REI Capital Growth LLC

a Delaware limited liability company

970 Summer Street, Stamford, CT 06905

Sponsored by

REI Capital Management, LLC

As filed with the Securities and Exchange Commission on January 19, 2023

AMENDED Preliminary* Offering Circular

*After Filing, Before Qualification 230.254

REI Capital Growth LLC, the “FUND”, is a Delaware limited liability company, makes this Offering statement (the “Offering”) pursuant to Regulation A+, Form 1-A, filed with the Securities and Exchange Commission. REI Capital Growth LLC is an “Emerging Growth Company” and as a “Smaller Reporting Company” both as defined in the Securities Act of 1933.

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange 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 may 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. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered or the terms of this Offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.

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.

We are offering 7,500,000 Non-voting, no dividend, Equity Shares in the form of Digital Asset Securities at $10.00 per Share (“Equity Shares”, or “Shares” – refer to Section 4, herein). Purchasers become Shareholders in the FUND upon acceptance by our Manager. The Manager reserves the right to accept or reject any subscription and require a minimum investment amount or limit the maximum investment amount. Currently, the initial limit minimum is $500.00. The Manager may or may not raise the maximum dollar amount during the lifetime of the FUND. See: “Equity Shares” for the full description. When a subscription has been accepted, all subscription payments are available to the FUND to acquire assets or for working capital. There are no provisions for return of funds once a subscription has been accepted. No commissions or finders fees will be paid. This Offering terminates after the Maximum Dollar Amount of this Offering has been received. For the description of Risk Factors, please refer to Section 2, herein. Sale to the Public shall commence upon qualification of this Offering by the Commission.

TABLE OF CONTENTS

2 Risk Factors

Investors in the FUND 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 will only recently have commenced operations, 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 high probability of losing their investment.

We were organized in November 2018 and have not yet started operations. As a result of our start-up operations we have; (i) generated no revenues, (ii) will accumulate deficits due to organizational and start-up activities, business plan development, and professional fees since we organized. There is nothing at this time 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. 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.

You may not have the opportunity to evaluate our investments before we make them, which makes your investment more speculative.

You will be unable to evaluate the economic merit of our investments before we invest in them and will be entirely relying on the ability of REI Capital Management LLC, our Manager, to select our investments. Furthermore, our Manager will have broad discretion in implementing policies regarding tenant or mortgagor creditworthiness, and you will not have the opportunity to evaluate potential tenants, managers or borrowers. These factors increase the risk that your investment may not generate returns comparable to our competitors.

 Our Manager will have complete control over the FUND and will therefore make all decisions of which Shareholders will have no control.

REI Capital Management LLC, our Manager, shall make certain decisions without input by the Shareholders. Such decisions may pertain to employment decisions, including our Manager’s compensation arrangements, the appointment of other officers and managers, and whether to enter into material transactions with related parties.

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

Since there is no public trading market for our Shares, you may never be able to liquidate your investment or otherwise dispose of your Shares. The FUND does currently have a Redemption Plan but there is no guarantee that the FUND will ever redeem or “buy back” your Shares. Further, no Shareholder may redeem their Shares until eighteen (18) months after the Shares were purchased. (See “EQUITY SHARES”). 

Our Business depends on Key Personnel.

We are significantly dependent on Alan Blair. The loss or unavailability of his 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 loss of your investment.

Valuation Risks

The Fair Market Value of an asset is the current price at which that asset would change hands in an orderly transaction between a willing buyer and a willing seller, without compulsion, and with a reasonable knowledge of the facts. The Manager intends to apply the principals of Fair Market Value in determining value of FUND assets,

The quarterly determination of the value of an Equity Share in this Offering is its percentage of the value of the consolidated net assets held by the Fund, assuming full dilution of all shares and share-equivalents outstanding at the NAV date. The beginning basis for determining NAV is the Carrying Amount of consolidated net assets. There is no guarantee that the carrying amount of consolidated net assets will accurately reflect the fair market value thereof.

There is no guarantee that the Carrying Amount or the assessed or appraised fair market value of an asset will be realized by the FUND on such assets disposal or liquidation. Nor can such guarantee be ensured on the settlement of carried liabilities.

To the extent that the Manager adjusts the Carrying Amount of net assets to reflect NAV, such basis of adjustments will be disclosed. However, the Manager recognizes and highlights the risk that the adjusted value of an asset or liability may not accurately reflect the fair market value of such asset, such as for example the proceeds received for the sale of a Share in any secondary market, or the settlement value of such asset or liability ultimately realized by the FUND.

General 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 that 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 or occupancy levels and that estimates of the costs of improvements to bring an acquired property up to standards established for the market position intended for that property may prove inaccurate. Expenses may be greater than anticipated.

Real estate investments are illiquid.

Because real estate investments are relatively illiquid, our ability to vary our portfolio promptly in response to economic or other conditions will be limited. The foregoing and any other factor or event that would impede our ability to respond to adverse changes in the performance of our investments could have an adverse effect on our financial condition and results of operations.

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

Our properties will be subject to increases in tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance, administrative and other expenses. If we are unable to 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 acquisitions or cash available for our reinvestment program which affect the rate at which we can increase the Net Asset Value of the Fund.

If we purchase assets at a time when the commercial real estate market is experiencing substantial influxes of capital investment and competition for properties, the real estate we purchase may not appreciate or may decrease in value.

The FUND’s target commercial, multi-tenant, retail, 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, 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 single 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 commercial retail space generally. Therefore, to the extent that there are adverse economic conditions in those regions that impact the applicable market rents, such conditions could result in a reduction of our income and cash available for investment and thus negatively affect the returns the FUND is seeking to achieve.

We depend on commercial tenants for some of our revenue and therefore our revenue may depend on the success and economic viability of our tenants.

We will be highly dependent on income from tenants. Our financial results will depend in part on leasing space in the properties we acquire to tenants on economically favorable terms.

In the event of a tenant default, 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, lease payment defaults by tenant(s) could cause us to lose our investment.

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.

This offering is a blind pool offering, and therefore, Shareholders 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 multi-tenant commercial real estate assets. However, because, as of the date of this prospectus, we have not identified the assets we expect to acquire and because our Shareholders will be unable to evaluate the economic merit of 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 Shareholders’ investment may not generate returns comparable to our competitors.

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 and only if owners of real estate accept our Shares in exchange for an interest in the target property or title to the property. Our properties may not be well diversified and their economic performance could be affected by changes in local economic conditions.

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 our reinvestment program and the rate at which we can increase the Net Asset Value of the Fund.

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, and foreign investors 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 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 our reinvestment program and the rate at which we can increase the Net Asset Value of the Fund.

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. Shareholders ultimately may not like the location, lease terms or other relevant economic and financial data of any real properties, other assets or other companies that we may acquire in the future. 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 appreciate in value would most likely preclude our Shareholders from realizing a 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.

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 reinvest in new assets and could decrease the value of our investors’ investments.

Our policies do not limit us from incurring debt until our total liabilities would be at 85% of the value of the assets of the FUND. We intend to borrow as much as 85% of the value of our properties. We do not currently own any properties. 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 available for our reinvestment program and the rate at which we can increase the Net Asset Value of the Fund.

Risks Related to Our Corporate Structure

We do not set aside funds in a sinking fund to redeem the Shares, so you must rely on our revenues from operations and other sources of funding for withdrawal requests. 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 redeem the Shares at the end of the applicable non-withdrawal period. Accordingly, you will have to rely on our cash from operations and other sources of liquidity, such as borrowed funds and proceeds from future offerings of securities, for payments upon withdrawal. 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 our reinvestment program which would affect the rate at which we can increase the Net Asset Value of the Fund. 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. 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 Shareholder.

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 Shareholders. Our Manager’s broad discretion in setting policies and our Shareholders’ inability to exert control over those policies increases the uncertainty and risks you face as a Shareholder. In addition, our Manager may change our investment objectives without seeking Shareholder approval. Although our board has fiduciary duties to our Shareholders and intends only to change our investment objectives when the board determines that a change is in the best interests of our Shareholders, a change in our investment objectives could cause a decline in the value of your investment in our FUND.

Our ability to achieve our target annualized return is subject to fluctuations in our financial performance, operating results and capital improvement requirements.

Currently, our strategy includes achieving a return to investors under this Offering that would result in a return of approximately 9% annualized return on investment, of which there is no guarantee. In the event of downturns in our operating results, unanticipated capital improvements to our properties, or other factors, we may be unable to achieve our target of approximately 9% annualized return on investment.

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.

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. 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, 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. 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.

 Insurance Risks

We may suffer losses that are not covered by insurance.

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

All decisions relating to the type, quality and amount of insurance to be placed on property securing its notes will be made exclusively by the Manager. Certain types of losses could be of a catastrophic nature (due to such things as ice storms, tornadoes, wind damage, hurricanes, earthquakes, landslides, sinkholes, and floods), some of which may be uninsurable, not fully insured or not economically insurable. This may result in insurance coverage that, in the event of a substantial loss, would not be sufficient to pay the full prevailing market value or prevailing replacement cost of the underlying property. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also might make it unfeasible to use insurance proceeds to replace the underlying property once it has been damaged or destroyed. Under such circumstances, the insurance proceeds received might not be adequate to restore the property, leaving the FUND with a financial loss.

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 FUND. Additionally, properties may now contain or come to contain mold, which may not be covered by insurance and has been linked to health issues.

The Manager will attempt to obtain the FUND’s own insurance policies on FUND properties but it is possible that some of the properties may be uninsured for a period of time or uninsurable. If damage occurred during a time when a property was uninsured, the FUND may suffer a loss.

Federal Income Tax Risks

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

An investment in Shares of the FUND involves material income tax risks.

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 Shares. 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 and whether we are required to qualify as a tax shelter under the Internal Revenue Code. Our counsel also gives no opinion as to the tax considerations to you of tax issues that have an impact at the individual or shareholder level.

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 FUND 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 FUND 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 FUND items will generally be determined at the FUND level in a single proceeding rather than in separate proceedings with each Shareholder, and our Manager is primarily responsible for contesting federal income tax adjustments proposed by the Internal Revenue Service. In such a contest, our Manger may choose to extend the statute of limitations as to all Shareholders and, in certain circumstances, may bind the Shareholders to a settlement with the Internal Revenue Service. Further, our Manager may cause us to elect to be treated as an electing large FUND. If it does, we could take advantage of simplified flow-through reporting of FUND items. Adjustments to FUND items would continue to be determined at the FUND 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 Shareholders or to bear such adjustments at the FUND level.

