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Private equity firm closes $50M fund

July 29, 2019
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Chip Cummings
Chip Cummings. Courtesy Red Oak Capital

A local private equity firm specializing in commercial real estate investments has closed a $50-million bond offering.

Grand Rapids Township-based Red Oak Capital Group’s latest offering, Red Oak Capital Fund II, reached the maximum statutory capacity of $50 million in capital investments two months ahead of schedule, according to the firm last week.

The $50-million Regulation A+ Tier II bond offering was qualified by the SEC in late 2018 and was scheduled to close in September.

“We have an amazing sales and distribution team,” said Chip Cummings, co-founder, co-owner and CEO, Red Oak. “With 21 selling agreements with key strategic industry partner firms, we have been able to reach a broad investor market very quickly.”

The bonds, which are secured by senior commercial mortgage notes, are backed by existing income-producing commercial real estate properties and offer a quarterly distribution with a fixed maturity date.

There are two series of bonds: Series A (6.5% coupon) matures on Dec. 31, 2021; Series B (8.5% coupon) matures on Dec. 31, 2024, Cummings said.

A coupon on a bond is the annual interest payment the bondholder receives from the bond’s issue date until it matures.

The $50 million will be used for financing commercial real estate loans on small and mid-size real estate projects, including in West Michigan. Red Oak will provide short-term loans of between $500,000 and $7 million, Cummings said.

Dallas-based Crescent Securities Group served as the managing broker-dealer for the offering.

The national firm of UHY handled the audits.

Richmond, Virginia-based Kaplan Voekler Cunningham & Frank acted as legal counsel.

Red Oak Capital Group

Founded in 2015 by its co-owners, Cummings, Joe Elias, chief technology officer, and Kevin Kennedy, partner and head of national sales and distribution, Red Oak Capital Group provides private equity and debt capital solutions for commercial real estate projects and investment options for individuals and financial institutions in the U.S.

The firm manages several funds, which to date have raised $54 million. Red Oak Capital Fund III — also a Regulation A+ Tier II offering — is currently in review, with an anticipated release in August.

Red Oak has 14 employees.

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