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% and 15.1% IRRs in 2019 and 2020, respectively.
- Pelorus has deployed $175M in the cannabis lending sector since 2016, comprised of 50 transactions with 21 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.
15% to 15% Annually
Only 1st Liens
Average LTV for All Loans
Average Loan Term
Property Types and Loan Types
- Commercial Property
- Ground-Up Construction
- Individual Accredited
- Ultra High Net Worth Investor
- Family Office
- Private Equity
- Hedge Fund
- Pension Fund
- Insurance Company
All Loans Held in Portfolio
Redemption Notice Period
Assets Under Management
IRA Investment Option
Regulation D 506(c)
May 1, 2018
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.
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.
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
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.
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%
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%
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%
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.