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 Shares. 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 Shareholder. Any such changes could have an adverse effect on an investment in our Shares 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 Shares and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our Shares.

Risks Related to the Digital Nature of the Digital Asset Securities

By and large, the risks for digital asset securities are the same as the risks of traditional securities, such as loss of value through business risk which is the risk that something occurs to cause the FUND’S ability to achieve its financial goals. In addition to those risks which affect any security, the Digital Asset Securities, which are the Equity Shares described in this Offering Circular, require special consideration.

The Equity Shares are in the custody of our Transfer Agent, Vertalo, which is a.special purpose Transfer Agent, regulated by the Securities and Exchange Commission (“SEC”) and specializing exclusively in Digital Assets Securities. By specializing, Vertalo can limit and isolate risks associated with its business operations by maintaining only those operational procedures appropriate for securely managing Investor information associated with the Digital Asset Securities.

As a Transfer Agent regulated by the SEC, Vertalo is obligated to maintain the Investor’s records in line with the same traditional regulatory requirements which obligate every Transfer Agent. In addition to these requirements, Vertalo also records the Investor’s information on its private Blockchain. All Investor information is also maintained by REICG. All necessary Investor information is maintained in multiple back-up databases containing identical Investor information under the control of both the Transfer Agent and REICG. These databases are implemented in multiple technologies on private networks.

With these redundant record keeping methods in place, risks associated with the loss or theft of a Digital Asset Security are reduced. And because these redundant record keeping methods are entirely digital, risks associated with performance and transaction speed, scalability, resilience, complexity, and visibility are reduced.

Each Investor can access their account using the familiar ID and password method. There is no “private key” access.

Risks associated with access to the Digital Asset Securities include access to the Internet, the security and integrity of computer systems used by the Investor, REICG, REICM, and Vertalo, and the security systems in place to protect the databases and computer systems from hacking, viruses, and other forms of external malicious manipulation.

Risks Related to Secondary Trading

A Shareholder may trade or sell his Equity Shares provided that the Shareholder has been able to identify a buyer for his Equity Shares acceptable to REICG. See “EQUITY SHARES”. The FUND cannot guarantee that the percentage of each Equity Share to the current Net Asset Value (“NAV”) of the FUND will reflect the proceeds a Shareholder may receive for the sale of Equity Shares in any secondary sale. Further, there can be no guarantee that any secondary market ever develops for Equity Shares.

Any Shareholder seeking to sell his Equity Shares on a private secondary market trading platform may encounter greater risk with regard to selling for the highest possible value due to the unregulated nature of secondary market trading platforms in comparison to regulated secondary market trading platforms. Buyers participating in unregulated secondary market trading platforms may discount the value of an investment offered in the unregulated secondary market trading platform because of the potential lack of sufficient information and the general lack of regulated information standards on that exchange.

3 Plan of Distribution

After the Qualification Date of this Offering, this Offering shall remain open until fully subscribed. The Offering Period will commence upon this Offering Circular being declared qualified.

Our Offering Price is arbitrary with no relation to value of the FUND. If the maximum amount of Shares are sold under this Offering, the purchasers under this Offering will own 100% of the Shares outstanding. If less than the maximum amount of Shares are sold under this Offering, the purchasers under this Offering will own 100% of the Shares outstanding.

The FUND does not currently own any loan assets. We believe we will need at least $100,000 to provide working capital and $25,000 for professional fees for the next 12 months.

The Equity Shares are self-underwritten and are being offered and sold by the Fund on a best-efforts basis. No compensation will be paid to any principal, the Manager, or any affiliated FUND or party with respect to the sale of Equity Shares. 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 this 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 FUND, 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 FUND’s account. This account is not held by an escrow agent. Subscription funds placed in the FUND account may only be released if the Subscription is not accepted by the Manager. The initial minimum purchase is $500 at $10 per share and subsequent purchases can be made in increments of one (1) share at $10 per share until a secondary market for the shares develops. Subscription Agreements are irrevocable.

Solicitation and Subscription.

The FUND, subject to Rule 255 of the Securities Act of 1933 and corresponding state regulations, is generally permitted to 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 this Offering. The FUND plans to solicit investors using the Internet through a variety of existing internet advertising mechanisms, such as search based advertising, search engine optimization, and the FUND website. The FUND website is in the process of being developed.

Please note that the FUND will not communicate any information to prospective investors without providing access to this Offering Circular. This Offering Circular 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.

Prior to the acceptance of any investment dollars or Subscription Agreements, the FUND will determine the residence of the prospective investor. Investments will be processed on a first come, first served basis, up to the Offering Amount of $75,000,000.

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

In compliance with Rule 253(e) of Regulation A, the Manager shall revise this Offering Statement during the course of this 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 this Offering Circular and be requalified under Rule 252.

Who May Invest

As a Tier II, Regulation A offering, investors must comply with the 10% limitation to investment in this Offering, as prescribed in Rule 251. The only investor in this offering exempt from this limitation is an accredited investor, an “Accredited Investor,” as defined under Rule 501 of Regulation D. If you meet one of the following tests you qualify as an Accredited Investor:

Under Rule 251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent fiscal year end). A non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s annual income or net worth (please see below on how to calculate your net worth).

NOTE: For the purposes of calculating your net worth, Net Worth is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the donor or grantor is the fiduciary and the fiduciary directly or indirectly provides funds for the purchase of the Equity Shares.

4 Equity Shares

The following descriptions of our Equity Shares, certain provisions of Delaware law and certain provisions of our certificate of formation and operating agreement are summaries and are qualified by reference to Delaware law, our certificate of formation and our operating agreement, copies of which are filed and available upon request.

General

We are a Delaware Limited Liability Company organized on November 7, 2018, under the Delaware Limited Liability Company Act, or Delaware LLC Act. REI Capital Management (REICM) is the sole managing member.

All Equity Shares are common shares, are non-voting and do not pay dividends. Holders of Equity Shares have no conversion, exchange, sinking fund, or appraisal rights. Holders of Equity Shares have no pre-emptive rights to subscribe for any securities of the FUND or its Affiliates and no preferential rights to returns. All of the Equity Shares offered will be duly authorized and validly issued after acceptance of the investor’s subscription by the Manager and upon payment of the subscription consideration in full. Holders of such Equity Shares will not be liable to the FUND in any way with respect to such Shares.

Equity Share Price

The Investor will receive one Digital Asset Security for each ten dollar (USD$10.00) Equity Share purchased. Ten dollars (USD$10.00) is the purchase price of a common share until such time that a secondary market develops or NAV is calculable. Thereafter, the per share purchase price in this offering will be adjusted at the beginning of each fiscal quarter (or as soon as commercially reasonable thereafter), and will be equal to the greater of (i) the market price established in a secondary market or (ii) our NAV divided by the number of shares outstanding as of the close of business on the last business day of the prior fiscal quarter. Our Manager will adjust our per share purchase price as of the date the new NAV is announced and investors will pay the most recent publicly announced purchase price as of the date of their subscription.

Solely by way of example, if an investor submits a subscription on April 2, such investor will pay the per share purchase price previously announced in January, not the per share purchase price that would be expected to be announced at a later date in April.

The FUND will post the fiscal quarter’s NAV on its public website at www.reicapitalgrowth.com.

Any subscriptions that we receive prior to the end of a fiscal quarter will be executed at a price equal to our NAV per share applicable to such fiscal quarter. Thus, even if settlement occurs in the following quarter, the purchase price for the shares will be the price in effect at the time the subscription was received

Liquidity

The Equity Shares are Digital Asset Securities and have the capacity to be traded on a secondary trading market specializing in Digital Asset Securities. Such a secondary trade could be made on an exchange registered with the SEC under Regulation ATS, a privately-run bulletin board, or a peer-to-peer transaction, if any such market existed. No public market currently exists for the secondary trading of Equity Shares.

Lockup Period

There is no “Lockup Period” or holding period limiting the resale of REICG Shares to a buyer acceptable to REICG.

Redemption Plan

While you should view this investment as long-term, we have adopted a redemption plan whereby, on a quarterly basis, an investor may obtain liquidity.

The FUND intends to institute a quarterly, discretionary Equity Share redemption program that will offer Shareholders on a first come first served basis the right to sell their Equity Shares back to the FUND at the quarter-end NAV(as published) less the cost of any brokerage and transfer fees relative to the Equity Shares redeemed, if any. The specific amount of Equity Shares available for redemption in any given quarter will be limited to the number of Equity Shares derived by the quotient calculated as ten percent (10%) of quarterly cash flow provided by operations, if any, as the numerator and quarter-end NAV per Equity Share as the denominator. During the first eighteen (18) months of FUND operations, this Redemption Plan will be implemented only at the discretion of the FUND Manager. This Redemption Plan will continue until such time as a secondary market exists for the Equity Shares as determined by the FUND Manager.

Provisions of Equity Shares Authorizing Manager to Act

After acceptance of the subscription by the Manger and by purchasing Equity Shares, you will be admitted as an Investor. Every Investor in Equity Shares shall be a party to and bound by the provisions of the Operating Agreement. Pursuant to this Operating Agreement, each Investor and each subsequent person who acquires Equity Shares from an Investor grants to the Manager a power of attorney to protect the interests of all Shareholders. The power of attorney grants our Manager the ability to execute and deliver such other documents as may be necessary or appropriate to carry out the purposes of the FUND.

Shareholder Dispute Resolution

Our Operating Agreement requires that all parties to the Operating Agreement in any action, lawsuit or proceeding, whether in contract or in tort, relating to any dispute arising under or in connection with this agreement or any transaction described in the Operating Agreement or to any dispute between the parties, including claims arising from federal securities laws, (i) waive their right to trial by jury and (ii) submit to the exclusive jurisdiction of the Delaware Court of Chancery or other state or federal court in the State of Delaware. Shareholders will not be deemed to have waived the FUND’s compliance with federal securities laws and the rules and regulations thereunder.

