring Approval of 75% of the All Members’ Interests other than the Manager

Consent of the Members holding the seventy five percent (75%) of all Members’ Interests (other than the Manager) must affirmatively vote to approve any of the following actions:

Votes Requiring Approval of a Majority of Interests of all Members

A vote of a Majority of Interests of all Members is required to:

Removal of Manager for Cause

All Class A, Class B, and Class C Members (other than the Manager) who collectively own seventy five percent (75%) or more of the Interests (the requisite Interests) shall issue a Notice to Perform to the Manager in accordance with the notice provision in Article 15.1 of the Operating Agreement. The Notice to Perform shall describe the matters of concern to the Members and shall give the Manager up to sixty (60) days to correct the matter of concern to the satisfaction of the voting Members. If the Manager fails to respond to the concerns or demands contained in such Notice to Perform then;

The Manager may be immediately removed, temporarily or permanently, for “Good Cause” determined by: (a) a vote of the requisite Members described above, or (b) by an arbitrator or judge per Article 13.5.4 of the Operating Agreement. Note, however, that removal of the Manager may require approval of a lender or substitution of a loan guarantor if any loan was conditioned on the qualifications of the Manager.

Reasons for Removal; Good Cause Defined

The previous Manager must serve until a new Manager is hired or elected. The Class A and Class B Members hereby agree that any right of removal shall be exercised only in good faith. “Good Cause” shall include only the following, as determined by a vote of the requisite Interests:

Limits on Manager’s Liability; Indemnification

The Manager will be fully protected and indemnified by the Company against all liabilities and losses suffered by the Manager (including attorneys’ fees, costs of investigation, fines, judgments and amounts paid in settlement, actually and reasonably incurred by the Manager in connection with such action, suit or proceeding) by virtue of its status as Manager with respect to any acts or omissions, except for cases where a finding is made by a court of law or arbitrator that the Manager engaged in intentional misconduct including, but not limited to, a knowing violation of the law. The provisions of this indemnification will also extend to all managers, Members, affiliates, employees, attorneys, consultants and agents of the Manager for any action taken by it on behalf of the Manager pursuant to the Operating Agreement.

Parallel Funds, Special Purpose Entities and Co-Investment Opportunities

The Manager may, in its discretion and to the extent permitted by applicable law, create or sponsor partnerships or other vehicles that will be formed for participating pro rata and pari passu in the portfolio companies of the Company ("Parallel Fund"). It is the intention of the Manager that the Manager of the Company will also act as the Manager of the Parallel Fund; provided, however, if such an arrangement were to become prohibited or result in a conflict of interest, a separate Manager will be established. The Parallel Fund will contain the similar economic terms, rights, restrictions and obligations for its investors as are applicable to Members in the Company.

Where the Manager deems it appropriate, the Company may use special purpose entities as subsidiaries, including corporations, limited liability companies and limited partnerships to make and hold investments. The Manager may also cause the Company to invest through corporations, limited liability companies, limited partnerships, joint ventures (both with third-parties and affiliates of the Manager), or other arrangements in which the Fund has an economic interest and where such arrangements are reasonably expected to preserve in all material respects the overall economic relationship of the Members.

To the extent that the Manager determines that any Company investment requires co-investment by third parties, the Manager may offer, but is not required to offer, to the Manager and all Members the opportunity to co-invest on a side-by side basis with the Fund and the Parallel Fund in such investment. The Manager shall have the right, in its sole discretion, to accept all, none or any portion of such Members’ capital for such co-investment opportunity and may offer all or any portion of such co-investment opportunity to any third parties, and the terms offered to such third parties may be different than the co-investment terms offered to electing Members.

Other Activities of Manager: Affiliates

The Manager need not devote its full time to the Company’s business, but shall devote such time as the Manager in its discretion, deems necessary to manage the Company’s affairs in an efficient manner. Subject to the other express provisions of the Operating Agreement, the Manager, at any time and from time to time may engage in and possess interests in other business ventures of any and every type and description, independently or with others, including ventures in competition with the Company, with no obligation to offer to the Company or any Member the right to participate therein, The Company may transact business with any Manager, Member, officer, agent or affiliate thereof provided the terms of those transactions are no less favorable than those the Company could obtain from unrelated third parties.

