Correspondence 0001477932-24-007592 from Iron Bridge Mortgage Fund, LLC (CIK 0001462371)
Iron Bridge Mortgage Fund, LLC (CIK 0001462371)
Date: Nov. 22, 2024 · CIK: 0001462371 · Accession: 0001477932-24-007592
AI Filing Summary & Sentiment
File numbers found in text: 024-11984
Referenced dates: September 30, 2024
Letter
Re:
iron_corresp.htmNovember 25, 2024
Pam Howell/Isabel Rivera
Office of Real Estate & Construction
Division of Corporate Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Iron Bridge Mortgage Fund, LLC
Offering Statement on Form 1-A Post-Qualification Amendment No. 3
Filed September 3, 2024
File No. 024-11984
To Whom it May Concern:
On behalf of Iron Bridge Mortgage Fund LLC (the “Company”), this letter is submitted in response to the Staff’s comment letter dated September 30, 2024 relating to the above-captioned Offering Statement on Form 1-A (the “Offering Statement”). The Staff’s comments are set forth below along with the Company’s response to each comment. Capitalized terms that are not otherwise defined herein shall have the meanings set forth in the Offering Statement.
Post-Qualification Amendment No. 3 to Offering Statement on Form 1-A filed September 3, 2024 Cover Page
Comment:
1.
We note that you have not designated a fixed amount of units across the various classes you intend to qualify in this amendment. Please revise your cover page to fix the volume of securities you intend to qualify in each class and the amount allocated to the distribution reinvestment plan. Please also remove the following statement that “[you] reserve the right to reallocate the Units [you] are offering between the primary offering and [y]our distribution reinvestment plan.” See Rule 253(b)(4) of Regulation A.
November 25, 2024
Page 2
Response: We have modified our cover page to fix the volume of securities we intend to qualify in each class and the amount allocated to the distribution reinvestment plan. We have also removed the statement that we “reserve the right to reallocate the Units we are offering between the primary offering and our distribution reinvestment plan.”
Comment:
2.
We note your statement that “the amount of each class of Units to be offered at any given time will be determined by the Company’s Manager in its discretion, based on market conditions and targeted cost of capital.” We also note the disclosure in the summary regarding the limitations in the Third Amended Operating Agreement relating to the Company’s ability to issue additional Class C Units or Class D Units. Please provide us with your analysis regarding whether your offering should be considered an impermissible delayed offering and not a continuous offering within the meaning of Rule 251(d)(3)(i)(F) of Regulation A.
Response: Given the allocation of Units set forth above, we have removed the statement that “the amount of each class of Units to be offered at any given time will be determined by the Company’s Manager in its discretion, based on market conditions and targeted cost of capital.” Each Class of Units will be offered for sale pursuant to Regulation A upon qualification of this Offering Statement.
With respect to the limitation relating to the issuance of additional Class C Units and Class D Units, as noted above, the Third Amended Operating Agreement limits the Company’s ability to issue additional Class C Units or Class D Units during any period of time when the Unreturned Capital Contributions of the Class A Units and Class B Units on an aggregate basis equal less than 20% of the total assets of the Company. The Company is also limited from redeeming any Class A Units or Class B Units when the Unreturned Capital Contributions of the Class A Units and Class B Units on an aggregate basis equal less than 20% of the total assets of the Company. These limitations are intended to protect Class C Unit holder and the Class D Unit holders by ensuring there is a layer of equity junior to them, and should only become applicable in limited circumstances. This limitation is currently not in effect and has not been triggered since the adoption of the Third Amended Operating Agreement. In the event that this limitation is triggered, we will suspend any offering or issuance of the Class C and Class D Units, and we will not resume such offering until a new offering statement, or post-qualification amendment to an offering statement, with respect to such Class C and Class D Units has been qualified.
Comment:
3.
We note the disclosure on page 3 and elsewhere in the offering circular that “the reinvestment of distributions by a Member in additional Units shall be at a purchase price equal to the fair market value of such Unit at the time of such reinvestment, as determined by the Manager in its sole discretion.” This would appear to be an at-the-market offering, which is not permitted under Regulation A. See Rule 251(d)(3)(ii) of Regulation A. Please revise or advise.