Authorized but Unissued Shares

Our Operating Agreement authorizes us to issue additional equity or other securities of the FUND for the consideration and on the terms and conditions established by our Manager without the approval of Shareholders. In particular, our Manager is authorized to provide for the issuance of an unlimited amount of one or more classes or series of equity securities of the FUND.

Personal Conduct Repurchase Right

Our Operating Agreement provides that we may elect to repurchase, at a price per share based on our NAV as of the end of the fiscal quarter prior to the quarter in which we elect to repurchase the shares, all of the Equity Shares held by an investor in the event that such investor fails to conform its personal conduct to common and accepted standards of good citizenship or conducts itself in a way that reflects poorly upon us, as determined by the Manager in its sole and absolute discretion. The purchase price will be payable to the investor in a single payment, with the payment becoming due fifteen (15) business days following the date on which we provide notice to the Investor of our decision to repurchase the Equity Shares.

5 Equity Shares Are Digital Asset Securities

The Equity Shares are securities regulated as an investment contract by the Securities and Exchange Commission (“SEC”). Each Equity Share is a Digital Asset Security maintained in the custody of the Transfer Agent and accessible to the Investor through the REICM Global Retail Investor Portal (GRIP). Each Equity Share is issued by the FUND only as a Digital Asset Security in the custody of the Transfer Agent.

Each Investor’s Equity Shares are held in a keyless digital wallet created by Vertalo, the Transfer Agent. This keyless wallet is the Investor’s account. Each Investor has access to their account through the REICM Global Retail Investor Portal. When and if a secondary market develops for the Equity Shares, each Investor will be able to initiate secondary market trades by logging into their account through the REICM Global Retail Investor Portal. From there, the Investor is connected to their account at the Transfer Agent through which the Investor can order a secondary market trade. Should a secondary market develop, every secondary market trade will be facilitated through the Transfer Agent. The REICM Global Retail Investor Portal gives each Investor the ability to manage their account with the familiar experience of logging into the web portal with a registered email address and password.

6 Use of Proceeds

The Manager will analyze and review a number of target investment opportunities on an ongoing basis.

THERE IS NO GUARANTEE THAT THE FUND WILL INVEST IN ANY PARTICULAR PROPERTY OR OPPORTUNITY. FOR ANY NUMBER OF REASONS, THE FUND MAY OPT AGAINST PURSUING ANY PARTICULAR OPPORTUNITY.

All Net Offering Proceeds are intended for the purchase of target properties identified and determined by the Manager. The amounts presented are estimates based on the best information available at the date of this Offering Circular and the experience of the Manager. The Manager will attempt in all cases to minimize costs and increase the amount available to acquire the initial real estate portfolio properties of the FUND, but there is no assurance that the expenses necessary to achieve the FUND’s goals will not exceed the amounts estimated.

7 Selected Financial Data 

Exemptions under Jumpstart Our Business Startups Act

We elect to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) as an “Emerging Growth Company”. An Emerging Growth Company is one that had total annual gross revenues of less than $1,000,000,000 as determined under Section 107 of the JOBS Act. We would lose our emerging growth status if we were to exceed $1,000,000,000 in gross revenues. We are not sure this will ever take place.

Because we are an emerging growth FUND, 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.

U.S. Taxation

REICG will elect to be taxed as a “C” Corporation for federal income tax purposes. This election is the most advantageous income tax treatment for the FUND.

To date, the Company has recognized net operating losses throughout its start-up phase, which it contemplates will continue until successfully offering its Shares to the public. See: “Index to Financial Statements”.

8 Management’s Discussion and Analysis of Financial Condition

General

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 and appearing elsewhere herein.

The investment opportunity offered hereby is speculative and involves a high degree of risk. There can be no assurances that an Investor will realize a substantial or any return on their investment. The Fund hopes to achieve an initial annual increase of Fund net asset values of nine percent (9%). The value of every Shareholder’s holding of Equity Shares shall be equal to the net asset value of the Fund assets in proportion to each Member’s respective Capital Contribution. The Manager, REI Capital Management LLC, will exclusively manage the Company.

REICG was formed in the State of Delaware in November of 2018. 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 Fund does not have any plans or arrangements to enter into a change of control, business combination or similar transaction or to change management.

As of the date of this offering circular, The Fund has not yet commenced active operations. Offering Proceeds will be applied to invest in multi-tenant stabilized open-air shopping centers. We will experience a relative increase in liquidity as we receive additional proceeds from the sale of Equity Shares and a relative decrease in liquidity as we spend net offering proceeds in connection with the acquisition and operation of our assets.

Further, we have not entered into any arrangements creating a reasonable probability that we will own a specific property. The number of additional properties that we will acquire will depend upon the number of Equity Shares sold and the resulting amount of the net proceeds available for investment in additional properties. Until required for the acquisition or operation of assets, we will keep the net proceeds of this offering in short-term, low risk, highly liquid, interest-bearing investments.

We intend to make reserve allocations as necessary to aid our objective of preserving capital for our investors by supporting the maintenance and viability of assets we acquire in the future. If reserves and any other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional funds by borrowing, restructuring property loans or liquidating our investment in one or more assets. There is no assurance that such funds will be available, or if available, that the terms will be acceptable to us.

Net Asset Value (“NAV”)

The FUND will determine the value of Equity Shares on a quarterly basis. The value of an Equity Share will be the share’s percentage of all issued shares to the Net Asset Value in U.S. Dollars (USD$) of all Fund Assets.

The Manager shall determine the NAV by subtracting the carrying amount of total liabilities from the carrying amount of total assets. If, in the Manager’s estimation, circumstances indicate that that the carrying amount of certain assets and certain liabilities is not reflective of the current market value of such assets and liabilities, the Manager may substitute a representative market value (“Stated Value”) for the carrying amount of such identified assets and liabilities to more accurately reflect NAV and to more accurately calculate the internal value of each Equity Share.

The “Stated Value” of any individual FUND Asset shall be determined by the Manager in its sole discretion. The Manager, however, shall establish and follow a methodology according to the Fund’s Valuation Policies, which may be modified, altered, amended, or improved from time to time at the Manager’s sole discretion.

Target Growth Rate

The FUND will target annual increases in NAV that may vary from time to time. The initial annual target increase of FUND net assets is nine percent (9%). The increase in FUND assets is primarily attributable to two components: (1) appreciation in the NAV of the FUND’s real estate portfolio and (2) investment of a targeted ninety percent (90%) of the FUND’s free cash flow into acquiring additional properties thereby increasing the FUND’s real estate portfolio. All income after property expenses, taxes, debt, and Fund operating expenses is the FUND’s “Free Cash Flow”

Strategy for Operations Liquidity

In this Offering we are offering and selling to the public up to $75,000,000 of Equity Shares. Our principal demands for cash will be for acquisition costs, including the purchase price, of any properties we acquire, the payment of our operating and administrative expenses, and all continuing debt service obligations. Generally, we will fund additional acquisitions from the net proceeds of this Offering. We intend to acquire additional assets with cash and/or debt. As we are dependent on capital raised in this offering to conduct our business, our investment activity over the next twelve (12) months will be dictated by the capital raised in this offering. If the capital raised in this offering is insufficient to purchase assets solely with cash, we will implement a strategy of utilizing a mix of cash and debt to acquire assets.

In addition to the capital raised in this Offering, we expect to use debt financing as a source of capital. The Manager intends to utilize leverage in a debt to equity ratio that it believes provides appropriate benefits in yield to Shareholders and FUND cash flow management.

Going forward, we anticipate that adequate cash will be generated from operations to fund our operating and administrative expenses, and all continuing debt service obligations. However, our ability to finance our operations is subject to some uncertainties. Our ability to generate working capital is dependent on the performance of each of our properties and the economic and business environments of the various markets in which our properties are located. Our ability to liquidate our assets is partially dependent upon the state of real estate markets and the ability of mortgagors to obtain financing at reasonable commercial rates. In general, we intend to pay debt service from cash flow obtained from operations. If cash flow from operations is insufficient then we may exercise the option to partially leverage the asset to increase liquidity. If we have not generated sufficient cash flow from our operations and other sources, such as from borrowings, we may use funds out of a reserve account which we may set up for that purpose in the future. Moreover, our Manager may change this policy, in its sole discretion, at any time to facilitate meeting its cash flow obligations.

Potential future sources of capital include secured or unsecured financings from banks or other lenders, establishing additional lines of credit, proceeds from the sale of assets and undistributed cash flow, subject to the limitations previously described. Note that, currently, we have not identified any additional source of financing, other than the proceeds of this offering, and there is no assurance that such sources of financing will be available on favorable terms or at all.

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, we will disclose the effective date on which we are required to adopt the recently accounting standard that applies to our financial statements.

Current Results of Operations as of December 31, 2021

Having not commenced active operations, we have not acquired any properties. Our management is not aware of any material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting our targeted assets, the commercial real estate industry and real estate generally, which may be reasonably anticipated to have a material impact on the capital resources and the revenue or income to be derived from the operation of our assets.

For the years ended December 31, 2020 and December 31, 2021, REI Capital Growth, LLC (“REICG”) has had no operations and therefore has generated no revenues or cash from operations.

REICG has been in a start-up phase since its inception on November 7, 2018, preparing for the offering of its debt securities to the public for purposes of initiating securitized commercial real estate loans. However, as the sponsor of this Offering has intended for REICG to always be created and offer its debt securities to the market, REICG has accounted for, been allocated, and incurred start-up expenses “as-if” it was formed on November 7, 2018. In the year ended 2021, REICG recognized Total Expenses of $188,233. In the year ended 2020, REICG recognized Total Expenses of $127,496.

As of December 31, 2021 and December 31, 2020, REICG has assets consisting of a minimal cash balance, as its expenses are advanced by the Sponsor. 

As of the year ended 2021, REICG had Total Liabilities of $334,192 of which $302,643 is due to the Sponsor, $17,549 consists of Accounts Payable and $14,000 consists of Accrued Expenses. As of the year ended 2020, REICG had Total Liabilities of $145,959 of which $135,807 is due to the Sponsor, $4,392 consists of accounts payable and $5,760 consists of Accrued Expenses.