Withdrawal Policy

No Member may withdraw any portion of its Capital Account within the first 12 months a Member's admission to the Company. Thereafter, 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 allow Members collectively to withdraw 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 limits if a Member is experiencing undue hardship.

Members may submit a written request for withdrawal as a Member of the Company and may receive a 100% return of capital provided that the following conditions have been met: (a) the Member has been a Member of the Company for a period of at least twelve (12) months; and (b) the Member provides the Company with a written request for a return of capital at least ninety (90) days prior to the requested date of withdrawal (“Withdrawal Request”).

The Company will not establish a reserve from which to fund withdrawals of Members’ Capital Accounts and such withdrawals are subject to the availability of cash in any calendar quarter to make withdrawal distributions (“Cash Available for Withdrawals”) only after: (i) all current Company expenses have been paid (including compensation to the Manager, Manager and its affiliates as described in this Offering Circular); (ii) adequate reserves have been established for anticipated Company operating costs and other expenses and advances to protect and preserve the Company’s investments in properties; and (iii) adequate provision has been made for the payment of cash distributions owing to Members.

The Company is not required to liquidate any properties for the purpose of liquidating the capital account of withdrawing Members. In the event the Company does not have sufficient Cash Available for Withdrawals to distribute the requested amounts to all Members that have outstanding withdrawal requests, the Company may distribute that portion of the Cash Available for Withdrawals remaining in such quarter to all withdrawing Members pro rata based upon the relative amounts being withdrawn as set forth in the Withdrawal Request.

Notwithstanding the foregoing, the Manager reserves the right to use all Cash Available for Withdrawals to liquidate the capital accounts of deceased Members or ERISA plan investors in whole or in part, before satisfying outstanding withdrawal requests from any other Members. The Manager also reserves the right, at any time, to liquidate the capital accounts of ERISA plan investors to the extent the Manager determines, in its sole discretion, that any such liquidation is necessary in order to remain exempt from the Department of Labor’s “plan asset” regulations.

Transfers of Interests

A Member may assign, his, her or its Interests only if certain conditions set forth in the Operating Agreement are satisfied. In the event any Member wishes to sell its Interest, it must first submit its offer to sell and the proposed price to the Manager and other Members, who shall have 30 days to elect to purchase the entire interest being so offered. If the Manager and other Members do not choose to exercise this right of first refusal, the selling Member may propose such a transaction with third parties for Manager Approval. Except as otherwise consented to by the Manager, the assignee must meet all requirements applicable to other original subscribers and must consent in writing to be bound by all the terms of the Operating Agreement. In addition, the Company must receive written evidence of the assignment in a form approved by the Manager and the Manager must have consented in writing to the assignment. The Manager may withhold this consent in its sole and absolute discretion, and no transfers to minors or incapacitated persons will be allowed (except in trust or by will or intestate succession). Prior to the Manager’s consenting to any assignment, the Member must pay all reasonable expenses, including accounting and attorneys’ fees, incurred by the Company in connection with the assignment.

Dissolution of the Company, Liquidation and Distribution of Assets

The Company shall be dissolved upon election of a 75% vote of all Members to dissolve the Company or on the sale of all of the Company’s Properties (which may be determined solely by action of the Manager).

Accounting Records and Reports

The Company shall engage an independent certified public accountant or accounting firm, in the discretion of the Manager, to audit the Company’s financial statements as of the end of each fiscal year (which shall be the calendar year). The Manager shall provide audited financial statements of the Company as of the end of and for such fiscal year to each member of the Company by April 30th of each year. No later than March 31^st of each year the Company will provide (i) a Schedule K-1 for such Member with respect to such fiscal year, prepared in accordance with the IRS Code, together with corresponding forms for state income tax purposes, setting forth such Member’s distributive share of Company items of Profit or Loss for such fiscal year and the amount of such Member’s Capital Account at the end of such fiscal year, and (ii) such other financial information and documents respecting the Company and its business as the Manager deems appropriate, or as a Member may reasonably require and request in writing, to enable such Member to prepare its federal and state income tax returns.

