Fund News: Stonecrest’s Real Estate Growth Fund – Q1 2020

First and foremost, we hope this update finds you and your loved ones healthy and safe.

The COVID-19 pandemic, with all its associated restrictions in moving properties and loans through foreclosure and sale processes, is impacting our ability to close out transactions. We do not know when these restrictions will be lifted. Hopefully, the country will stabilize in the near term and we will return to business as usual.

During REGF’s first quarter, Stonecrest made a concerted and successful effort to pay off the remaining mortgage debt on our assets. Since we are no longer purchasing assets from auction sites, and our consumer direct purchase effort is maturing but not yet robust, we decided to reduce our overhead by paying down debt.

As discussed in last quarter’s newsletter, we have continued to sell a mix of both quality and challenged assets. We were able to sell some of our most challenged assets, which was an accomplishment as they were tied up in litigation, title or construction issues. Unfortunately and expectedly, liquidating these assets negatively impacted the fund’s return.

Though we are disappointed by REGF’s performance, by reducing our mortgage expense, shedding impaired assets, and continuing to source and purchase consumer direct properties, we expect the yield to stabilize and then rebound by the end of the fund’s term.