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CORRESP
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iron_corresp.htm

   805 SW BROADWAY
SUITE 1500
PORTLAND, OR 97205
503.226.1191 PHONE
503.226.0079 FAX

   January 27, 2025

   503.226.8636 Direct

 apear@buchalter.com

 Jeffrey Gabor/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. 4

 Filed November 25, 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 January 10, 2025 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. 4 to Offering Statement on Form 1-A filed November 25, 2024

 Offering Circular Summary, page 2

 COMMENT:

   1.

   We note your revision in response to prior comment 9. Please revise your summary to clearly disclose the management fees for the last two fiscal years.

 RESPONSE: We have updated our Offering Summary as requested.

   Jeffrey Gabor/Isabel Rivera

 Office of Real Estate & Construction

 January 27, 2025

 Page 2

 Distribution Reinvestment, page 3

 COMMENT:

   2.

   We note your response to prior comment 5 and are still considering the mechanics of your dividend reinvestment program and may have further comments.

 RESPONSE: Please let us know if you have any further comments. We welcome the opportunity to discuss any further concerns the Staff may have.

 Business

 Calculation of NAV, page 44

 COMMENT:

   3.

   We note that your response to prior comment 3 includes disclosure about the company's use of NAV and its NAV per unit as of September 30, 2024 and October 31, 2024. Please provide us, on a supplemental basis, with a template for your NAV disclosures and additional information of when the company began to use NAV.

 RESPONSE:

 Please find enclosed the template intended to be used for NAV disclosures as Exhibit A to this letter. We have also added these to our Offering Statement, and we will file updated disclosures on at least a quarterly basis.

 We use NAV solely for the purposes of our newly modified redemption program, and we began using the concept of “NAV” upon the effective date of the most recent amendment to our Third Amended and Restated Operating Agreement, which implemented the changes to our redemption program, November 25, 2024 (“NAV Effective Date”).

 Prior to this shift to NAV, the price we paid for Units under our redemption program was based on the amount of Unreturned Capital Contribution of such Units being redeemed.  We had initially adopted this methodology during the time when the Company was a limited liability company taxed as a partnership.   The Company elected to be treated as a corporation taxed as a “real estate investment trust” (“REIT”) for U.S. federal income tax purposes under the Code, commencing with its taxable year ending December 31, 2022, but did not change the terms of its redemption program at that time.

   Jeffrey Gabor/Isabel Rivera

 Office of Real Estate & Construction

 January 27, 2025

 Page 3

 Commencing on the NAV Effective Date, the Company began using the “share-based” accounting methodology to calculate NAV. Because the Company’s assets are generally “held to maturity” in the case of mortgage loans receivable secured by real estate, or “held for sale” in the case of REO assets, the value of Units generally do not change due to appreciation or depreciation of investments. The value of a Unit generally increases intra-month due to accrued but undistributed profits earned from net interest income on mortgage loans or short-term capital gains or losses from the sale of REO assets. At month end, net profits are generally (though not necessarily) distributed to Unitholders. A Unitholder who elects cash distribution will receive monthly profit distributions in cash, and a Unitholder who elects reinvestment will purchase additional Units at $1.00 per Unit. After monthly net profits have been distributed, the value of each Unit returns to $1.00 per Unit.

 Assuming an offering price of $1.00 per Unit, and assuming we continue our practice of distributing net profits to the Members on a monthly basis, the NAV per Unit and the Unreturned Capital Contribution of such Units would be equal, because of the netting effect of the monthly profit distribution accrual and payment described above.  However, given that the Company may change the offering price of its Units in the future or its distribution practices may change, this may not always be the case.   As NAV appears to be the metric most commonly adopted by non-traded REITs in their redemption programs, we believed this shift would be valuable for investor communications.

 General

 COMMENT:

   4.

   We note that your response to prior comment 20 relating to the Investment Company Act of 1940 (the “Investment Company Act”) did not address any subsidiaries. Please confirm that you have no subsidiaries.

 RESPONSE:  The Company does not currently have any subsidiaries.

 COMMENT:

   5.