As soon as practicable after the end of each semi-annual period, but in no event later than 90 days following the end of each such period, the Manager shall prepare and e-mail, mail or make available on its secure website portal, to each Member (i) the Company’s unaudited financial statements as of the end of such fiscal semi-annual and for the portion of the fiscal year then ended, (ii) a statement of the properties of the Company, including the cost of all properties, and (iii) a report reviewing the Company’s activities and business strategies for such period. The Manager shall cause the Company reports to be prepared in accordance with GAAP.

Alternative Dispute Resolution

The Company Operating Agreement contains a dispute resolution agreement. Litigation could require diversion of Company Profits to pay attorney’s fees or could tie up Company funds necessary for operation of the Company, impacting the profitability of the investment for all Members. The Company compels Members to attempt mediation followed by arbitration in a procedure adapted from guidelines and rules published by the American Arbitration Association (AAA). This provision excludes claims under federal securities laws and the rules and regulations promulgated thereunder.

We believe this is enforceable under federal law and the state of Delaware as it not only clear and unambiguous, but it clearly states, multiple times, that the Member is waiving his/her right to bring a claim in a court of law before a judge or a jury.  The Alternative Dispute Resolution Act (1998) requires all federal district courts to authorize and promote the use of alternative dispute resolution programs. The state of Delaware encourages arbitration and passed the Delaware Rapid Arbitration Act (DRAA) which is designed to make arbitration practice more timely and efficient. The DRAA imposes time limitations on the arbitrator compelling arbitration to complete within 120 days with a 60-day extension.

Despite these laws and rules in place, we are uncertain of the enforceability of any Alternative Dispute Resolution provision.

Members, by agreeing to this alternative dispute resolution, will not be deemed to have waived the company’s compliance with the federal securities laws. If, in any action against the Manager, the selected or appointed arbitrator, or judge (if applicable) makes a specific finding that the Manager has violated securities laws, or has otherwise engaged in any of the actions for which the Manager will not be indemnified, the Manager must bear the cost of its own legal defense. The Manager must reimburse the Company for any such costs previously paid by the Company. Until the Company has been fully reimbursed, the Manager will not be entitled to receive any Fees or Distributions it may otherwise be due.

It is expected that all Members, including those in secondary transactions, would be subject to the arbitration provision.

LEGAL PROCEEDINGS

We may from time to time be involved in routine legal matters incidental to our business; however, at this point in time we are currently not involved in any litigation, nor are we aware of any threatened or impending litigation.

OFFERING PRICE FACTORS

Our offering price was set by our Manager as detailed in the section titled “Determination of the Offering Price,” beginning on page 24. This offering is a self-underwritten offering, which means that it does not involve the participation of an underwriter to market, distribute or sell the Units offered under this offering.

If the maximum amount of Investor Interests are sold under this Offering, the purchasers under this Offering will own 100% of the Class A and Class B Interests outstanding.

If the minimum amount of Investor Interests are sold under this Offering, the purchasers under this Offering will own 100% of the Class A and Class B Interests outstanding.

The Manager believes that if the maximum amount of the Investor Interests are sold, the price per Interest value will be between $10 and $11.79 per Interest for a total of $75,000,000.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of the date of this Offering.

* The Company has already sold 645,230 Class A Units (approximately 73.50% of Units sold) and 232,622 Class B Units (approximately 26.50% of Units sold) for $10 or $10.19 each.  The After Offering percentages reported in this table assume that all further Units are sold for $11.79, the highest price possible under this offering, that 75% of additional Units sold are Class A Units, and that the individuals listed do not purchase further Units.

The Class A and Class B Interests collectively maintain an 80% interest in the Company overall and the Class C Interests will maintain a 20% interest in the Company overall. Class A and Class B Interests are being sold through this Offering. The Class A Interests purchased by Management were purchased through this offering on the same terms as other investors, and members of Management may decide to purchase additional Class A Interests. Class C Interests were issued to Jason Weimer and Robert Barlau at inception of the Company for $10 per Unit ($1000 total).