November 25, 2024
Page 3
Response: We have changed the disclosure from saying “fair market value” to saying that the reinvestment is at a purchase price equal to the price at which Units are currently being offered by the Company, or if no offering is being conducted, the NAV as of the last date of the month preceding such reinvestment, as determined by the Manager in its sole discretion. The previous reference to “fair market value” was not intended to imply there was any active trading market in the Company’s securities, or that such market would be used to set the reinvestment price. There is no active market for any of the Units and no active market is expected to develop. The Third Amended and Restated Operating Agreement has also been amended to reflect this change.
Comment:
4.
Please briefly identify the material risks involved in purchasing your securities, including the lack of transferability and liquidity, as required by Section 1.D of Guide 5. Refer to Item 7(c) of Part II of Form 1-A for the applicability of Guide 5 to Form 1-A.
Response: We have updated the Cover Page to identify the material risks involved in purchasing our securities, including the lack of transferability and liquidity.
Distribution Reinvestment, page 3
Comment:
5.
We note your distribution reinvestment plan. Please revise to clarify how your activities will be done in compliance with Regulation A; for example, please ensure that your analysis and disclosure reflects: (i) confirmation that the distribution reinvestment plan securities are being offering pursuant to Rule 251(d)(3)(i)(B); (ii) confirmation that you will provide investors with a hyperlink to the current offering circular in connection with and at the time of any distribution reinvestment (refer to Rule 251(d)(1)(iii)); (iii) how you will comply with the investment limitations and qualifications for purchaser status set forth in Rule 251(d)(2)(i)(C) with respect to any securities purchased through your distribution reinvestment plan; and (iv) how you will ensure you are eligible to offer and sell securities pursuant to Regulation A at the time of such sales.
Response: Pursuant to our Third Amended and Restated Operating Agreement, each Class A Member, Class C Member, and Class D Member has elected to, and shall be treated as having elected to, reinvest all distributions made with respect to their Class A Units, Class C Units and Class D Units for the purchase of additional Units of the same class associated with such distributions. Each Class B Member shall reinvest all distributions made with respect to its Class B Units for the purchase of additional Class C Units or Class D Units, as determined by the Manager in its sole discretion unless such Class B Member has provided advance written notice to the Manager of its preference. The Company generally makes distributions monthly.
November 25, 2024
Page 4
Notwithstanding the foregoing, a Member may affirmatively elect to receive a portion of its distributions from the Company in cash by providing advance written notice to the Manager on such form, within such times and subject to such limitations as are established by the Manager. To terminate an election to receive cash distributions, a Member must notify the Manager in writing of its termination on such form as is established by the Manager and such revocation will be effective for distributions related to the first month following the month in which the revocation notice is received, which are paid, if at all, in the second month following the month in which the revocation notice is received. If no election to receive cash distributions is made, then distributions will be reinvested as described above.
If the Unit in question is currently being offered pursuant to Regulation A, distribution reinvestment plan securities will be offered pursuant to Rule 251(d)(3)(i)(B). As described above, Units upon subscription are accompanied by the right to receive distributions in the form of additional Units. Every month, Members receive an email reminding them of their ability to change the form of their distribution election, with the email containing a link to the Company’s current Offering Circular. In addition, the form Members must complete to change their election also will contain the link to the Company’s current Offering Circular. As elections do not become effective until at least a month after such election, this delivery is well in advance of such election becoming effective.
With respect to compliance with the investment limitations and qualifications for purchaser status set forth in Rule 251(d)(2)(i)(C) with respect to any securities purchased through our distribution reinvestment plan, this limitation has limited application to the offering of Units by the Company because the Company only accepts subscriptions from nonaccredited investors in limited circumstances, and intends to continue this practice into the future. At the time of this letter, no Class D Units (the current class of Units being offered pursuant to Regulation A) are held by Members that did not certify that they were “accredited” at the time of subscription. We have updated our Offering Statement to better reflect our practices, as described above. While each nonaccredited investor certifies through its Subscription Agreement that its investment is within the limitations set forth in Rule 251(d)(2)(i)(C), the Subscription Agreements have been modified to require Members to update the Company if this representation is no longer true, and the Company will also include in its form for Members to change their distribution elections a reminder that investments are subject to the foregoing limitations and will also ask the Member to re-certify their accredited status or to reconfirm that their investment is within the investment limits, any time they re-elect to participate in the distribution reinvestment program after having opted to receive cash distributions.