   We note that, in your response to prior comment 20, you state that you attached your balance sheet as of September 30, 2024. Please provide this balance sheet as no such attachment was filed.

 RESPONSE: Please see Exhibit B to this response letter.

   Jeffrey Gabor/Isabel Rivera

 Office of Real Estate & Construction

 January 27, 2025

 Page 4

 COMMENT:

   6.

   In prior comment 20, we asked for a detailed legal analysis of your reliance on Section 3(c)(5)(C) of the Investment Company Act. However, you only provided analysis relating to subpart (C). Please provide similar analysis in the context of the introduction to Section 3(c)(5) (i.e., “Any person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates…”).

 RESPONSE:

 Per our previous letter to the Staff on November 25, 2024 (the “Previous Response Letter”), responding to the Staff’s previous comments, applying the factors considered in In re Tonopah Mining Co. (26 SEC 426 at 427 (1947)), the Company would be an investment company, within the meaning of Section 3(a)(1)(A) of the Investment Company Act, were it not exempted from the definition of investment company under Section 3(c)(5)(C) of the Investment Company Act. Regardless of the foregoing however, as discussed in the Previous Response Letter, the Company is exempted from the definition of “investment company” under Section 3(c)(5)(C) of the Investment Company Act. Section 3(c)(5) of the Investment Company Act provides:

 “Any person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses: (A) Purchasing or otherwise acquiring notes, drafts, acceptances, open accounts receivable, and other obligations representing part or all of the sales price of merchandise, insurance, and services; (B) making loans to manufacturers, wholesalers, and retailers of, and to prospective purchasers of, specified merchandise, insurance, and services; and (C) purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.”

 As discussed in the Previous Response Letter, by virtue of engagement in purchasing or otherwise acquiring mortgages and other liens on and interests in real estate, the Company is primarily engaged in “purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.”

 The Company is also “not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates.” The Units offered are also not “redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates.”

   Jeffrey Gabor/Isabel Rivera

 Office of Real Estate & Construction

 January 27, 2025

 Page 5

 Redeemable Securities

 Under Section 2(a)(32) of the Investment Company Act of 1940 (the “Investment Company Act”), “redeemable security” means:

 “any security, other than short-term paper, under the terms of which the holder, upon its presentation to the issuer or to a person designated by the issuer, is entitled (whether absolutely or only out of surplus) to receive approximately his proportionate share of the issuer’s current net assets, or the cash equivalent thereof.”

 Because our Unitholders are subject to certain restrictions on redemptions from the Company, as described in the Offering Statement, we believe that the Units do not meet this definition of redeemable securities.

 Entitlement to Payment Upon Presentation of the Security

 Members1 are not “entitled” to receive payments for their Units “upon presentation to the issuer,” as required by the definition.

 First, the Company’s Manager may, in its sole discretion, amend, suspend, or terminate the redemption plan at any time, subject to 10 days’ notice to the Members, for any reason, including to protect the Company’s operations and our non-redeemed Members, to prevent an undue burden on the Company’s liquidity, or following any material decrease in our NAV.  The Manager shall further be entitled to reject a Redemption Request, limit the amount to which a Redemption Request applies or otherwise modify the terms of satisfying a Redemption Request to the extent the Manager determines necessary or advisable to ensure or maintain the status of the Company as a REIT or avoid any U.S. federal income or excise tax.  The Company’s mortgages and real properties will not be liquidated to meet Member requests for redemption, but rather will be liquidated only for purposes of meeting investment objectives.  The Staff has cited in previous no-action letters that a Company’s lack of obligation to redeem securities as a result of liquidity concerns or tax qualification purposes as one of the factors that indicates a security is not a “redeemable security” for purposes of this definition.  See U.S. Prop. Inv., N.V., 1989 SEC No-Act. LEXIS 641 (May 1, 1989); Embarcadero Mortgage Fund I, publicly available November 5, 1986; Breen Mortgage Fund I, publicly available January 20, 1988.