Liquidity and Capital Resources

REICG’s liquidity and capital resources are all advanced by the Sponsor. REICG’s goal is to raise $75,000,000 in this Offering and will begin operations immediate upon receipt of sufficient funds. Additionally, REICG plans future offerings as market conditions allow and will increase operations proportionately and to the benefit of all investors in its equity securities by providing greater diversity of its real estate portfolio. If necessary, the Sponsor may continue to supplement REICG’s liquidity to meet its current obligations, until this Offering is closed. Upon the qualification of the Form 1-A, REICG plans to pursue its investment strategy of acquiring commercial retail center real estate in target markets throughout the United States. However, there is no guarantee that REICG will make any such acquisitions. Making such investments will depend highly on the funds raised and the availability of acquisition opportunities that meet REICG’s Investment Policies and criteria. There can be no assurance that additional capital will be available to REICG. If so, REICG’s investment objective of acquiring commercial retail centers across the continental U.S. in target markets will be adversely affected. REICG currently has no acquisition or investment agreements, arrangements, or understandings with any person to acquire real estate properties, as described. Since REICG has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.

REICG does not currently have nor does it intend to enter into any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, results of operations, liquidity, capital expenditures, or capital resources.

None.

Currently, Alan Blair is the principal of our Manager and has devoted working hours to our FUND without a salary. For more information on our personnel, please see ““BOARD OF MANAGERS AND EXECUTIVE OFFICERS”.” Our Manager will coordinate all of our business operations. We plan to use consultants, attorneys, accountants, and other personnel, as necessary and do not plan to engage any additional full-time employees in the immediate future. We believe the initial use of non-salaried personnel allows us to expend our capital resources as a variable cost as opposed to a fixed cost of operations and this allows more revenue to be available for investment at the initial stage. Any expenses related to this Offering will be charged to the FUND. For example, any costs associated with raising capital such as escrow and technology fees will be borne by the FUND. Costs associated with overall management of the FUND and the management and acquisition of the properties shall also be borne by the FUND. Our Manager is spending the time allocated to our business in handling the general business affairs of our FUND such as 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 acquisitions. The principals of the Manager expect to devote additional working hours to the business of the FUND.

9 Investment Policies of the Fund

The FUND will purchase multi-tenant stabilized open air shopping centers; strategically located within the U.S., which areas have affluent demographics and strong employment markets; and which are currently generating positive cash flow after capital and ordinary expenditures. Targeted properties will have triple-net leases and, at a minimum, be ninety percent (90%) leased at acquisition.

Within this category, the FUND will target assets with purchase prices in a range that, at the sole discretion of the Manager, is too large for typical individual investors and too small for institutional investors. The decreased competition in this price range generally provides buying opportunities with higher capitalization rates (“CAP rates”). The acquisition prices for targeted properties will generally range from USD$5.0 million to USD$25 million.

No assurances can be given that these objectives will be attained.

10 Description of Business

The business of REI Capital Growth LLC (the FUND) is to give an Investor the opportunity to participate in long-term investment strategies based on the income performance and asset appreciation of commercial real estate assets. This investment structure uses the NAV basis for valuation of Equity Shares which is a feature of an Interval Fund (“IF”) combined with the long-term hold and capital reinvestment strategies of a “Permanent Capital Vehicle” (“PCV”). The FUND intends to value Equity Shares based on the Fund’s NAV and the FUND intends to reinvest ninety percent (90%) of the FUND’s free cash flow into acquiring additional properties thereby increasing the FUND’s real estate portfolio. Shareholder ownership is recorded and maintained on the secure servers of the Transfer Agent, using the Transfer Agent’s private distributed ledger system. The record of Shareholder ownership is also maintained in the secure records of REICG.

Valuation Policies of the Fund

The Net Asset Value of a real estate portfolio asset will generally be the consolidated Carrying Amount of all assets recorded in the FUND’s financial statements. However, the Manager will, at its discretion, determine if the Carrying Amount reflects the value of such asset for purposes of determining NAV. To the extent the Manager determines that current conditions or circumstances affect the Carrying Amount of a particular asset, whether negatively or positively, the Manager will adjust such Carrying Amount in order to provide for a more accurate determination of NAV. It is noted that, generally, conditions or circumstances negatively affecting an asset’s carrying amount are recognized for financial reporting purposes when such conditions or circumstances are considered other than temporary. Positive conditions or circumstances are not recognized for GAAP financial reporting purposes. To the extent any adjustments to Carrying Amounts are made in determining NAV, the Manager will provide disclosure, so that shareholders and other stakeholders can be informed:

Interval Fund (“IF”)

An IF is an investment company that offers to repurchase its shares from shareholders periodically. Shareholders are not required to accept these offers to sell their shares back to the fund. The shares of an IF are offered and redeemed at a price based on the fund’s NAV.

IFs provide individual investors with access to investment strategies that are often limited to institutions such as hedge funds and pension plans. These investment strategies may include investments in asset classes that are less liquid, such as commercial real estate.

Like the IF structure, the Equity Shares in this Offering are valued at a price based on the Fund’s NAV, which is largely determined by the Fund’s commercial real estate Asset portfolio.

Unlike the IF structure, the Equity Shares in this Offering are maintained as Digital Asset Securities using distributed ledger technology in order to facilitate trading on a secondary market should one develop.

Permanent Capital Vehicle (“PCV”)

A PCV is an investment structure created to service a pool of capital for an indefinite period of time. The indefinite nature of this structure means that it is not designed to draw on the capital, but to grow the capital with a long-term financial performance model.

Like the PCV, the Equity Shares in this Offering are structured for Investor participation in a long-term financial performance model with the goal of reinvesting the Fund’s Free Cash Flow into new commercial real estate properties.

11 Conflicts of Interest

The Manager, its Affiliates, and its principals are subject to various conflicts of interest in managing the FUND. The FUND will pay the Manager and/or Affiliates fees, some of which are not determined by arm’s length negotiations. The FUND will pay an annual asset management fee to the Manager of one and one-quarter percent (1.25%) of the gross total value of all FUND assets, as determined on the last day of each quarter. Given that the asset management fee is calculated based on the gross total value of all FUND assets, a potential incentive exists for the Manager to inflate the gross total value of all FUND assets, in order to increase its Asset Management Fee.

The Manager and/or Affiliates may charge reasonable, market-based loan brokerage, extension, processing, underwriting, and inspection fees in connection with services provided in connection with the business of the FUND (see: “Compensation of Our Manager”). The Affiliate REI Advisors LLC may receive compensation in the form of commissions paid through the closing of the purchase or sale of a FUND Asset. All fees and compensation paid to Affiliates shall be market-based and commercially reasonable at all times. In these regards, the interests of the Manager and its Affiliates are in conflict with the interests of Shareholders.

The Manager shall devote only such time to REICG’s affairs as may be reasonably necessary to conduct its business. The Manager, and/or its Affiliates and principals, may be a manager of other companies (some of which may directly compete with the business of REICG) and have other business interests of significance.

The Manager also supervises and controls the business affairs of the FUND’s potential primary lender REI Capital Income LLC (“REICI”) and receives compensation from REICI. The business of REICI is to make loans to borrowers seeking to finance the borrower’s purchase or refinance of commercial real estate property. The Manager locates lending opportunities for REICI, raises capital for REICI, administers the financial affairs of REICI, and renders certain other services. The Manager may determine that an REICI loan can efficiently finance the purchase or refinance of a commercial real estate property by REICG and, as Manager of REICI and Manager of REICG, cause the loan to be made by REICI to REICG. As the principal party for both REICI as lender and REICG as borrower, the Manager’s representation of both entities simultaneously is in conflict.

Furthermore, while the Manager in its capacity as Manager is obligated to consider the interests of the Shareholders as a whole, the Manager may decide to act in its capacity as a Shareholder without considering the interests of other Shareholders. The interests of the Manager in its capacity as a Shareholder may be adverse to the interests of other Shareholders.

The Manager and REICG are not represented by separate counsel. The attorneys and other experts who have prepared the documents for this Offering also perform other services for the Manager. This representation will continue.

Manager as Shareholder

The Manager is a Shareholder of the FUND and from time to time may invest additional amounts in the FUND. Any further investment by the Manager will be made according to the then prevailing Equity Share Price and otherwise be in such form and in such amount as determined by the Manager in its sole discretion, without notice or approval of other Shareholders. The Manager may also determine to have the FUND accept its investment while rejecting the investments of others (though it does not intend to do so). In addition, the Manager will be eligible to have the same rights to request the FUND to redeem its Equity Shares as any other Shareholder. Any such redemption may reduce the amount of funds available for the redemption of other Investors’ interests.

Broker/Dealer Representatives may receive Equity in the Fund or other Compensation

In connection with this Offering, the Manager currently has no agreements for any outside persons to sell the Equity Shares on behalf of REICG. However, REICG may, but is not obligated to, utilize the services of one or more licensed Broker/Dealer and/or Registered Investment Advisors (“RIA”) or private persons acting as finders to locate interested Investors.

Because the securities will be offered on a best efforts basis, there can be no assurances that all or any part of this Offering will be sold. It is possible that a fee may be incurred, if the services of third parties are enlisted. Such estimated fee could amount to five percent (5%), if not more, but the Sponsor will in all circumstances expend its efforts to minimize any and all such fees. A Broker/Dealer and/or RIA so engaged may be given an equity interest in the Fund as compensation for the value of their services.

Diverse Ownership

The Investors may include taxable and tax-exempt persons and entities and may include persons or entities organized in various Non-U.S. jurisdictions. As a result, conflicts of interest may arise in connection with decisions made by the Manager that may be more beneficial for one Shareholder than for another Shareholder. In addition, the Manager may make investments for the FUND that may have a negative impact on other investments made by certain Investors in separate transactions. In selecting investments appropriate for the FUND, the Manager will consider the investment objectives of the FUND as a whole, not the investment, tax, or other objectives of any individual Shareholder, including itself.

12 U.S. Tax Treatment of the Fund and Its Subsidiaries

Election as a “C” Corporation

The Fund is organized as a Delaware Limited Liability Company and is eligible to report to the IRS as a partnership. However, the FUND will instead report its activities and the activities its subsidiaries to the IRS as a “C” Corporation due to the generally lower rates of taxation assessed and reduced administrative burden for “C” Corporations and because the FUND’S Equity Shares are non-voting and do not pay dividends. Further, by reporting as a “C” Corporations, no expenses paid by the FUND are allocated to Shareholders. The fact that the Equity Shares do not pay dividends will be communicated regularly by the FUND to the IRS through its tax filings. By opting to be taxed as a “C” Corporation, FUND Investors will not receive an allocation of income or loss that is individually taxable for U.S. tax purposes, but may be taxable in their relevant non-US tax jurisdiction(s). In connection with the FUND’s election to be taxed as a “C” Corporation, the FUND is not structured to “pass through” taxes for capital gains, dividends, or interest earned to Shareholders.