November 25, 2024
Page 5
If the Unit in question is not currently being offered pursuant to Regulation A, the Manager will not permit any Member elect to participate in the dividend reinvestment program, unless another exemption from registration is available.
Redemption Rights, page 6
Comment:
6.
We note your disclosure that any member may submit a written request for redemption of their units. We further note your risk factor disclosure on page 8 regarding the company’s ability to suspend redemption rights in certain circumstances. Please disclose how many redemption requests have been received and whether the company has been able to fulfill all requests made to date. To the extent it has not, please disclose the percentage of redemption requests fulfilled as of the most recent practicable date. Refer to Disclosure Guidance Topic No. 6.
Response: Since the Offering Statement for the Class D Units was initially qualified under Regulation A on September 21, 2022, there have been 98 redemption requests with respect to 16,990,599 Class D Units, all of which requests have been fulfilled. The Company has not suspended redemption rights with respect to Class D Units since the Offering Statement for the Class D Units was qualified under Regulation A. We have added this information to the Offering Statement.
Business
Portfolio Loan Characteristics
Borrowers, page 33
Comment:
7.
We note your disclosure that many of the company’s portfolio borrowers are one to three member teams who join to form a company and take title to projects in the company name. Please expand your underwriting disclosure to discuss how the company evaluates these one to three member team companies when conducting criminal background checks, ordering credit reports, and evaluating liquidity. Please also discuss in greater detail the credit criteria used in assessing borrowers and provide clearer disclosure of the credit quality of the loans in your portfolio.
November 25, 2024
Page 6
Response: As disclosed in our Offering Statement, as an asset-based lender, the Company’s underwriting guidelines are heavily weighted toward real estate valuation, liquidity and loan-to-value coverage. We primarily rely on the assessment of the collateral securing the loan as opposed to the credit quality of our Portfolio Borrowers, as the Company believes that the collateral – and at times cross-collateral – securing the Portfolio Loan is the primary source of repayment protection. That being said, we do also evaluate our Portfolio Borrowers, as disclosed in the Offering Statement. We have updated these disclosures to further clarify this assessment process.
Comment:
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 46
8.
We note your statements on pages 47 and 55 indicating that lending to only the highest quality borrowers has been a tenet of your risk mitigation strategy in light of the ongoing economic uncertainty regarding interest rates. Please explain the characteristics of a highest quality borrower, as we further note your risk factor disclosure on page 17 that the company may invest in portfolio loans with borrowers who will not be required to meet the high credit standards of mortgage lenders.
Response: We have amended the Offering Statement to address this seeming inconsistency. We have further clarified on pages 48 and 57 what qualities the Company sees as beneficial in its borrowers. We have also clarified the risk factor disclosures on page 17. It is more accurate to state that the Company is using different credit criteria for its borrowers than mortgage lenders and its borrowers may not be able to meet a conventional mortgage lenders credit standards, instead of stating the Company’s borrowers will not meet the required criteria of conventional mortgage lenders. Many of the Company’s borrowers would likely meet such criteria, but may be ineligible for conventional mortgage loans for other reasons or may prefer to work with the Company because of the Company’s competitive advantages, as discussed in the Offering Statement in greater detail.
Interest of Management and Others in Certain Transactions, page 59
Comment:
9.
Please provide the fees paid to the Manager for the last two completed fiscal years and the current fiscal year, as required by Item 13 of Part II of Form 1-A. Please also revise the summary to clearly disclose the Manager fees.
Response: We have updated these disclosures to provide the fees paid to the Manager for the last two completed fiscal years and the current fiscal year and to clearly disclose the Manager fees.
November 25, 2024
Page 7
Redemption of Units, page 64
Comment:
10.
