A Real Estate Investment You Can Trust

Iron Bridge’s capital structure is comprised of four tiers of equity (Class A, Class B, Class C and Class D), providing investors with different options to meet their investment needs. Class A is owned by employees of the Company only and is first at risk should a capital loss occur.

On February 1, 2021, the Company restructured its equity into Class A, Class B, Class C and Class D Units. Class D Units receive a 5% preferred return and are senior in security interest to Class C, Class B, and Class A. Class C Units receive a 6% preferred return and are senior in security interest to Class B and Class A but subordinate to (at risk before) Class D. Class B Units receive a 9% preferred return and are senior in security interest to Class A but subordinate to Class D and Class C. Class A Units are subordinate to all other equity classes and receives 90% of any profits in excess of the preferred return owed to Class D, Class C and Class B. 10% of any profit in excess of the preferred return owed to Class D, Class C and Class B is distributed proportionally to Class D, Class C and Class B investors as profit participation.

• Risk Management – the Manager’s investment capital (invested in Class A Units) is at risk before outside investor capital, which incentivizes prudent risk management.
• Liquidity – Because the Company's loan portfolio turns over in approximately eight months, investors can withdraw their investment with 30-day notice to Iron Bridge, providing investors with liquidity and flexibility.
• Flexibility - Monthly profit distributions can be reinvested, increasing the annualized investment return through compounding. Investors can also make deposits into their accounts at the start of any month. It’s a great way for investors to earn an attractive rate of return on capital that might otherwise be sitting in the bank.

All the Company’s equity classes (Class A, Class B, Class C and Class D) are invested in a portfolio of approximately 295 short-term (12 month maturity) real estate loans secured by first lien deeds of trust. The approximate average loan-to-value of the loan portfolio is 68%. In other words, the company’s loan portfolio, in which Equity Program investors are invested, is insulated from loss by approximately $60 million of our borrowers’ equity, which is at risk first (based on mortgage loans receivable, net, of $127 million).

However, each class of equity investment is further insulated by any subordinate (at risk first) equity class. For example, Class D is the most insulated investment program and has a senior priority interest on all the Company’s assets, ahead of Class A, Class B and Class C. In other words, Class D investors are insulated by our borrowers’ equity of approximately $60 million, plus the additional Class A, Class B, and Class C of approximately $57 million. As a result, Class D investors have an effective loan-to-value on the real estate collateral of 38%.

Similarly, the Class C is the second most insulated investment program and has a senior priority interest on all the Company’s assets ahead of Class A and Class B but is subordinate to (at risk before) Class D. In other words, Class C investors are insulated by our borrowers’ equity of approximately $60 million, plus the additional Class A and Class B of approximately $28 million. As a result, Class C investors have an effective loan-to-value on the real estate collateral of 53%.

Similarly, the Class B is the third most insulated investment program and has a senior priority interest on all the Company’s assets ahead of Class A but is subordinate to (at risk before) Class B, Class C and Class D. In other words, Class B investors are insulated by our borrowers’ equity of approximately $60 million, plus the additional Class A of approximately $8 million. As a result, Class B investors have an effective loan-to-value on the real estate collateral of 64%.

*The forgoing numbers are as of December 31, 2023.

For the 12 months ended December 31, 2023, the Company generated $13.8 million in total revenues available to pay interest expense and investor preferred returns. With average portfolio leverage of 32.0%, the Company paid interest expense of $2.8 million related to Bank Borrowings. The Company paid preferred returns of $1.1 million related to Class D Units, $1.8 million related to Class C Units and $1.8 million related to Class B Units.

Total revenue was 4.9 times the amount necessary to pay interest expense related to Bank Borrowings; 3.5 times the amount necessary to pay the interest expense and preferred returns related to Bank Borrowings and Class D Units combined; 2.4 times the amount necessary to pay the interest expense and preferred returns related to Bank Borrowings, Class D Units and Class C Units combined, and; 1.8 times the amount necessary to pay the interest expense or preferred returns related to Bank Borrowings, Class D Units, Class C Units and Class B Units combined.

In these calculations, the preferred return payable to Class D investors is combined with the interest payable on Bank Borrowings because Bank Borrowings have a senior security interest to Class D investors. Similarly, the preferred return payable to Class C investors is combined with preferred return payable to D investors and interest payable on Bank Borrowings because Class D investors and Bank Borrowings have a senior security interest to Class C investors, and; the preferred return payable to Class B investors is combined with preferred return payable to Class C and Class D investors and interest payable on Bank Borrowings because Class C and Class D investors and Bank Borrowings have a senior security interest to Class B investors. We believe that this level of coverage provides investors in each class a significant layer of protection that should help safeguard investor capital during an adverse economic event.