13 U.S. Federal Income Tax Considerations for Investors

US Investors

As a Shareholder filing a US tax return, it is expected that the Shareholder should report capital gains or losses when the Shareholder sells any share to another investor, when any of the Shareholder’s shares are redeemed by the FUND, and upon payment of the Shareholder’s pro rate share of cash upon the liquidation of the FUND. However, the Investor should consult with their own tax advisor to learn how the IRS characterization of any of these activities may impact the Investor’s individual tax return.

Non-US Investors

In the IRS Code, a Non-US Investor is deemed a “Foreign Person” meaning any person other than a “U.S. Person”, as defined in Title 17 C.F.R. §230.902(k). The term “Foreign Person”, also termed Nonresident Alien, is also defined by the IRS in various ways. The U.S. Federal Income Tax Risks described in this Section pertain to the federal tax risks to nonresident alien individuals, Title 26 U.S. Code §871.

The IRS has issued regulations indicating how a non-US Investor should establish their foreign status for certain purposes. Prospective investors are strongly encouraged to consult with their tax advisors concerning the requirements imposed by the regulations of their jurisdiction and the effect on investing in Equity Shares.

Any capital gain realized on the sale or other taxable disposition of an Equity Share (including a redemption) by a non-US Investor will be exempt from U.S. federal income and withholding tax, provided that:

FIRRMA: Non-US Investors

Under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA), The Committee on Foreign Investment in the U.S. proposed rules governing the foreign acquisition and ownership of real estate. Under FIRRMA, if the interest, gain or income on Equity Shares held by a Foreign Person is effectively connected with the conduct of a trade or business in the United States by the Foreign Person, the Investor generally will be subject to U.S. federal income tax on the interest, gain or income at regular U.S. federal income tax rates. In addition, if the Foreign Person is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its “effectively connected earnings and profits” within the meaning of the Code for the taxable year, as adjusted for certain items, unless it qualifies for an exemption or a lower rate under an applicable tax treaty.

However, the FUND’S Equity Shares are non-voting shares which has the consequence that Shareholders have no voice in the management of the FUND and are not active in the conduct of the FUND, 26 CFR § 1.355-3. All shareholders are passive investors in the FUND and, based solely on a Shareholder’s connection to the FUND, a Shareholder does not actively conduct the trade or business of the FUND. Ownership of Equity Shares by a “Foreign Person” who is also a “Nonresident Alien” should not subject the Shareholder to U.S. federal income and withholding tax. However, it is strongly advised that the Investor consult with and consider obtaining the opinion of their tax or legal advisor(s).

Foreign Persons holding interests in Equity Shares should consult their tax advisors regarding the procedures whereby they may establish an exemption from or reduction in withholding applicable to countries without a U.S. tax treaty, otherwise, any applicable taxes will simply be the cost of doing business in the U.S.

FIRPTA: Non-US Investors

The Foreign Investment in Real Property Tax Act (“FIRPTA”) was enacted to tax the gains on non-US residents’ income from the sale of US real property interests (“USRPI”). USRPI include real property located in the U.S. and stock of regular domestic “C” corporations and certain REITs that hold USRPIs as the majority of their global real estate and other trade or business assets

In 2015, Congress passed the PATH Act that made significant reforms to FIRPTA including significant benefits for non-US investors in US real estate. Of particular note, the PATH Act exempts certain foreign pension funds from taxation under FIRPTA on gains from investment in US real estate. The PATH Act also significantly modifies the rules applicable to Real Estate Investment Trusts (“REIT”) and Regulated Investment Companies (“RIC”) defining each to be a Qualified Investment Entity (“QIE”).

The PATH Act introduces six significant modifications to the existing FIRPTA rules: Here we will mention all six and focus on the rules that apply to RICs, in that REICG is such a company.

The PATH Act added new special ownership rules to IRC §897(h)(4), effective December 18, 2015, for applying the domestically controlled definition to a QIE, when stock in the QIE is either publicly traded (expanded to include Publicly Offered), or owned by another QIE. Includes the following:

ERISA Considerations

The following is a summary of material considerations arising under ERISA and the prohibited transaction provisions of the Code that may be relevant to a prospective investor, including plans and arrangements subject to the fiduciary rules of ERISA and plans or entities that hold assets of such plans (“ERISA Plans”); plans and accounts that are not subject to ERISA but are subject to the prohibited transaction rules of Section 4975 of the Code, including IRAs, Keogh plans, and medical savings accounts (together with ERISA Plans, “Benefit Plans” or “Benefit Plan Investors”); and governmental plans, church plans, and foreign plans that are exempt from ERISA and the prohibited transaction provisions of the Code but that may be subject to state law or other requirements, which we refer to as Other Plans. This discussion does not address all the aspects of ERISA, the Code or other laws that may be applicable to a Benefit Plan or Other Plan, in light of their particular circumstances.

In considering whether to invest a portion of the assets of a Benefit Plan or Other Plan, fiduciaries should consider, among other things, whether the investment:

ERISA and the corresponding provisions of the Code prohibit a wide range of transactions involving the assets of the Benefit Plan and persons who have specified relationships to the Benefit Plan, who are “parties in interest” within the meaning of ERISA and, “disqualified persons” within the meaning of the Code. Thus, a designated plan fiduciary of a Benefit Plan considering an investment in our shares should also consider whether the acquisition or the continued holding of our shares might constitute or give rise to a prohibited transaction. Fiduciaries of Other Plans should satisfy themselves that the investment is in accord with applicable law.

Section 3(42) of ERISA and regulations issued by the Department of Labor, or DOL, provide guidance on the definition of plan assets under ERISA. These regulations also apply under the Code for purposes of the prohibited transaction rules. Under the regulations, if a plan acquires an equity interest in an entity which is neither a “publicly-offered security” nor a security issued by an investment company registered under the Investment Company Act, the plan’s assets would include both the equity interest and an undivided interest in each of the entity’s underlying assets unless an exception from the plan asset regulations applies

If the underlying assets of our company were treated by the Department of Labor as “plan assets,” the management of our company would be treated as fiduciaries with respect to Benefit Plan Shareholders and the prohibited transaction restrictions of ERISA and the Code could apply to transactions involving our assets and transactions with “parties in interest” (as defined in ERISA) or “disqualified persons” (as defined in Section 4975 of the Code) with respect to Benefit Plan Shareholders. If the underlying assets of our company were treated as “plan assets,” an investment in our company also might constitute an improper delegation of fiduciary responsibility to our company under ERISA and expose the ERISA Plan fiduciary to co-fiduciary liability under ERISA and might result in an impermissible commingling of plan assets with other property.

If a prohibited transaction were to occur, an excise tax equal to 15% of the amount involved would be imposed under the Code, with an additional 100% excise tax if the prohibited transaction is not “corrected.” Such taxes will be imposed on any disqualified person who participates in the prohibited transaction. In addition, our Manager, and possibly other fiduciaries of Benefit Plan Shareholders subject to ERISA who permitted such prohibited transaction to occur or who otherwise breached their fiduciary responsibilities, could be required to restore to the plan any losses suffered by the ERISA Plan or any profits realized by these fiduciaries as a result of the transaction or beach. With respect to an IRA or similar account that invests in our company, the occurrence of a prohibited transaction involving the individual who established the IRA, or his or her beneficiary, would cause the IRA to lose its tax-exempt status. In that event, the IRA or other account owner generally would be taxed on the fair market value of all the assets in the account as of the first day of the owner’s taxable year in which the prohibited transaction occurred. 

14 Legal Proceedings

There are currently no legal proceedings involving the FUND, its affiliates, or the the Manager.

15 Security Ownership of Certain Beneficial Owners and Management

The Sponsor and Manager, REI Capital Management LLC, currently owns 100% of REI Capital Growth LLC, the FUND.

16 Board of Managers and Executive Officers

The following table sets forth information on our board of managers and executive officers of our Sponsor. We are managed by our Manager, which is majority owned and controlled by our Sponsor. Consequently, we do not have our own separate board of managers or executive officers.

Executive Officers and Managers

REICM is led by a team of executives that have diverse experience in all aspects of real estate investing, accounting and lending.

Chairman and Chief Executive Officer – Alan Blair

Mr. Blair is the originator of the business model of REICG and one of the two founding partners of REICM. With over forty (40) years of entrepreneurial business experience in commercial real estate, finance, property management, and real estate syndications, his real estate experience includes multifamily properties with as many as two hundred forty (240) units, Absolute NNN Retail, and Condo-Hotel-Commercial Retail Centers. Mr. Blair has completed over fifty (50) distinct commercial transactions throughout the course of his career, including multiple 1031 Like-Kind-Exchange transactions. In addition to his role as a Managing Member of REICG, Mr. Blair is the Managing Member, Founding Member, and the Broker of Record for REI Advisors, a Commercial Real Estate Brokerage firm. REI Advisors assists individual and institutional real estate investors locate, analyze, acquire and manage quality cash flowing commercial real estate properties throughout the U.S. A former Marine Corps Captain and Helicopter Pilot, he holds a Bachelor of Science in Business and Marketing from Manhattan College. Mr. Blair is the primary research analyst, when evaluating properties for acquisition.

Interim Acting Chief Financial Officer – Gregg Saunders

Mr. Saunders has over thirty (30) years of leadership experience in Finance that includes roles as CFO, Partner, and Director. In addition, Mr. Saunders has over fifteen (15) years of Big 4 Accounting experience and success with KPMG LLP. Mr. Saunders’ career spans a broad range of achievements including full-scale turnarounds, start-up growth, and key XBRL initiatives; Mr. Saunders has been recognized as a Leading Expert of the U.S. GAAP Taxonomy. He is an accomplished senior finance executive with a broad financial-operational-business background applicable to multiple industries and an extensive background in creating big-picture strategies, assembling and leading highly skilled teams, ensuring full regulatory compliance, and driving change/improvement within established organizations. Mr. Saunders provides expertise in financial and business principles, procedures, and best practices with an extensive accounting and operations knowledge, including systems, journals, internal controls, policies/procedures, and strategies for effective implementation.