Please be advised that you are responsible for analyzing the applicability of the tender offer rules to your share redemptions, including Regulation 14E, which would apply to any tender offer for securities issued pursuant to the Regulation A exemption. To the extent you have questions about the tender offer rules, you may contact the Division’s Office of Mergers and Acquisitions at 202
Show Raw Text
CORRESP
1
filename1.htm
iron_corresp.htmNovember 25, 2024
Pam Howell/Isabel Rivera
Office of Real Estate & Construction
Division of Corporate Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re:
Iron Bridge Mortgage Fund, LLC
Offering Statement on Form 1-A Post-Qualification Amendment No. 3
Filed September 3, 2024
File No. 024-11984
To Whom it May Concern:
On behalf of Iron Bridge Mortgage Fund LLC (the “Company”), this letter is submitted in response to the Staff’s comment letter dated September 30, 2024 relating to the above-captioned Offering Statement on Form 1-A (the “Offering Statement”). The Staff’s comments are set forth below along with the Company’s response to each comment. Capitalized terms that are not otherwise defined herein shall have the meanings set forth in the Offering Statement.
Post-Qualification Amendment No. 3 to Offering Statement on Form 1-A filed September 3, 2024 Cover Page
Comment:
1.
We note that you have not designated a fixed amount of units across the various classes you intend to qualify in this amendment. Please revise your cover page to fix the volume of securities you intend to qualify in each class and the amount allocated to the distribution reinvestment plan. Please also remove the following statement that “[you] reserve the right to reallocate the Units [you] are offering between the primary offering and [y]our distribution reinvestment plan.” See Rule 253(b)(4) of Regulation A.
November 25, 2024
Page 2
Response: We have modified our cover page to fix the volume of securities we intend to qualify in each class and the amount allocated to the distribution reinvestment plan. We have also removed the statement that we “reserve the right to reallocate the Units we are offering between the primary offering and our distribution reinvestment plan.”
Comment:
2.
We note your statement that “the amount of each class of Units to be offered at any given time will be determined by the Company’s Manager in its discretion, based on market conditions and targeted cost of capital.” We also note the disclosure in the summary regarding the limitations in the Third Amended Operating Agreement relating to the Company’s ability to issue additional Class C Units or Class D Units. Please provide us with your analysis regarding whether your offering should be considered an impermissible delayed offering and not a continuous offering within the meaning of Rule 251(d)(3)(i)(F) of Regulation A.
Response: Given the allocation of Units set forth above, we have removed the statement that “the amount of each class of Units to be offered at any given time will be determined by the Company’s Manager in its discretion, based on market conditions and targeted cost of capital.” Each Class of Units will be offered for sale pursuant to Regulation A upon qualification of this Offering Statement.
With respect to the limitation relating to the issuance of additional Class C Units and Class D Units, as noted above, the Third Amended Operating Agreement limits the Company’s ability to issue additional Class C Units or Class D Units during any period of time when the Unreturned Capital Contributions of the Class A Units and Class B Units on an aggregate basis equal less than 20% of the total assets of the Company. The Company is also limited from redeeming any Class A Units or Class B Units when the Unreturned Capital Contributions of the Class A Units and Class B Units on an aggregate basis equal less than 20% of the total assets of the Company. These limitations are intended to protect Class C Unit holder and the Class D Unit holders by ensuring there is a layer of equity junior to them, and should only become applicable in limited circumstances. This limitation is currently not in effect and has not been triggered since the adoption of the Third Amended Operating Agreement. In the event that this limitation is triggered, we will suspend any offering or issuance of the Class C and Class D Units, and we will not resume such offering until a new offering statement, or post-qualification amendment to an offering statement, with respect to such Class C and Class D Units has been qualified.
Comment:
3.
We note the disclosure on page 3 and elsewhere in the offering circular that “the reinvestment of distributions by a Member in additional Units shall be at a purchase price equal to the fair market value of such Unit at the time of such reinvestment, as determined by the Manager in its sole discretion.” This would appear to be an at-the-market offering, which is not permitted under Regulation A. See Rule 251(d)(3)(ii) of Regulation A. Please revise or advise.