“Beneficial ownership” means the sole or shared power to vote or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have “beneficial ownership” of any security that such person has the right to acquire within 60 days from the date of this Offering.

MANAGER, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The principals of the Manager of the Company are as follows:

Family Relationships

Jack Weimer is Jason Weimer’s father.

Duties, Responsibilities and Experience

Jason Weimer and Robert Barlau are the managers of GCPF Management LLC which is the Manager of the Company. All business and affairs of the Company shall be managed by the Manager. The Manager shall direct, manage, and control the Company to the best of its ability and shall have full and complete authority, power, and discretion to make any and all decisions and to do any and all things that the Manager shall deem to be reasonably required to accomplish the business and objectives of the Company. The rights and duties of the Manager is described in the Operating Agreement.

The principals of the Manager are as follows:

Jason Weimer

Managing Partner

Jason, the founder of Gratus Capital, LLC (d/b/a Gratus Funds) is in charge of day-to-day operations and leads the acquisitions team. Since 2008, Gratus Capital has grown assets under management from 0 to $14 million.  As the founder of Gratus Capital, Jason has built an experienced team of qualified professionals with a track record of properly assessing the needs of an asset and finding the right resource to get the job done.

In the first four years Jason served as the property manager as well as the asset manager learning all components of a successful real estate operation, from leasing, to legal, to evictions, to human psychology, to the value of good partners and putting a great product forward. In the fifth year, property management was outsourced and actually helped to lower overall operating costs through the efficiencies of scale gained through the manager.

In 2015, Gratus Capital launched its second investment partnership. Also in 2015 all Gratus Capital partners participated in a formal 12-month mentoring program with a successful multi-family syndicator out of Virginia to round out their knowledge of multi-family syndication and commercial real estate investment.

Jason’s vision for the fund was to share the benefits of real estate ownership to everyday families like his closest friends and family. Gratus Capital’s second real estate fund raised $1.6MM of equity, acquiring a diversified portfolio of single families, duplexes and multi-family in the Greater Minneapolis market. Toward the end of 2018 Gratus Capital made a strategic shift to focus exclusively on multi-family properties.

Robert Barlau

President Real Estate Operations

Robert Barlau is head of Real Estate Operations for Gratus Capital. He acquired his first investment property in 2007.  Robert spent the previous 10 years in corporate sales with Aerotek, North America’s leading recruiting agency. During his ten years at Aerotek, Robert served a variety of businesses from startups to Fortune 500 companies in the Manufacturing, Healthcare, and Medical Device industries. As a strategic partner, Robert worked with his clients to identify opportunities to enhance their workforce and then managed a team of recruiters to place qualified candidates. His efforts led him to seven consecutive years of surpassing his sales quota, a Significant Impact Award, MVP award, and a promotion to a leadership role where he directed a team of salespeople and recruiters. During his time in this role, Robert led his team to be the largest market in his segment throughout all Aerotek. 

 In 2016 Robert began working part time with Gratus Capital.  While working with Gratus, Robert was mentored in a year real long Multifamily Investing program covering the entire process to identify, raise capital and operate a successful multifamily real estate investment.  Robert played an integral role in Gratus Capital’s second fund, Gratus Capital Properties Fund I, (GCPFI).  This fund acquired a diversified portfolio of rental properties across the Greater Minneapolis market.

In 2020, after three years of GCPFI outperforming pro-forma by ~40%, Robert left his position with Aerotek and focused his full-time efforts into Gratus Capital’s Real Estate Operations. He spent the majority of 2020 optimizing GCPFI to further maximize returns for investors which lead to the fund’s best year since inception. Robert is now primarily focused on building out systems and infrastructure for Gratus Capital Properties Fund III.

Jack Weimer

Sponsor

Jack is a graduate of Valparaiso Technical Institute of Valparaiso, IN holding an AS degree in Engineering Electronics. He later received a BA degree from Trinity International University of Deerfield, IL in 1985. Jack spent 36 years in various technical and leadership roles at Eagle Test Systems, an international leader in automated electronic test equipment, where he ultimately served as Chief Technical Officer helping build the company to more than $120 MM in revenue by the time the company went public on the New York exchange in 2006.