Iron Bridge has a $80 million (increased from $60 million at 12/31/23) line of credit with Umpqua Bank, which has a senior security interest in all the Company’s assets. The Company targets a line of credit utilization rate of 50-80%, which allows the Company to meet unanticipated loan requests from borrowers or unanticipated withdrawal requests from investors. Similarly, if the Company’s portfolio loans pay off faster than anticipated or if new loan originations do not match the rate of loan payoffs, the line of credit can be paid down while keeping investor capital fully utilized.

As of December 31, 2023, the Company’s allowance for loan losses equaled 1.5% of the active loan portfolio. This compares to the Company’s total loan charge offs of 0.207% since inception (2009). See the Company’s offering circular and most recent quarterly report for more details.

For each prospective borrower, the Company performs a criminal background check, orders a credit report, measures liquidity, interviews the borrower to assess experience level and evaluates the quality of previous work. The Company also requires each borrower to provide a construction cost budget, detailing the cost and scope of planned capital improvements, and a profit analysis, detailing the borrower’s estimated resale price, total project cost and estimated profit.

As an asset-based lender, the Company’s underwriting guidelines are heavily weighted toward real estate valuation, liquidity and loan-to-value (LTV) coverage.

Specifically, the Company operates under the following underwriting guidelines:

• The Company does not lend more than 70% of the estimated “after-repair value” of the collateral;
• the Company does not lend unless secured by a first lien deed of trust or mortgage;
• the Company does not lend unless the borrower has a clearly defined exit strategy; and
• the Company does not lend without assessing the borrower’s ability to pay.

The Company has the sole discretion whether to originate a mortgage loan at a given LTV. Some of the factors considered by the Company when determining the maximum LTV to be extended on a mortgage loan are:

• age, type, condition, and location of the collateral; • borrower creditworthiness and credit history;
• loan amount and credit terms requested;
• additional cross-collateralized properties;
• proposed changes to or reconstruction of the collateral;
• tenant history and occupancy rate (if applicable); and
• amount of the interest reserve or construction loan (if any).

Our private lending business has performed well in both increasing and decreasing real estate pricing environments since inception (2009) and is not dependent on a high volume of distressed real estate sales, a restrictive lending environment or appreciating real estate values. It is important to understand that our borrowers create value in their real estate projects by making strategic capital improvements, and Iron Bridge shares in the borrower’s value creation by making a loan secured by the real estate collateral and receiving interest payments. As the real estate environment changes, Iron Bridge will adapt by shifting its loan portfolio to different geographic markets and adjusting its loan programs and related underwriting guidelines accordingly.

The company has developed and continues to develop a network of real estate investors who have a need for private real estate financing to execute their investment strategies. These investors are professional home builders, developers, rehabbers, remodelers, or other real estate-oriented professionals who utilize different techniques to acquire, improve and resell real property.

A common misconception is that these borrowers must be low quality with bad credit scores otherwise they would borrower from a bank lender. On the contrary, these borrowers generally have good credit, experience and liquidity. However, they choose to use private financing over bank financing due to the superior speed and efficiency.

There can be no assurance that an investor will not lose some or all of their investment in the Company. However, the Company has established the following guidelines to minimize risk and maximize the preservation of capital: (a) All of the Company’s Portfolio Loans are secured by first lien deeds of trust or mortgages on real property; (b) The Company does not lend more than 70% of the estimated after- repair value of the real estate collateral; (c) The Company seeks to maintain strong cash flow generation and preferred return coverage ratios, which are reported to investors quarterly, and; (d) each investment class is further secured by the subordinate (at risk before) investment classes. The Company reports to investors each quarter the “loan-to-value”, “asset coverage” and “preferred return coverage” of each investment class.

It is also important to point out that Class A (owned by employees only) is first at risk of capital loss, which we believe incentivizes prudent risk management.

No. Since the Company’s inception (2009) no investor has ever lost money in Iron Bridge Mortgage Fund, and all monthly profit distributions or interest payments have been paid to investors in full, when due. Iron Bridge Mortgage Fund is the only investment program that has ever been sponsored by the Manager or its Principals.

While we hope to continue this successful track record, there is no guarantee we will be able to do so. See the risks described in our Offering Circular for more details.

While Iron Bridge intends to fulfill all redemption requests from investors, and historically has been able to do so, its redemption program is subject to a number of limitations. For example, if the Company has unfulfilled Redemptions Requests at any time from Members collectively seeking redemption for more than thirty percent (30%) of outstanding Units, then the Company may elect to (A) suspend processing Redemption Requests 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, 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 any such payments or prepayments shall be made in the following order of priority: bank line of credit, Class D Units, Class C Units, Class B Units, then Class A Units; and (D) give notice to all Members that the Company is electing to take the actions set forth in subsections (A), (B) and (C) above. See the Company’s offering circular for more details.

