SEC Comment Letter 0000000000-25-003689 to Roots Real Estate Investment Community I, LLC (CIK 0001866803)
Roots Real Estate Investment Community I, LLC (CIK 0001866803)
Date: April 7, 2025 · CIK: 0001866803 · Accession: 0000000000-25-003689
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File numbers found in text: 024-11897
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April 7, 2025
Daniel Dorfman
Manager
Roots Real Estate Investment Community I, LLC
1344 La France Street NE
Atlanta, GA 30307
Re:Roots Real Estate Investment Community I, LLC
Post-Qualification Amendment No.4 to Offering Statement on Form 1-A
Filed March 24, 2025
File No. 024-11897
Dear Daniel Dorfman:
We have reviewed your amendment and have the following comments.
Please respond to this letter by amending your offering statement and providing the
requested information. If you do not believe a comment applies to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response. After reviewing any amendment to your offering statement and the information you
provide in response to this letter, we may have additional comments.
Form 1-A POS filed March 24, 2025
Cover Page
1.We note the disclosure on page 45 that residents of the rental properties have the
option, subject to the qualifications set forth in this offering circular, to invest the
reimbursed fee and additional credits from RootsCom into this offering. Please clearly
disclose this consideration other than for cash. We direct you to the Note to Rule
251(a) of Regulation A for the valuation of non-cash consideration. Please also
explain the table on page 45 setting forth the example of this program, including
clarifying how you determined the interest rate and total return. Please also provide
additional details of the terms of this program.
Risk Factors, page 12
We note that your forum selection provision in Section 17.12 of the Amended and
Restated Operating Agreement and the Subscription Agreement identifies the state or
federal courts in the State of Georgia as the exclusive forum for certain litigation,
including claims arising from federal securities laws. Please disclose this provision in 2.
April 7, 2025
Page 2
the offering circular and state, if true, that it applies to actions arising under the
Securities Act or Exchange Act. In that regard, we note that Section 27 of the
Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce
any duty or liability created by the Exchange Act or the rules and regulations
thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for
federal and state courts over all suits brought to enforce any duty or liability created
by the Securities Act or the rules and regulations thereunder. If the provision applies
to Securities Act claims, please also revise your offering circular to state that there is
uncertainty as to whether a court would enforce this provision and that investors
cannot waive compliance with the federal securities laws and the rules and regulations
thereunder.
3.Please add disclosure regarding the arbitration provision in Article 9 of the Amended
and Restated Operating Agreement. Please clarify whether this provision applies to
claims under the federal securities laws. In addition, please clearly disclose the
additional risks associated with this provision, including limited access to information
and other imbalances of resources between the company and shareholders, and that
these provisions can discourage claims or limit shareholders’ ability to bring a claim
in a judicial forum that they find favorable. Please clearly disclose any uncertainty as
to the enforceability of such provision. Please also disclose the waiver of a jury trial in
Section 17.12 of the Operating Agreement, if the arbitration provision is overruled or
otherwise deemed unenforceable.
4.We note the investor representations in the subscription agreement prohibit "(1)
indirect, special or consequential damages, lost profits or the like or (2) punitive
damages. Please clearly disclose and clarify whether this provision applies to claims
made under the federal securities laws. Please also address any questions as to
enforceability.
Management, page 33
5.Please provide the business experience during the past five years of each executive
officer and director, including his principal occupations and employment during that
period and the name and principal businesses of any corporation or other organization
in which such occupations and employment were carried on.
See Item 401(e) of Regulation S-K.
Management Compensation, page 37
6.Please revise the summary to include a summary of all the management fees. Please
also revise the table to reflect the compensation paid for the last two completed fiscal
years, as required by Items 402 and 404 of Regulation S-K. In addition, please revise
to remove the word "estimated" from the compensation column or advise why such
information is an estimate rather than the amount paid.
April 7, 2025
Page 3
Real Estate Portfolio, page 49
7.Please provide the disclosure required by Items 14 and 15 of Regulation S-K. Given
the lack of materiality of any particular asset, we direct your to Instruction 2 to Item
14. which indicates the information shall be given by such classes or groups and in
such detail as will reasonably convey the information required.
Description of Our Units, page 66
8.We note your narrative disclosure as to how your NAV is calculated and that you
calculated the offering price to be $140.00 per share. Please provide tabular disclosure
that demonstrates the components of your NAV calculation. Please also disclose
historical NAV calculations.
Quarterly Redemption Plan, page 73
9.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 202-551-3440.
10.We note that you may conduct the share redemption program during the offering
period of the shares being qualified in this offering circular. Please be advised that
you are responsible for analyzing the applicability of Regulation M to your share
redemption program. We urge you to consider all the elements of your share
repurchase program in determining whether the program is consistent with the class
relief granted by the Division of Market Regulation in the class exemptive letter
granted Alston & Bird LLP dated October 22, 2007. To the extent you have questions
as to whether the program is entirely consistent with that class exemption you may
contact the Division of Trading and Markets.
Exhibits
11.We note that the Operating Agreement filed as Exhibit 2.3 states that the Company
and the Manager may enter into one or more written agreements setting forth
compensation terms and additional roles, responsibilities and obligations of each of
the Manager and the Company. Please file all such agreements as exhibits.
General
12.Please update your disclosure in Part I, Item 4 to include the portion of the aggregate
offering price attributable to all the units that you have sold pursuant to a qualified
offering statement within the past 12 months before the qualification of this 1-A POS
as well as the aggregate offering price attributable to securities being offered on
behalf of the issuer. Please also update Part I, Item 6 to reflect the unregistered
securities sold within the past year. Please also revise the cover page to reflect the
amount of securities under this offering that have been sold to date.
April 7, 2025
Page 4
13.We note the disclosure regarding the distribution reinvestment plan when discussing
the description of the units on page 74. Please update your cover page to provide an
allocation of the securities being offered pursuant to the distribution reinvestment
plan. In addition, please revise to confirm that the distribution reinvestment
plan securities are being offering pursuant to Rule 251(d)(3)(i)(B); and that you will
provide investors with a hyperlink to the current offering circular in connection with
and at the time of any distribution reinvestment, see Rule 251(d)(1)(iii).
14.We note the certain relationships and related transactions in the Form 1-K and Form
1-SA. Please provide all the disclosure required by Item 404 of Regulation S-K. Such
disclosure should clearly disclose the acquisition of properties from the Sponsor.
Please clarify whether you have a related transaction policy for these purchases. In
this regard, we note that the Manager receives a one time acquisition fee for each
property purchased. However, it is unclear whether the Sponsor is selling such
properties for the price it acquired the properties or whether the Sponsor may receive
fees or other consideration above its purchase price.
We will consider qualifying your offering statement at your request. If a participant in
your offering is required to clear its compensation arrangements with FINRA, please have
FINRA advise us that it has no objections to the compensation arrangements prior to
qualification.
We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence
of action by the staff.
Please contact Babette Cooper at 202-551-3396 or Jennifer Monick at 202-551-3295
if you have questions regarding comments on the financial statements and related
matters. Please contact Pearlyne Paulemon at 202-551-8714 or Pam Howell at 202-551-3357
with any other questions.
Sincerely,
Division of Corporation Finance
Office of Real Estate & Construction
cc:Michael P. Williams