Please note that your final distribution for Real Estate Growth Fund, LLC is enclosed with this newsletter. The Stonecrest team worked very hard to liquidate all remaining assets. This included any remaining real estate holdings and non performing notes. The annualized return for the fund is 0.52%. The Final K1 will be issued for 2021, officially closing out the fund.
As the 2008 recession took hold, our business model of purchasing deeply distressed properties and mortgages from banks and mortgage servicers worked very well. We expected that the opportunities to purchase this type of asset would disappear at some point but, year after year, we continued to find sufficient assets to purchase. Eventually, the supply did dry up and the margins decreased for the remaining assets we were purchasing, making it difficult to earn significant returns. The pandemic also negatively impacted our business model by imposing restrictions on evictions and foreclosures, making it exceedingly difficult to maximize our return. As a result, we had to sell those assets at a steep discount, decreasing our overall earnings for REGF. Though we could not achieve the return for REGF we had hoped for, we commend our team for their hard work, persistence, and creativity to make sure our investors’ principal was protected during these unprecedented times. To help, the management team at Stonecrest considerably reduced their management fee as well. We also want to thank all our investors for their faith and trust in our abilities and look forward to continuing the relationship.