Under the Redemption Program, the Company will redeem Units up to a maximum of 5% of the total aggregate members' equity of the Company per quarter, calculated in accordance with GAAP as of the last day of the previous calendar quarter, which means that our net redemptions will be limited to approximately 20% of our total members' equity in any 12 month period. If redemptions do not reach the 5% limit in a calendar quarter, the unused portion generally will b 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 combined total assets less total liability of the Company as of the last day of the previous calendar quarter.

In connection with this offering, the Company will also be required to file with the Securities and Exchange Commission (“SEC”) annual, semiannual, and current event reports for so long as offers and sales of Equity Program units are ongoing. These SEC reports will be available to investors when filed with the SEC.

The Company’s books and records are maintained on the accrual basis for accounting purposes and for reporting income and losses for federal income tax purposes.

From 2011 through 2021, the Company’s financial auditor was Armanino. In 2022, the Company changed financial auditors to Perkins & Co. Perkins & Co. brings industry expertise surrounding real estate and more specifically mortgage pools, providing Iron Bridge with proactive counsel throughout the year. Copies of all financial audits are available upon request.

Upon subscription for Units, investors may elect to have their monthly profit distributions (A) sent to them in cash via electronic ACH transfer, or (B) reinvested into additional Units. Investors are automatically treated as having elected to reinvest all distributions made with respect to their Units if no distribution election is made. The reinvestment of distributions by a member in additional Units shall be at a purchase price equal to the offering price of such Units if the Company is currently offering such Units, or if no offering is being conducted, the fair market value of such Unit at the time of such reinvestment, as determined by the Manager in its sole discretion. Equity Program investors who choose monthly reinvestment will benefit from compounding monthly returns and an increased annualized yield. In addition, taxable investors may receive the full 20% 199A federal tax deduction.

• If the Class D investment return is 5.2% (5% preferred plus 0.2% participation), then the compounded annual rate would be 5.3%, and the tax-adjusted equivalent rate would be approximately 5.8%
• If the Class C return is 6.2% (6% preferred plus 0.2% participation), then the compounded annual rate would be 6.4%, and the tax-adjusted equivalent rate would be approximately 6.9%
• If the Class B return is 9.2% (9% preferred plus 0.2% participation), then the compounded annual rate would be 9.6%, and the tax-adjusted equivalent rate would be approximately 10.2%

To manage its capital structure, the Company requires Class B investors who chose monthly reinvestment to reinvest in Class C or Class D Units.

There is no restriction on the amount an accredited investor can invest. Investors that are not “accredited investors,” as defined for purposes of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), when permitted by Iron Bridge to invest, will not be permitted to purchase more than 10% of the greater of the investor’s annual income or net worth (for natural persons) or revenue or net assets (for entities).

An accredited investor is generally defined as an individual who has a net worth of at least $1 million, excluding the value of the investor’s primary residence, or has had an individual income in excess of $200,000 for each of the two most recent years, or a joint income with the investor’s spouse of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year.

Prospective investors should start by entering their information in the “Ready to Invest” fields at the bottom of our investor webpage or the Contact Us webpage. Prospective investors will then receive an introductory email with links to the Offering Circular and additional reading material and another link to schedule a call with one of our team members. Prospective investors may also access the Offering Circular, without any need to provide further information, directly at the bottom of the investor page.

After all of your questions have been answered, if you are interested in moving forward, you will need to indicate how you intend to hold your investment: (a) in your name individually or together with a spouse; (b) through an entity (e.g, trust, limited liability company, corporation), or; (c) through an IRA or other tax advantaged account. With this information, our team will email you the correct subscription package in PDF format, and the same subscription package using SignNow for electronic completion and signature.

After your subscription package is complete, Iron Bridge will debit your initial deposit, using electronic ACH transfer, from the bank account you provided. Investors may also choose to send a wire using the instructions provided in the subscription package.

Investors should email [email protected] and our team will provide you with the necessary documents to be completed and signed electronically. Once completed, Iron Bridge will initiate the deposit or redemption transaction using electronic ACH transfer to the investor’s bank account.

For security purposes, Iron Bridge prefers to initiate all electronic ACH transfers from the investor’s bank account. If prospective investors wish to wire transfer funds to Iron Bridge, we strongly suggest that you call Iron Bridge on a known phone number to verify the Iron Bridge wire instructions.

As of 11/18/2024 the net asset value (NAV) per Unit is $1.00