Strategic Advisor and Founding Partner – Matthew Blair

Mr. Blair is one of the two founding members of REICM and will participate as a Strategic Advisor thereto, participating in all aspects of REICG management on a part-time or as-needed basis. Mr. Blair has extensive experience working with performing and distressed real estate loan portfolios, through his work valuing loan portfolios for sale in the secondary market and through the founding of the Special Opportunities Group at Cushman and Wakefield. Mr. Blair is currently a Senior Managing Director and Co-Head of the Special Opportunities Group at Cushman and Wakefield, which focuses on advisory work for the banking industry. Mr. Blair manages all project execution for the Special Opportunities Group, having led teams of over one hundred twenty (120) commercial credit professionals on a variety of loan portfolio valuation, compliance and regulatory remediation assignments. Mr. Blair and his teams have reviewed thousands of loans supporting billions of dollars in capital lent by the largest financial institutions in the world. In addition, Mr. Blair was the project lead for KBW’s FDIC bank foreclosure team. Mr. Blair managed the data aggregation, cash flow modeling, and portfolio valuation of failed institutions, which included performing and nonperforming loans of every asset class. Mr. Blair holds a Bachelor of Science from Lehigh University and an MBA from Wharton Business School.

17 Executive Compensation

Each of the Executive Officers of the Manager will also serve as officers of the FUND. The Executive Officers’ base compensation and cash bonuses, if any, will be the responsibility of and paid directly by the Manager. Through its executive officers and employees, the Manager will be responsible for the day-to-day operations, property acquisition and disposition decisions, asset management, and monitoring of FUND performance, which costs the FUND will indirectly bear through fees paid to the Manager. The FUND reserves the right to hire directors, executive officers, and employees directly. The FUND anticipates establishing a share-based compensation plan intended to award incentive compensation to directors, executive officers, and employees of the FUND, as well as to contractors and providers of goods and services including REICM and its directors, Executive Officers, and employees.

18 Compensation of Our Manager

FUND Administration

The FUND will be administered by REICM (the “Manager”). A fund administration fee payable quarterly in arrears equal to an annual rate of one-half of one percent (0.5%), which: (i) until the end of the first complete fiscal quarter, will be multiplied by gross total value of all FUND assets, pro-rated for the portion of the FUND’s fiscal quarter by multiplying the FUND administration fee by a fraction, the numerator shall be the number of days of administration in such fiscal quarter and the denominator shall be the total number of days in such fiscal quarter.

Asset Management Fee

The Manager will receive an asset management fee payable quarterly in arrears equal to an annual rate of one and one quarter percent (1.25%), which: (i) until the end of the first complete fiscal quarter will be multiplied by the GROSS TOTAL VALUE OF ALL FUND ASSETS, pro-rated for the portion of the FUND’s fiscal quarter by multiplying the asset management fee by a fraction, the numerator of which shall be the number of days of asset management in such fiscal quarter and the denominator of which shall be the total number of days in such fiscal quarter.

Performance Allocations

The Manager will also receive Performance Allocations of Operating Company Units “OC Units” as defined in the Phat Holding LLC’s operating agreement. The purpose of the Performance Allocation is intended to provide the Manager a number of Units for incentive and performance awards to the extent of ten percent (10%) of the quarterly or annual increase in Net Asset Value while protecting the gains in value per share recognized by shareholders of the FUND.

Following commencement of the fourth (4^th) year of operations, the Manager may designate persons employed or otherwise contractually associated with the Manager to receive OC Units (the “Performance Allocation”) in an amount of OC Units equivalent in value to one tenth (1/10) of the quarterly or annual aggregate increase in Net Asset Value of the Operating Company’s Units outstanding as of the immediately prior quarter end or year-end from the last Performance Allocation date. Any such allocation shall however be limited so that (i) that the resulting performance allocation does not result in a decrease in Net Asset Value per outstanding Unit from the previous quarter end, published, Net Asset Value per Unit (the “Limiting Factor”) and (ii) for avoidance of doubt: the Performance Allocation of Units shall never result in a decrease in the Net Asset Value per Unit below the Net Asset Value per Unit of the immediately preceding quarter end. This performance allocation is intended to be and shall be made on the increase of the Fund’s Net Asset Value per Unit above the Net Asset Value per Unit of the immediately preceding quarter end.

19 Independent Auditors

The financial statements of our company, which comprise the balance sheets for the years ending December 2020 and December 2021 and the related statements of operations, changes in members’ deficit and cash flows included in this offering circular and the related notes to those financial statements, have been audited by Keiter, an independent certified public accounting firm, as stated in their report appearing herein See: “Index to Financial Statements”.

20 Limitations on Liability

Our Manager and executive officers, if any are appointed by our Manager, will owe fiduciary duties to our company and our members in the manner prescribed in the Delaware Limited Liability Company Act and applicable case law. Neither our Manager nor any executive officer will owe fiduciary duties to our Shareholders. Our Manager is required to act in good faith and in a manner that it determines to be in our best interests. However, nothing in our operating agreement precludes our Manager or executive officers or any affiliate of our Manager or any of their respective officers, directors, employees, members or trustees from acting, as a director, officer or employee of any corporation, a trustee of any trust, an executor or administrator of any estate, a member of any company or an administrative official of any other business entity, or from receiving any compensation or participating in any profits in connection with any of the foregoing, and neither our company nor any member shall have any right to participate in any manner in any profits or income earned or derived by our Manager or any affiliate thereof or any of their respective officers, directors, employees, members or trustees, from or in connection with the conduct of any such other business venture or activity. Our Manager, its executive officers, any affiliate of any of them, or any shareholder, officer, director, employee, partner, member or any person or entity owning an interest therein, may engage in or possess an interest in any other business or venture of any nature or description, provided that such activities do not compete with the business of our company or otherwise breach their agreements with our company; and no member or other person or entity shall have any interest in such other business or venture by reason of its interest in our company.

21 Additional Information and Undertakings

The Manager undertakes to make available to each Investor every opportunity to obtain any additional information from the FUND or the Manager necessary to verify the accuracy of the information contained in this Offering Circular, to the extent that it possesses such information or can acquire it without unreasonable effort or expense. This additional information includes, without limitation, all the organizational documents of the FUND and all other documents or instruments relating to the operation and business of the FUND that is material to this Offering and the transactions contemplated and described in this Offering Circular.

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

As of December 31, 2021 and the date of filing, REI Capital Growth LLC (“REICG”) does not have and has not yet issued any shares of its Common Stock. REICG anticipates issuing shares of its Common Stock at $10 par value and that when a secondary market develops, the trading symbol of its tradable securities will be REICG. The anticipated exchanges on which the shares will initially be tradable include any number of digital securities exchanges.

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Table of Contents

INDEPENDENT AUDITOR’S REPORT

To the Manager of

REI Capital Growth, LLC  

Opinion  

We have audited the accompanying consolidated financial statements of REI Capital Growth, LLC and its subsidiary (the “Company”), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the related consolidated statements of operations, changes in members’ deficit, and cash flows for the years then ended, and the related notes to the consolidated financial statements.  

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of their operations, changes in members’ deficit and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States.  

Basis for Opinion  

We conducted our audits in accordance with auditing standards generally accepted in the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.  

Responsibilities of Management for the Consolidated Financial Statements  

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.  

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are available to be issued.  

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with generally accepted auditing standards, we:  

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.  

May 2, 2022

Glen Allen, Virginia  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

December 31, 2021 and 2020

Consolidated Balance Sheets

The accompanying notes are an integral component to these consolidated financial statements.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Consolidated Statements of Operations

The accompanying notes are an integral component to these consolidated financial statements.

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Consolidated Statements of Changes in Members’ Deficit

The accompanying notes are an integral component to these consolidated financial statements.

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows

The accompanying notes are an integral component to these consolidated financial statements.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Notes to Consolidated Financial Statements

REI Capital Growth LLC (“REICG”) and its wholly owned subsidiary PHAT Holding LLC (“PHAT”)  (collectively,  the  “Company”,  unless  otherwise  indicated  by  context)  are Delaware limited liability companies formed in November 2018. REICG was formed primarily to acquire multi-tenant, stabilized, open-air commercial centers throughout the United States of America (the “U.S.”) that it will hold through its subsidiary PHAT, a real estate operating entity. The open-air commercial centers targeted by the Company are anchored or in close proximity to large traditional retailers (e.g., grocery stores, home improvement centers) and tenanted by local business that are integral to the community (e.g., national, regional, local restaurants, hair salons, cleaners, and other service-oriented businesses).  

The Company is currently in process of attracting investors to fund its vision of providing digitalized securities in a real estate holding company. During the periods preceding the current year ended December 31, 2021 and to date, the Company’s sponsor, REI Capital Management, LLC (“REICM” or the “Sponsor”) invested time and effort in developing a strategy of continual real estate investment in order to provide investors the opportunity potentially to realize stable and attractive returns through net asset value real estate portfolio growth. Likewise, the Sponsor anticipates providing liquidity to investors through a share- repurchasing program and the future development of secondary digital securities markets.  

The accompanying consolidated financial statements include the accounts of REICG and PHAT. All inter-company transactions and balances have been eliminated in consolidation. These  consolidated  financial  statements  have  been  prepared  on  the  accrual  basis  of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), as issued by the Financial Accounting Standards Board (the “FASB”) and published in the Accounting Standards Codification (the “ASC”) thereby.  

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires certain estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

The Company is  in  a  start-up phase during which all its activities have been and  are dedicated to developing, creating, and offering an investment opportunity to the public. The Sponsor has funded all expenses and such funding is considered advances to be repaid once sufficient cash flows are generated from the real estate portfolio in excess of cash operating requirements and reserves. The Company anticipates that the start-up phase of operations will continue until the initial offering of the Company’s digital securities is completed.  

Segment Reporting

The Company anticipates that it will have a single reportable segment for financial reporting purposes, in accordance with U.S. GAAP, based on the evaluation of acquired properties as independent stand-alone operations, rather than distinguishing the future portfolio of properties by principal business or geographically grouping activities. Significant performance metrics will include net asset value of the overall real estate portfolio and the amount of cash flow generated for reinvestment.  