November 25, 2024
Page 3
Response: We have changed the disclosure from saying “fair market value” to saying that the reinvestment is at a purchase price equal to the price at which Units are currently being offered by the Company, or if no offering is being conducted, the NAV as of the last date of the month preceding such reinvestment, as determined by the Manager in its sole discretion. The previous reference to “fair market value” was not intended to imply there was any active trading market in the Company’s securities, or that such market would be used to set the reinvestment price. There is no active market for any of the Units and no active market is expected to develop. The Third Amended and Restated Operating Agreement has also been amended to reflect this change.
Comment:
4.
Please briefly identify the material risks involved in purchasing your securities, including the lack of transferability and liquidity, as required by Section 1.D of Guide 5. Refer to Item 7(c) of Part II of Form 1-A for the applicability of Guide 5 to Form 1-A.
Response: We have updated the Cover Page to identify the material risks involved in purchasing our securities, including the lack of transferability and liquidity.
Distribution Reinvestment, page 3
Comment:
5.
We note your distribution reinvestment plan. Please revise to clarify how your activities will be done in compliance with Regulation A; for example, please ensure that your analysis and disclosure reflects: (i) confirmation that the distribution reinvestment plan securities are being offering pursuant to Rule 251(d)(3)(i)(B); (ii) confirmation that you will provide investors with a hyperlink to the current offering circular in connection with and at the time of any distribution reinvestment (refer to Rule 251(d)(1)(iii)); (iii) how you will comply with the investment limitations and qualifications for purchaser status set forth in Rule 251(d)(2)(i)(C) with respect to any securities purchased through your distribution reinvestment plan; and (iv) how you will ensure you are eligible to offer and sell securities pursuant to Regulation A at the time of such sales.
Response: Pursuant to our Third Amended and Restated Operating Agreement, each Class A Member, Class C Member, and Class D Member has elected to, and shall be treated as having elected to, reinvest all distributions made with respect to their Class A Units, Class C Units and Class D Units for the purchase of additional Units of the same class associated with such distributions. Each Class B Member shall reinvest all distributions made with respect to its Class B Units for the purchase of additional Class C Units or Class D Units, as determined by the Manager in its sole discretion unless such Class B Member has provided advance written notice to the Manager of its preference. The Company generally makes distributions monthly.
November 25, 2024
Page 4
Notwithstanding the foregoing, a Member may affirmatively elect to receive a portion of its distributions from the Company in cash by providing advance written notice to the Manager on such form, within such times and subject to such limitations as are established by the Manager. To terminate an election to receive cash distributions, a Member must notify the Manager in writing of its termination on such form as is established by the Manager and such revocation will be effective for distributions related to the first month following the month in which the revocation notice is received, which are paid, if at all, in the second month following the month in which the revocation notice is received. If no election to receive cash distributions is made, then distributions will be reinvested as described above.
If the Unit in question is currently being offered pursuant to Regulation A, distribution reinvestment plan securities will be offered pursuant to Rule 251(d)(3)(i)(B). As described above, Units upon subscription are accompanied by the right to receive distributions in the form of additional Units. Every month, Members receive an email reminding them of their ability to change the form of their distribution election, with the email containing a link to the Company’s current Offering Circular. In addition, the form Members must complete to change their election also will contain the link to the Company’s current Offering Circular. As elections do not become effective until at least a month after such election, this delivery is well in advance of such election becoming effective.
With respect to compliance with the investment limitations and qualifications for purchaser status set forth in Rule 251(d)(2)(i)(C) with respect to any securities purchased through our distribution reinvestment plan, this limitation has limited application to the offering of Units by the Company because the Company only accepts subscriptions from nonaccredited investors in limited circumstances, and intends to continue this practice into the future. At the time of this letter, no Class D Units (the current class of Units being offered pursuant to Regulation A) are held by Members that did not certify that they were “accredited” at the time of subscription. We have updated our Offering Statement to better reflect our practices, as described above. While each nonaccredited investor certifies through its Subscription Agreement that its investment is within the limitations set forth in Rule 251(d)(2)(i)(C), the Subscription Agreements have been modified to require Members to update the Company if this representation is no longer true, and the Company will also include in its form for Members to change their distribution elections a reminder that investments are subject to the foregoing limitations and will also ask the Member to re-certify their accredited status or to reconfirm that their investment is within the investment limits, any time they re-elect to participate in the distribution reinvestment program after having opted to receive cash distributions.