Having had the responsibility of managing his own retirement funds, Jack had the unique opportunity to watch and compare the various investment options offered to him and others his age. Despite having access to some of the most sophisticated investment products Wall Street had to offer and the associated volatility, he was less than impressed with the overall performance.

After years of mediocre results and multiple heart-dropping crashes, Jack became a founding investor in Gratus Capital’s first real estate fund. In his 20 years of investing, of all his various investments, the most consistent positive performer was his rental real estate.

In 2016, Jack left his 36-year career and became a partner at Gratus Capital. Jack has a passion for helping others avoid many of the investment mistakes and headaches he’s had along the way, providing tried and true alternatives for folks desiring good quality investment options. At Gratus Capital, Jack supports capital development, compliance and general operations.

Skip Johnson

President Business Development

Skip leads business development for Gratus Capital. Previous to his role at Gratus, Skip was a cofounder and partner of Great Waters Financial from October 2012 to September 2021, a Minneapolis based wealth management and financial planning firm.  Skip was integral to help the firm grow to serving over 1000 households with over a billion dollars of assets under management in 8 years’ time.

Great Waters Financial earned a place on the MN Fast 50 list (50 fastest growing privately held businesses in MN) for four years straight, was recognized on the INC 5000 list three times, and was named a “Best Places to work in MN” among mid-sized companies. Skip was involved in company strategy, marketing, and helped create “architecting your retirement tm” and the “Foundational Investing tm” planning philosophy.

As his business grew, Skip became an early investor in a Gratus fund as well as other private offerings that became available to him.

After more than a decade of helping hundreds of families retire confidently through a balanced financial plan of stocks, bonds, and other publicly available investments, Skip saw how privately held investments that were becoming an increasingly significant part of his personal financial plan, were not available to the masses.  He recognized how rules that were meant to protect could also harm, largely limiting alternative investments to those who already had money.

Skip is inspired by Gratus Capital’s mission to democratize access to high-quality investments and to help people pursue their purpose beyond money. Skip helps investment advisers and firms serve their clients through the integration of Gratus Capital’s Funds into their existing processes.

Austin Schmitt

Chief Operating Officer

Austin leads business operations at Gratus Capital as its Chief Operating Officer. Before his role at Gratus Capital, Austin was a partner and Director of Operations at Great Waters Financial from February 2014 to September 2021, one of the fastest growing financial advisory firms in the country.

Leading Great Waters Financial through growth to over one billion dollars of assets under management in less than 8 years has taught him a vast understanding of scale, structure, and strategy. The passion of operational leadership and employee development has fueled the drive to use great business practices to impact the world around him.

That passion aligns clearly with the Gratus Capital mission to democratize access to investments that can help people achieve financial margin to focus more on what matters most to them.

Austin is motivated to bring these investments to as many people as possible.

Cory Storkamp

Sponsor

Cory has been a passionate investor for 20+ years after learning about the power of compounding at an early age. His first real estate acquisition came in 2006 and he’s been captivated by creating passive income via multifamily real estate investments ever since. Educated at St. Cloud State University, Cory earned his Bachelor of Science in Entrepreneurship which fueled his fire to build sales organizations within intrapreneurial environments. Currently, Cory is a Vice President of Sales at Sodexo where he leads a team of business development and sales executives across their Urban Food Portfolio since January 2022. Prior to Sodexo he helped build out and lead Digital Sales for Microsoft and subsequently ran the Microsoft Digital Sales Customer Success Team globally across five locations worldwide from March 2016 to June 2020. His experience also includes leading sales organizations for Oracle from July 2009 to March 2016 at both their Minneapolis site and at Headquarters in Redwood City, CA. His performance as a 4x Club winner at Oracle and Epicor Software, where he began his career, gave him the experience and exposure required to start his journey of building out various sales organizations across multiple geographies worldwide. He continues to find purpose in educating others on sales, leadership, creating long term wealth, and most importantly giving back.