Subsequent Events

The Company evaluated subsequent events through May 2, 2022, the date the Consolidated Financial Statements were available for issuance and determined that there were no such events requiring recognition or disclosure in the Consolidated Financial Statements, other than the share-based compensation consulting services agreement disclosed in the Summary of Significant Accounting Policies footnote under Share-based Compensation.

In order to better inform the reader of anticipated future business operations, Management has included significant accounting policies for accounts and transactions that may have not existed or occurred as of and for the years ended December 31, 2021 and 2020.  

Real Estate

Acquired real estate assets will be accounted for at cost, less accumulated depreciation and amortization. On acquiring real estate operating properties, the Company will estimate fair values of acquired tangible assets (e.g., land, building, improvements) and identified intangible assets and liabilities (e.g., above- or below-market leases, in-place leases, tenant relationships - - as applicable), and assumed debt, if any, based on evaluation of circumstances, market conditions, and information available at the time. Fair value will be based primarily on the market approach of valuation, contemplating the price to be received or value of consideration transferred in an orderly transaction for the sale of assets or transfer or assumption of a liability, respectively, by unrelated market participants at the measurement date. Acquisitions of operating properties will be considered asset acquisitions for which associated acquisition costs will be capitalized.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Allocation of the consideration transferred to acquire identified intangible assets and assume liabilities (e.g., above- and below-market leases) will be determined based on the present value of the excess or deficiency between contractual amounts to be paid, including fixed rate below-market renewal options, in accordance with existing leases and an estimate of market lease rates and other lease provisions (e.g., base rental changes, expense reimbursements) measured over a period equal to an estimate of the remaining lease terms. Capitalized above- or below-market intangible balances will be amortized to rental income over the estimated remaining terms of the respective leases, including expected exercised renewal option periods for below-market leases. The Company does not anticipate assuming mortgage debt on acquired properties, however, to the extent mortgage debt is assumed or acquired subject to discounts or premiums; such will be amortized to interest expense over the remaining term of the associated debt instrument.  

The Company will consider existing market conditions and costs to execute similar contracts to develop an estimate of carrying costs during the expected leasing period from vacant to existing occupancy in determining the value of in-place leases. Carrying cost estimates generally include real estate taxes, insurance, other operating costs, estimates of unrealized rental   revenues   during   leasing   periods,   costs   to   execute   similar   leases,   including commissions, legal and other professional fees, and other expenses based on current market demand. Any value allocated to in-place leases and tenant relationships will be amortized over the estimated remaining term of the underlying lease. In the case a lease was to be terminated prior to its contractual expiration, any unamortized costs relating to such lease will be written-off.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

The following table presents a summary of asset categories that the Company may obtain or take possession of including future real estate assets as well as other assets. The summary is not intended to be all-inclusive, but only to provide an indication of assets the Company generally contemplates acquiring. The straight-line method of depreciation and amortization will be applied over the following estimated useful lives of the underlying asset:  

The useful lives of depreciable assets, including but not limited to real estate assets and such assets to be redeveloped in future periods, will be periodically assessed to determine if the estimated useful lives require revision to properly reflect the recoverable period of the assets carrying value, which changes in estimate, if any, will be accounted for on a prospective basis. Significant renovations and replacements, which improve or extend the life of an asset, will be capitalized. Expenditures for maintenance, repairs, and demolition costs will be charged to operations as incurred.  

Finite lived intangible asset useful lives will be periodically evaluated and  assessed to determine if the estimated useful lives are appropriate. Any changes to a finite lived intangible asset useful life will be accounted for prospectively.

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Impairment of real estate portfolio properties, including any related amortizable intangible asset or liability and other applicable assets will be continually assessed by the Company to determine if any indicators infer that the asset has been impaired. Indicators may include a specific property’s operating performance, general market conditions, and changes in anticipated holding periods. Property value will be considered impaired under the condition that the Company’s estimated fair value is less than the property’s carrying value. Fair value will be estimated primarily based on (i) discounted cash flow models for the specific property over its remaining holding period, (ii) third-party appraisals, or (iii) estimated sales price and/or the consideration indicated by a signed contract or accepted letter of intent, if the property has been designated for sale. Impairment is recognized on properties and assets held for use as the excess of the carrying value of the asset over the property’s or other assets expected undiscounted cash flows or assessed fair value, which results in the property or asset being written-down to its estimated fair value. Estimated fair values that are based on discounted cash flow models consider all estimated cash in- and outflows over a specified holding period. Capitalization rates and discounts rates that are utilized in such models are generally based on unobservable rates that the Company, based on experience and available information, believes are within a reasonable range of existing market rates. Additionally, such cash flow models will consider factors such as expected future net operating income, prospects, market trends, the effects of demand, competition for commercial space (i.e., supply), and other factors. Recognized impairment will be included in the Consolidated Statements of Operations as a current expense and the asset’s carrying amount will be reduced to reflect its indicated fair value.  

Cash and Cash Equivalents

The Company currently has demand deposits held with a financial institution, which cash balance was funded by the Sponsor. In the future, the Company anticipates holding cash equivalents, in addition to its cash balances, which cash equivalents will be defined as highly liquid investments that are readily convertible to known amounts of cash and that have original maturities to the Company of three months or less. Cash equivalents, due to their short-term nature, present an insignificant risk of change in value caused by fluctuation in market rates  of  interest and,  therefore, the  carrying value  of  cash  and  cash  equivalent balances is considered to reflect fair value.  

Leases – Lessor  

Accounting for lease and non-lease components of rental contracts will be done in accordance with ASC Topic 842 Leases. Non-lease components of a real estate rental may include items such as common area maintenance charges and expense reimbursements paid by tenants.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

ASC Topic 842 Leases defines initial direct costs as the incremental costs that would not have been incurred if the lease had not been executed. Such initial direct costs include, among other items, third-party commissions (e.g., brokers, leasing and referral agents) and internal commissions paid to employees for successfully entering leases (i.e., direct internal costs). Initial direct costs under ASC Topic 842 Leases are capitalized and generally amortized over the term of the lease, including renewal options expected to be exercised, applying a straight-line method of recognition. Amortized initial direct costs will be included in General and Administrative Expenses in the Company’s Consolidated Statements of Operations. Indirect internal initial costs of obtaining leases will be expensed as incurred.  

Lease Receivables

As the Company acquires real estate properties and initiates leasing operations, the Company will continuously review its lease receivables (i.e., trade receivables), including straight-line rents recognized in relation to base rents, common area maintenance charges and expense reimbursements receivable, and other amounts receivable for collectability. In assessing the probability of collection of a lessee’s total accounts receivable, the Company will consider such factors as the tenant’s historical payment history, the size and volume of the tenant’s business operations, the effects of the COVID-19 pandemic on the tenant’s business, the lessee’s credit worthiness, external risks associated with and potentially impacting the tenant, and current broad and regional economic trends and conditions. To the extent the Company determines that a lease receivable is at risk of non-collectability, a provision for doubtful accounts will be recognized and included in the Consolidated Statements of Operations. If a lease receivable is determined to be wholly uncollectable, the Company will write off the at- risk receivable and will recognize any rental payments received from the at-risk tenant on a cash basis.  

ASC Topic 842 Leases requires a general reserve for uncollectable lease receivables, in addition to the aforementioned specific reserve for non-collectability. The Company will recognize a general reserve for non-collectability based on historical experience developed and assessed on a rolling look-back methodology plus an assessment of settlement proceeds with tenants in arrears. Such general reserve will reduce Rental Revenues from Rental Properties, Net that are recognized in the Company’s Consolidated Statements of Operations.  

As the Company has not yet initiated operations, it has not experienced tenant defaults attributable to the COVID-19 pandemic. However, the Company will certainly consider the effects on properties under consideration to be acquired that have experienced negative effects from the COVID-19 pandemic and include such effects in its valuation and potential offers to purchase such real estate properties.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Deferred Leasing Costs

In accordance with U.S. GAAP, ASC Topic 842 Leases, indirect internal leasing costs are required to be expensed as incurred. However, external and direct internal leasing costs will be capitalized and amortized on a straight-line basis, over the terms of related leases, as applicable. Capitalized deferred leasing costs will be considered a component of operations and presented as such on the Company’s Consolidated Statements of Cash Flows.  

Deferred Financing Costs

Costs incurred in obtaining long-term financing, will be included in debt (e.g., notes payable, mortgages payable) on the Company’s Consolidated Balance Sheets. Such costs, if any, will be amortized on the effective interest method over the terms of the related debt agreements, as applicable, in order to recognize a constant rate of interest, as applicable, which expense will be recognized in the Consolidated Statements of Operations in the period incurred.  

Rental Revenues

The Company’s primary source of revenue will be rental income derived from operating its to be acquired commercial center real estate portfolio. In accordance with U.S. GAAP, ASC Topic 842 Leases, the Company is required to recognize revenue derived from non-lease components of a given contract, if any, in accordance with ASC Topic 606 Revenue from Contracts with Customers, unless the Company elects as a practical expedient under ASC Topic 842 Leases to not separate lease and non-lease components, which election the Company has not yet made a decision to adopt as an accounting policy. In applying U.S. GAAP ASC Topic 606, the Company will (i) identify the contract with its customer (e.g., lease), (ii) identify its performance obligations within the contract (e.g., specific and common spaces and amenities, if any, to be provided), (iii) determine the transaction price (e.g., amount of rent by component (e.g., base rent, escalation rent, percentage rent (if any), common area charges), (iv) allocate the transaction price to the contract’s identified performance  obligations,  and  (v)  recognize  revenue  when  and/or  as  the  contract’s performance obligations have been satisfied.  

Additionally, ASC Topic 842 Leases requires the Company to allocate any capitalized costs (e.g., external or direct internal deferred leasing costs) to the separate lease and non-lease components of a given contract to which such relate.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

The  Company  will  present  revenue  derived  from  rental  properties, as  acquired,  on  its Consolidated Statements of Operations as Revenue from Rental Properties, Net and provide such individual assertions detailing components of revenue as determined to be beneficial by and to the Company’s stakeholders. Revenues from Rental Properties, Net are anticipated to be comprised of minimum base rentals, percentage rent (on occasion), common area maintenance charges and expense reimbursement income, and amortization of above- and below-market rent adjustments, if any. The Company anticipates its leases will substantially be categorized as operating leases, in accordance with ASC Topic 842 Leases and, as such, base rental income under the leases will be recognized on a straight-line basis over the life of the lease, as applicable. Percentage rent is not anticipated as a regular lease component, but on occasion and depending on a particular tenant, percentage rent may exist. Percentage rent that is rental revenue based on a particular tenant’s sales will be recognized in accordance with the controlling lease contract, when such sales level is achieved. Lease termination fee income, if any, will be recognized when consideration has been received and the lessee (i.e., tenant) has vacated the rented space. If a lessee continues to occupy leased space after lease termination,  the  termination  fee  income  will  be  recognized  on  the  basis  of  a  lease modification over the term the tenant continues to occupy the space until vacating the same.  

Gain Recognition

Although the Company’s real estate thesis is to hold its real estate properties for use into perpetuity, properties will be sold if advantageous for the Company’s shareholders. ASC Topic 610 Other Income, Sub-Topic 20 Gains and Losses from the Derecognition of Nonfinancial Assets requires that the sale of nonfinancial assets, such as real estate, will be recognized when control of the asset transfers to the buyer. Control is defined as the buyer having the ability to direct the use or obtain substantially all of the remaining benefits from the asset transferred. Generally, gains on the sale of real estate will therefore be recognizable by the Company on closing of a transaction and when the substantial amount of consideration has been exchanged. Losses on sales of properties are required to be recognized when identified, regardless of transaction closings and such that the real estate property’s carrying value in the Company’s Consolidated Balance Sheets represents its net realizable value.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

Leases – Lessee

To the extent the Company enters into leases as a lessee, it will account for the leases in accordance with ASC Topic 842 Leases, in accordance with U.S. GAAP. ASC Topic 842 Leases, if the leases are categorized as operating leases, will require  the  Company to recognize right-of-use (“ROU”) assets and liabilities, which will effectively present the lease on the Company’s Consolidated Balance Sheets. ROU assets will represent the Company’s right to use an underlying asset for the lease term and the related liabilities will represent the Company’s lessee obligation related thereto. ROU assets and liabilities will be recognized from the commencement date of the underlying leases, based on the present value of the lease payments during the lease term. To determine the present value of the lease payments over the lease term, ASC Topic 842 Leases requires using the discount (i.e., interest) rate implicit in the lease and, if not available, the lessee’s incremental borrowing rate. Rental expense related to operating leases entered into by the Company will be recognized on a straight-line basis over the lease term. As of the date of the Consolidated Balance Sheets and the issuance of these Consolidated Financial Statements, the Company does not have any existing lease obligations.  

Income Taxes

The Company’s real estate investment thesis contemplates holding properties long-term and reinvesting a substantial amount of free cash flow generated from property net operating income, in order to build value by potentially increasing the net asset value of the underlying real estate portfolio to be acquired. As such, the Company does not contemplate making periodic dividend payments or distributions to shareholders; although the Company does contemplate establishing a periodic share repurchase program to provide shareholders a possible means of liquidating their investment, until such time and in addition to a secondary market or markets possibly developing for the Company’s digital securities. As such, the Company plans  to  elect  to  be  taxed  as  a  C-Corporation for  U.S.  Federal Income Tax purposes, which will likely be favorable for its U.S. shareholders and non-exempt foreign shareholders. In addition to potentially lower effective tax rates than realized by a number of independent shareholders, the Company will likely avoid significant compliance costs.  

To date, the Company has recognized net operating losses throughout its start-up phase, which it contemplates will continue until successfully offering its securities to the public.  

To date, the Company has not filed its tax return for federal or state purposes; however, as there has been no taxable income, the Company is confident that it does not owe any federal income tax or penalties for failure to file and for state purposes; any amount that may be potentially assessed is likely to be immaterial. If there is an assessment of penalties for failure to file, the Sponsor will accept, satisfy, and absorb any such penalties.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

As a C-Corporation for U.S. federal tax purposes and in accordance with ASC Topic 740 Income Taxes, the Company will be required to account for temporary differences between the carrying values of its assets and liabilities for financial reporting purposes and the tax bases thereof.  

Share-based Compensation

The Company plans to establish an incentive compensation plan for its Directors, Officers, Employees, and third parties. The plan is not yet established and, as contemplated, will provide the granting of share-based compensation awards to individuals as current and long- term compensation in the form of operating units in PHAT.  

Share-based compensation will be accounted for based on the requirements of ASC Topic 718 Compensation – Stock Compensation, which requires recognition in the Consolidated Financial Statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). U.S. GAAP also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.  

Pursuant to ASC Topic 505-50 Equity-Based Payments to Non-Employees, compensation expense is determined at the measurement date for share-based payments to consultants and other third parties. The expense is recognized over the vesting period of the award. As of December 31, 2021, the Company has granted the equivalent of $14,000 of REICG digital securities to a consultant at the rate of $2,000 per month for seven months of marketing services. Based on the Company’s intended offering per share value of $10.00 that is its estimated per share fair value, the equivalent number of shares to be issued is 1,400, which issuance is contingent on the Company completing a successful Regulation A offering in accordance with U.S. Securities Law administered by the Securities and Exchange Commission (“SEC”) under its Rules and Regulations. As of the year ended December 31, 2021, there has been $14,000 of compensation expense incurred related to this agreement, one-half of which expense or $7,000 will be borne by the Sponsor. Therefore, the Company has recognized one-half or $7,000 of the total $14,000 compensation expense at the rate of $4,120 and $2,880 for each of the years ended December 31, 2021 and 2020, respectively, which is included in Start-up Expenses – Marketing in the Consolidated Statements of Operations. The $7,000 of compensation expense not recognized by the Company is to be reimbursed to by the Sponsor and is reflected as a reduction of the amount Due to Sponsor in the Consolidated Balance Sheets.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

The value of future share-based based compensation awards granted will be determined using a fair value estimation, which if options based, will be estimated using either the Binomial or Black-Scholes pricing models, whereby compensation cost is the excess of the fair value of the award as determined by the pricing model at the grant date or other measurement date over the amount that must be paid to acquire the shares. As it is contemplated that most grants will be restricted shares, the fair value will be based on the grant date net asset value of the underlying shares. The resulting amount of expense will be charged to expense on a straight-line basis over the period that the Company expects to receive the benefit, which is generally anticipated to be the vesting period.  

During the calendar quarter ending March 31, 2022, the Sponsor entered into an information technology consulting agreement for services to develop a proprietary mobile phone and computer application for investor information and services. Compensation under the agreement is share-based and will be accounted for in accordance with the aforementioned applicable policy.  

Expenses

As of the date of the Company’s Consolidated Financial Statements and continuing to date, the Company remains in a start-up phase whereby all its activities are directed to bringing a valid and formative offering of its digital securities to market. As such, all expenses are included in the Consolidated Statements of Operations in the period in which incurred.  

Related Parties

REI Capital Management, LLC (“REICM”, the “Sponsor”, or the “Manager”) is the Sponsor and will be the Manager of the Company. To date, REICM has advanced all funds for all expenses incurred by the Company. The Sponsor will be reimbursed for such advances, which amount to $302,643 and $135,807 at December 31, 2021 and 2020, respectively, when, in its sole determination, the free cash flow of the Company generated from the net operating income of the to be acquired real estate properties allows for such reimbursement and does not negatively affect the net asset value of the digital securities issued to shareholders. Negative effect on the net asset value of the digital securities issued to shareholders is considered to be an impact that reduces the net asset value of such digital securities below the prior period reported net asset value.

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

The Manager will receive compensation for administration of the fund and for managing the assets of the fund in the amount of one-half of one percent (0.5%) and one and one-quarter percent (1.25%) per annum, respectively, based on assets-under-management (“AUM”), paid quarterly in arrears. Additionally, it is contemplated that the Company will compensate the Manager for certain services and activities performed on its behalf including:  

Accounts payable and accrued expenses consist of goods and services procured and are recognized in the period during which the benefit of such goods and services were received. Accounts payable and current accrued expenses are generally considered short-term for operating purposes and as such, the carrying value of such items are considered to represent their fair value as of the date of the Consolidated Balance Sheets.  

REI Capital Growth LLC

and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2021 and 2020

As of December 31, 2021 and 2020, Accrued Expenses of $14,000 and $5,760, respectively, consists solely of the share-based compensation attributable to the marketing consulting contract discussed in the Summary of Significant Accounting Policies disclosure. It is contemplated that this obligation will be satisfied within one year of the termination of the underlying agreement, which occurred in the third quarter of the year ending December 31, 2021.  

The  offering  contemplated by the Sponsor, in accordance with Regulation A of U.S. Securities Laws administered by the SEC, is to issue seventy-five million dollars ($75,000,000) of digital securities at $10 per share. Additionally, the Sponsor is contemplating raising an additional seventy-five million dollars ($75,000,000) of digital securities at $10 per share under a Regulation S offering to non-U.S. investors, as defined. Both offerings are exempt from the registration requirements of the U.S. Securities Act of 1933 administered by the SEC, but are subject to compliance with the Rules and Regulations thereof and review thereby. There is only one class of digital or other securities contemplated by both offerings and the Company does not currently contemplate creating additional classes of its equity securities.  

The Sponsor effectively contributed $200 to REICG during the year ended December 31, 2020, primarily for purposes of opening a bank account. However, prior to and since that date, the Company has not incurred any expenses other than start-up costs and the Sponsor has and intends to continue advancing all such costs, as previously discussed.  

Other than the share-based compensation arrangements the Company had and has for certain marketing and information technology consulting services, respectively, the Company is not aware of any existing, pending, or threatened commitments or contingencies, as applicable.  

PART III—EXHIBITS

22 Exhibits

Form 1A

Regulation Offering Statement

REI Capital Growth LLC

Sponsored by
REI Capital Management, LLC

As filed with the Securities and Exchange Commission on January 19, 2023

Signatures

Pursuant to the requirements of Regulation A, REI Capital Growth LLC, the issuer, certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly cause this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Stamford, State of Connecticut, on January 19th, 2023.

Representing a majority of the Members of REI Capital Growth LLC