November 25, 2024
Page 5
If the Unit in question is not currently being offered pursuant to Regulation A, the Manager will not permit any Member elect to participate in the dividend reinvestment program, unless another exemption from registration is available.
Redemption Rights, page 6
Comment:
6.
We note your disclosure that any member may submit a written request for redemption of their units. We further note your risk factor disclosure on page 8 regarding the company’s ability to suspend redemption rights in certain circumstances. Please disclose how many redemption requests have been received and whether the company has been able to fulfill all requests made to date. To the extent it has not, please disclose the percentage of redemption requests fulfilled as of the most recent practicable date. Refer to Disclosure Guidance Topic No. 6.
Response: Since the Offering Statement for the Class D Units was initially qualified under Regulation A on September 21, 2022, there have been 98 redemption requests with respect to 16,990,599 Class D Units, all of which requests have been fulfilled. The Company has not suspended redemption rights with respect to Class D Units since the Offering Statement for the Class D Units was qualified under Regulation A. We have added this information to the Offering Statement.
Business
Portfolio Loan Characteristics
Borrowers, page 33
Comment:
7.
We note your disclosure that many of the company’s portfolio borrowers are one to three member teams who join to form a company and take title to projects in the company name. Please expand your underwriting disclosure to discuss how the company evaluates these one to three member team companies when conducting criminal background checks, ordering credit reports, and evaluating liquidity. Please also discuss in greater detail the credit criteria used in assessing borrowers and provide clearer disclosure of the credit quality of the loans in your portfolio.
November 25, 2024
Page 6
Response: As disclosed in our Offering Statement, as an asset-based lender, the Company’s underwriting guidelines are heavily weighted toward real estate valuation, liquidity and loan-to-value coverage. We primarily rely on the assessment of the collateral securing the loan as opposed to the credit quality of our Portfolio Borrowers, as the Company believes that the collateral – and at times cross-collateral – securing the Portfolio Loan is the primary source of repayment protection. That being said, we do also evaluate our Portfolio Borrowers, as disclosed in the Offering Statement. We have updated these disclosures to further clarify this assessment process.
Comment:
Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 46
8.
We note your statements on pages 47 and 55 indicating that lending to only the highest quality borrowers has been a tenet of your risk mitigation strategy in light of the ongoing economic uncertainty regarding interest rates. Please explain the characteristics of a highest quality borrower, as we further note your risk factor disclosure on page 17 that the company may invest in portfolio loans with borrowers who will not be required to meet the high credit standards of mortgage lenders.
Response: We have amended the Offering Statement to address this seeming inconsistency. We have further clarified on pages 48 and 57 what qualities the Company sees as beneficial in its borrowers. We have also clarified the risk factor disclosures on page 17. It is more accurate to state that the Company is using different credit criteria for its borrowers than mortgage lenders and its borrowers may not be able to meet a conventional mortgage lenders credit standards, instead of stating the Company’s borrowers will not meet the required criteria of conventional mortgage lenders. Many of the Company’s borrowers would likely meet such criteria, but may be ineligible for conventional mortgage loans for other reasons or may prefer to work with the Company because of the Company’s competitive advantages, as discussed in the Offering Statement in greater detail.
Interest of Management and Others in Certain Transactions, page 59
Comment:
9.
Please provide the fees paid to the Manager for the last two completed fiscal years and the current fiscal year, as required by Item 13 of Part II of Form 1-A. Please also revise the summary to clearly disclose the Manager fees.
Response: We have updated these disclosures to provide the fees paid to the Manager for the last two completed fiscal years and the current fiscal year and to clearly disclose the Manager fees.
November 25, 2024
Page 7
Redemption of Units, page 64
Comment:
10.
Please be advised that you are responsible for analyzing the applicability of the tender offer rules to your share redemptions, including Regulation 14E, which would apply to any tender offer for securities issued pursuant to the Regulation A exemption. To the extent you have questions about the tender offer rules, you may contact the Division’s Office of Mergers and Acquisitions at 202