  _______________________

 1We believe that the definition of redeemable security contained in Section 2(a)(32) of the Investment Company Act is intended to apply only to redemptions initiated by the holder of securities and not to optional redemptions by an issuer.  While it is possible to construe Section 2(a)(32) as applicable to optional issuer redemptions because “presentation” of the Units presumably would be necessary in order for Member to receive its optional redemption payment, we believe that this would be a strained and artificial interpretation of a provision clearly intended to apply to investor-initiated redemptions. See U.S. Prop. Inv., N.V., 1989 SEC No-Act. LEXIS 641 (May 1, 1989).

   Jeffrey Gabor/Isabel Rivera

 Office of Real Estate & Construction

 January 27, 2025

 Page 6

 Second, the limitations of the redemption program, even if the redemption program has not been suspended and terminated, impose a number of other limitations that prevent the Units from being deemed “redeemable securities.”  Redemptions are subject to the following limitations:

   ·

   While it is the intention of the Company to complete all Redemption Requests within sixty (60) days of receipt, this intention is limited as otherwise discussed herein, and there is no specific contractual obligation as to when such redemptions must be completed.

   ·

   As described in the Offering Statement as filed on November 25, 2024, we are limited in any calendar quarter to redeem Units in an amount, on a net basis, of no more than 5% of aggregate NAV as of the last day of the previous quarter, which means that our redemptions will be limited to approximately 20% of our aggregate NAV in any 12 month period, with all classes of Units being treated as a single class. If redemptions do not reach the 5% limit in a calendar quarter, the unused portion generally will be carried over to the next quarter, but not any subsequent quarter, except that the maximum amount of redemptions during any quarter may never exceed 10% of the aggregate NAV as of the last day of the previous quarter.

   ·

   If at any time the amount of Unreturned Capital Contributions associated with the Class A Units and Class B Units, in the aggregate, equal less than 20% of the total assets of the Company, the Company shall suspend processing Redemption Requests associated with Class A Units and Class B Units and extend the redemption date for such Units until such time as the Unreturned Capital Contributions associated with the Class A Units and the Class B Units in the aggregate exceeds 20% of the total assets of the Company.

   ·

   Redemption Requests will generally be completed in the order received. If the Company does not completely satisfy a Redemption Request at the end of a quarterly period because of the limitations on repurchases, then the Company will treat the unsatisfied portion of the repurchase as a request for repurchase in the next quarter, unless the Redemption Request is withdrawn. At the beginning of the next quarter, Redemption Requests that were not satisfied during the previous quarter and that have not been withdrawn will be redeemed on a pro rata basis, prior to any new Redemption Requests.

   ·

   Notwithstanding the foregoing, at any time, the Manager may prioritize Redemption Requests related to (and in the following order of priority): (a) repurchases upon the death of a Member; (b) repurchases in connection with a disability, as determined by the governmental agency responsible for reviewing the disability retirement benefits that the Member could be eligible to receive or determination of incompetence, processed in order of the date such disability or incompetence was determined; (c) repurchases in connection with required minimum distribution requirements for the Member, processed in order of the date the notice is received; and (d) any Redemption Request for less than 50,000 Units.

   Jeffrey Gabor/Isabel Rivera

 Office of Real Estate & Construction

 January 27, 2025

 Page 7

   ·

   If (i) the Company receives a Redemption Request from a Member (or group of affiliated Members) for an aggregate amount over $1 million, then the Company may, at the Manager's election, as determined in its sole discretion, complete any such Redemption Request in multiple quarterly payment intervals of $1,000,000 for each such payment date and (ii) if the Company has unfulfilled Redemptions Requests at any time for more than thirty percent (30%) of outstanding Units, or to the extent that the processing of Redemption Requests may otherwise be prohibited by law, then the Company may elect to (A) suspend processing of any additional Redemption Requests by Members in the order received; (B) extend the redemption date for all Members until such time as the Company has sufficient liquidity to complete such redemptions without causing a material adverse impact on the Company, as determined by the Manager in its reasonable discretion, with no requirement of the Company or the Manager to market or sell any investments or other assets at fire sale or discount prices to complete any outstanding Redemption Requests, (C) make payments, or prepayments as applicable, to Members who have submitted a Redemption Request, provided, however, that an