Allen LeMay

Sponsor

Allen grew up in a small town of 800 people in Northwestern Wisconsin.  After graduating high school, he attended St. Cloud State University and received a Bachelor of Science in Marketing.  Currently, Allen is an account executive at ServiceNow working with Fortune 100 companies on their digital transformation strategies since September 2021.  Prior to ServiceNow he spent six years at Workday as a Regional Sales Director from March 2015 to June 2020.  In this role, Allen was responsible for facilitating complex multimillion-dollar enterprise resource planning (ERP) deals.  This required him to work closely with VP & C-Level executives to create a shared vision.  In addition, he was responsible for developing the strategy their internal team would execute on.  Allen has consistently been a top performer in his different roles, which he credits to the team that was supporting him.   

Allen got started investing in real estate in 2003 and has always had a passion for it.  He believes in the power of passive income and compounding interest.  These are two principles he grown a huge passion for and wants to do everything he can to educate the masses on.  He has been involved in multiple syndications as both a general partner and limited partner with most of the properties being in Kentucky & Tennessee.

Other intertest of Allen's include: spending time with wife and daughter, giving back to community, trail running, biking (mountain & road), fishing, hiking, hockey, cold plunging, pushing yourself to physical and mental limits you don't think possible.

EXECUTIVE COMPENSATION

The following table sets forth the cash compensation of Manager:

The Class C Interests were issued as founder’s interest in exchange for $1000. Currently Jason Weimer and Robert Barlau, the managers of the Manager, holds 100% of the members’ equity of the Company. Upon issuance of the minimum Offering amount these Class C Interests will be a 20% interest and are subordinate to the Class A and Class B Interests.

The Manager will only request reimbursement of organizational and offering expenses once the Company has raised more than $1,000,000.

Employment Agreements

There are no current employment agreements or current intentions to enter into any employment agreements.

Future Compensation

The principals of our Manager have agreed to provide services to us without cash compensation until such time that we have sufficient earnings from our revenue. The managers of the Manager received Class C Interests at formation in exchange for $1000.

Transfer Agent

We intend to enlist the services of KoreTransfer as our transfer agent.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The Company utilizes office space provided at no cost from our Manager. Office services are provided without charge by the Company’s Manager. Such costs are immaterial to the financial statements and, accordingly, have not been reflected.

The Company has entered into a promissory note and line of credit with the Managing Member, with the purpose of funding operating expenses and “pre-funding” the acquisition of assets. As of December 31, 2023, June 30, 2023, December 31, 2022, June 30, 2022, and December 31, 2021, funds due to an affiliate of the Manager of the Company (including both principal provided and interest accrued thereon), are approximately $3,743,430, $4,750,400, $5,108,921, $252,297, and $238,923 respectively. The Note is an uncollateralized revolving credit facility which matures October 28, 2030. Interest due thereon, accrues at simple rate of interest set at the coupon rate on a U.S. 10-year treasury note + five percent (5%) per annum, not to exceed 10% (the “Alternative Base Rate”). This rate adjusts semi-annually on January 1 and July 1 of each year, and as of July 31^st, 2022, is currently 8.866% as of January 1, 2024.

We have issued 100% of the Class C Interests at formation to the managers of our Manager, Jason Weimer and Robert Barlau, in exchange for $1000. The approximate value of the Class C Interests at the time of this Offering is approximately $1,000. The Manager shall receive the following fees and compensation:

PRIOR PERFORMANCE

Prior Performance is Not Indicative of Future Results

The Manager of the Company is GCPF Management LLC, and the principal owners and managers of the Manager are Jason Weimer and Robert Barlau.

In April 2017, members of the Manager launched Gratus Capital Properties Fund I, LP (“GCPFI.”) The purpose of GCPFI was to invest in a portfolio of cash flowing rental real estate, made up of single-family homes, duplexes and smaller multi-family properties. The initial goal was to raise $1,000,000 from friends, family and business associates. The initial $1,000,000 was fully subscribed shortly, before opening a second close window and increasing the possible equity to $2,000,000 in 2018.  These offerings were conducted under Rule 505 of Regulation D. We refer to each of these securities offerings and the properties GCPFI purchased as a “Project.”

The Project was demined to be similar in nature in that it raised funds from private equity offerings exempt from registration pursuant to the safe harbor afforded by Regulation D under the Securities Act for the primary purpose of acquiring income-producing residential real estate assets as long-term investments for eventual sale. In addition, the Project also has investment objectives that are similar to the investment objectives of the Company.

