The Pelorus Fund is delivering “near equity-like returns” by focusing on providing loans secured by commercial properties and allowing for cannabis-use tenants; we are non-plant touching.

The Pelorus Fund is a cannabis-focused commercial real estate mortgage REIT with a target annualized yield of 15% IRR. The Fund achieved an annualized 15.5% IRR in 2019, and the mortgage REIT qualifies for a 20% federal tax savings with monthly distributions to the Members.

Highlights:

  • Pelorus has deployed $83M in the cannabis lending sector since 2016, comprised of 37 transactions with 13 payoffs.
  • Pelorus launched the Pelorus Fund in 2018 as a low-cost (1% management fee) diversified strategy of secured notes collateralized by real estate properties with personal/corporate guarantees from the sponsors.
  • Pelorus is taking advantage of the lack of institutional liquidity in the market to generate above-market returns for transactions due to lack of understanding in the commercial lending space.
  • Pelorus Fund converted to Mortgage REIT in 2018 which qualifies for a 20% Federal tax savings on income distributed to the Fund Members and cleanses UBTI for Self-directed IRA investors.

Property Geographic Area Details

National, in medically licensed states.

Investment Type

Mortgage Fund

Target Return

15% to 15% Annually

Minimum Investment

$50,000

Lien Position

Only 1st Liens

Average LTV for All Loans

50%

Average Loan Term

18 months

Property Types and Loan Types

Collateral Types

  • Commercial Property

Property Types

  • Retail
  • Office
  • Industrial
  • Cannabis

Loan Types

  • Purchase
  • Refinance
  • Ground-Up Construction

Investor Types

  • Individual Accredited
  • Ultra High Net Worth Investor
  • Family Office
  • Private Equity
  • Hedge Fund
  • Pension Fund
  • Foundation
  • Endowment
  • Insurance Company

Preferred Return

15%

Leverage

Unlevered

Recapitalization

All Loans Held in Portfolio

Commitment Term

1 months

Redemption Notice Period

30 days

Distributions Paid

Monthly

Inception Date

May 1, 2018

Assets Under Management

$25,000,000

Fund Term

Open-End

Maximum Offering

$250,000,000

Management Fee

1%

Performance Split

25% of Originations, 75% of Extension/Exit Fees, and 50% of Net Profits (warrants), no carried interest split, 100% of net income goes to Fund Members.

Securities Exemption

Regulation D 506(c)

IRA Investment Option

Yes

Mortgage REIT

Yes

Pelorus Fund Mortgage REIT for Cannabis Use Real Estate

Pelorus is a Real Estate Investment Trust (REIT) that provides high-performance loans to owners and operators within the cannabis market. The capital is used to grow to meet demand for product, acquire new properties, and conduct tenant improvements to improve profitability.

We provide accredited investors with a low-risk, asset-backed, high-yield return for their capital with a 15% target IRR.

CONSISTENT RETURNS

Pelorus is an anchor investment for your portfolio. We consistently distribute profits from loan origination points, net income, extension fees, and exit fees in a very clear and transparent manner. This is a high-return, low-risk opportunity that is extremely rare to find.

ADDITIONAL VALUE FOR REIT MEMBERS

Option Warrants:

As the fund matures equity warrants may generate additional income. Long-term investors can potentially see premium returns from exercised option warrants.

DEMAND FOR OUR CAPITAL IS HIGH

We have a strong pipeline of transactions with as much as $150M in deal flow with borrowers seeking the performance products we offer. We’re expanding our fund from $100M to $250M to facilitate demand.

We are receiving high-yields on our loans from highly-qualified borrowers, and we flow these returns directly, on a monthly basis, to our members.

WHY A MORTGAGE REIT NOW?

Pelorus has built an impressive pipeline of deals that are collateralized by real estate at modest loan to values (LTVs), supplemented by personal/corporate guarantees.

MULTIPLE INVESTMENT BENEFITS

There are multiple investment benefits obtained by structuring the Pelorus Fund as a private Mortgage REIT, most notably a 20% tax deduction on Federal Taxes and a domicile advantage for favorable states (K-1 reporting for states).

PELORUS FUND BENEFITS:

  • Target Yield: 15% IRR
  • Monthly Distributions
  • Diversified Portfolio of High Yield Commercial Mortgage Notes
  • Provides a 20% QBID (Qualified Business Income Deduction)
  • REITs “cleanse” UBTI for self-directed IRAs
  • Established in 2018 / Converted to Mortgage REIT in 2020
  • Income Alignment of the Manager (GP and Members (LPs)

HIGH-YIELD CASH FLOWING INCOME

The double-digit monthly returns have an additional potential upside with some transactions having options for warrants that the Fund may harvest at some point in the future.

INCOME ALIGNMENT IS HOW WE PROVIDE A 15% IRR

WE ARE ABLE TO SECURE EQUITABLE TERMS FROM BORROWERS AND CONVERT THIS INTO HIGH-YIELD RETURNS FOR OUR INVESTORS.

We distribute profits from loan origination points, net income, extension fees, and exit fees.

NET INCOME

This is the direct interest we collect from the loans. We distribute this monthly to our members. This and other fee income is how we meet the targeted 15% IRR.

MEMBER INCOME: 100%
MANAGER INCOME: 0%

EXTENSION/EXIT FEES

When a borrower extends a loan there are fees charged.We split 75% to our members and retain 25% for management income and support.

MEMBER INCOME: 75%
MANAGER INCOME: 25%

ORIGINATION FEES

When we close a deal, we receive 75% of the origination fees.We split 25% to our members. This allows us to keep our management fees thin and consistent.

MEMBER INCOME: 25%
MANAGER INCOME: 75%

PROFITS

When a borrower exits out of a loan and fees are paid we split 50% to our members and retain 50% for management to help keep our fund fees at the 1% level.

MEMBER INCOME: 50%
MANAGER INCOME: 50%

INVESTMENTS SECURED BY REAL ESTATE

The cannabis real-estate market is special as the property itself is worth more than normal property due to the special zoning/permits for cannabis use. Pelorus is a Real Estate Investment Trust (REIT) so our loans are secured by the borrower’s real estate and personal/corporate guarantees.

  • IN THE GREEN ZONE
    Cannabis related businesses must be located within a Green Zone and have a Conditional Use Permit.
  • CONDITIONAL USE PERMIT (CUP)
    Once a property has a CUP for cannabis, it remains in place forever.
  • LEGAL AND SAFE
    Since 2014 the Rohrabacher-Blumenauer amendment has provided economic security against any federal involvement
  • OUR FUND MAKES SECURE LOANS
    We make loans at conservative LTVs collateralized by the real estate assets, personal and corporate guarantees.

NO CORRELATION TO INVESTING IN THE CANNABIS EQUITIES MARKET

Investing in the Pelorus Fund is not like investing in the Cannabis Equities Market. We make loans secured to owners of properties that are zoned and licensed for Cannabis operations. We are hands-off with investing in the cannabis production/operations.

Media Links:

Pelorus Equity Group

949-393-4737

Office Locations

124 Tustin Avenue, Suite 200, Newport Beach, California, 92663
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