Because of these similarities, investors who are considering purchasing Investor Interests from the Company might find it useful to review information about the Project. Of course, prospective investors should bear in mind that prior performance does not guarantee future results. The fact that a prior Project has been successful (or unsuccessful) does not mean the Company will experience the same results.

There have been no major adverse business developments or conditions experienced by any Project that would be material to purchasers of the Company’s Investor Interests.

The Project raised an aggregate of $1,591,300 in equity from a total of 22 investors in 2018. Its offering materials state that the Manager will endeavor to provide a liquidity event (typically a cash out refinance) within 5 to 10 years (i.e., 2022 to 2027), and that if such refinancing was not available then the Manager would endeavor to sell the Property after a hold period of approximately 10 years (i.e., 2027). The Project regularly buys, updates, manages and sells rental property in and around the Twin Cities market in Minnesota. Cash flow has been reinvested so far to date, and approximately 14% of investment capital has been returned to investors via cash-out refinances. Based on our most recent estimates of value, equity returns have compounded at an annual rate of 11.9% per year.

STRATEGY AND RESULTS

As described at length in “Investment Strategy” section starting on page 34, the strategy of our Manager on the behalf of the Company is to:

CAUTION: PRIOR PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE FACT THAT OUR SPONSOR HAS BEEN SUCCESSFUL WITH THESE PROGRAMS DOES NOT GUARANTY THAT THE COMPANY WILL BE SUCCESSFUL.

Acquisitions of Properties Within Last Seven Years

During the last seven years, the Manager has purchased 29 properties with outside investors, which have an aggregate of 61 rental units and cost a total of $4,728,000.

Prior Performance Tables

The Manager of the Company is GCPF Management LLC, and the principal owners and managers of the Manager are Jason Weimer and Robert Barlau.

In April 2017, members of the Manager launched Gratus Capital Properties Fund I, LP (“GCPFI.”) The purpose of GCPFI was to invest in a portfolio of cash flowing rental real estate, made up of single-family homes, duplexes and smaller multi-family properties. The initial goal was to raise $1,000,000 from friends, family and business associates. The initial $1,000,000 was fully subscribed shortly, before opening a second close window and increasing the possible equity to $2,000,000 in 2018.  These offerings were conducted under Rule 505 of Regulation D. We refer to each of these securities offerings and the properties GCPFI purchased as a “Project.”

The Project was determined to be similar in nature in that it raised funds from private equity offerings exempt from registration pursuant to the safe harbor afforded by Regulation D under the Securities Act for the primary purpose of acquiring income-producing residential real estate assets as long-term investments for eventual sale. In addition, the Project also has investment objectives that are similar to the investment objectives of the Company.

Prior Performance Tables

We are providing a number of tables that illustrate the results of the Projects:

Because of the similarities between the Programs and the Company, investors who are considering purchasing Class A or Class B Interests from the Company might find it useful to review these tables. However, prospective investors should bear in mind that PRIOR PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE FACT THAT OUR MANAGER HAS BEEN SUCCESSFUL WITH THESE PROGRAMS DOES NOT GUARANTEE THAT THE COMPANY WILL BE SUCCESSFUL.

The prior performance tables reflect properties who’s managing member is both the Manager and/or Jason Weimer and Robert Barlau. Our Manager, GCPF Management LLC, was formed in 2020 by Jason Weimer and Robert Barlau. Over time, the assets owned by the Program and managed by the Manager will be sold.

Table I – Manager Experience (unaudited) - sets forth the Manager’s historical experience for all programs that started to raise capital in the last seven years

Table II- Managers Compensation (unaudited) - summarizes the compensation the Manager received from all programs closed during the most recent seven years:

(1) Includes reimbursements

GCPFI has paid the manager/sponsor fund administration fees and management fees. To date, GCPFI has reinvested all cash flow from operations resulting in mark-to-mark total approximate return of 11.9% annualized.

Table III – Operating Results of Prior Programs (unaudited). - sets forth the operating results of properties included in prior real estate programs: