THE SOCOTRA OPPORTUNITY FUND...Socotra Opportunity Fund is designed to take advantage of slightly higher risk investments than the more conservative Socotra Fund. This higher risk

THE SOCOTRA OPPORTUNITY FUND

2208 29th St. Suite 100, Sacramento, CA 95817 | (855) 889 - 7626

SOCOTRA OPPORTUNITY FUNDOfficial Document - Statistics & Summaries

2208 29th St. Suite 100Sacramento, CA 95817

(855) 889 - 7626

he Socotra Opportunity Fund, LLC focuses on capital appreciation and cash flow, primarily through performing and nonperforming first deeds of trust on properties with a significant equity hedge. Structured much like a mutual fund, funds are invested collectively in a portfolio of private money loans, diversified

across numerous locations, property types, and borrowers. In select cases, the Opportunity Fund considers equity and second deeds of trust if there is a significant opportunity relative to risk.

Targeted investment opportunities include stabilizing commercial real estate property, financing fix-and-flip residential projects, providing funding for rapid escrow closures, and cash-outs for business needs. The Socotra Opportunity Fund is designed to take advantage of slightly higher risk investments than the more conservative Socotra Fund. This higher risk tolerance delivers a correspondingly yield target of approximately 9-10%, compared to the Socotra Fund’s annual yield of 8-9%.

Since its inception, the Socotra Opportunity Fund has distributed cash flow every month, due in large part to a careful balancing of long- and short-term goals. Capital appreciation is the Fund’s long-term goal, while the near-term goal in this economic cycle is to maintain the Fund’s yield target of 10%, while maintaining an LTV target of <50%. Within the next 36 months, at the beginning of the next anticipated market cycle, the Fund is expected to outperform the market and take advantage of premium

opportunities, purchasing nonperforming notes and properties on the courthouse steps.

ABOUT THE FUND

T



(855) 889 - 7626

MEMBER EQUITY, Beginning of Year

MORTGAGE & FEE INCOME

SERVICING FEES

PROFIT PARTICIPATION FEES

ADMINISTRATIVE & MANAGEMENT FEES

OTHER FEES & TAXES

PROVISION FOR LOAN LOSS

OTHER INCOME

NET INCOME

MEMBER CONTRIBUTIONS

MEMBER WITHDRAWALS

MEMBER EQUITY, End of Year

MEMBER INVESTMENT ANNUAL YIELD

$1,492

$418

$42

--

--

$11

$68

$59

$357

$3,244

-$101

$4,992

10.7%

AUDITED INCOME STATEMENT & MEMBER EQUITY

$4,992

$645

$67

--

$35

$05

$40

$24

$521

$1,907

-$369

$7,051

9.2%

$7,051

$1,089

$100

$110

$73

$06

-$04

-$76

$729

-$2,907

-$596

$10,090

9.1%

$10,090

$1,514

$149

$217

$75

$05

$40

-$100

$928

-$5,000

-$1,050

$14,968

9.3%

$707

$3,895

-$70

$460

$4,992

--

$4,992

$24

$6,595

-$110

$553

$7,062

$11

$7,051

CASH

NOTES RECEIVABLE

PROVISION FOR BAD NOTES

OTHER ASSETS

TOTAL ASSETS

TOTAL LIABILITIES

EQUITY

AUDITED BALANCE SHEET

$500

$14,891

-$170

--

$15,221

$253

$14,968

YEAR END BALANCE SHEET ($K) 2016 2017 2018 2019 (FCST)

CHANGE IN MEMBER EQUITY & FUND INCOME ($K) 2016 2017 2018 2019 (FCST)

$674

$9,419

-$161

$304

$10,237

$146

$10,090

as of December 31, 2018




(855) 889 - 7626

esidential loans are primarily comprised of single family residences, including duplexes, triplexes, and quadplexes, while commercial loans are a blend of mixed use, multi-tenant, and industrial buildings. The Opportunity Fund’s

managers monitor and advance all property taxes and insurance policies on the portfolio of loans. To ensure the security of the Fund’s investors, the Fund requires the use of independent third party appraisals to determine property values, in addition to underwriting each borrower’s desired use of funds.

These opportunities are all originated in-house using traditional sales tools, including driving markets, meeting industry affiliates, and traditional cold-calling techniques. We have spent more than 10 years cultivating relationships with brokers, agents, and other local real estate experts, building a reputation as a lender that performs consistently. These efforts have made Socotra Capital the premier private lender, allowing the firm exclusive access to time sensitive deal flow that generates increased yields for our investors.

The firm is actively looking to grow the Fund’s capital structure in anticipation of a forthcoming credit crunch and compressed asset prices. The Fund intends to take advantage of one-time opportunities that may arise due to other lenders having too much exposure.

ABOUT THE LOANS

RLEGAL DISCLOSURE

he performance quoted represents past performance and does not guarantee future results.

Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted, and numbers may reflect small variances due to rounding. Standardized performance and performance data current to the most recent month end may be found in the Performance section.

T

SOCOTRA OPPORTUNITY FUND: Monthly Investor Annual Equivalent Yield

2016

2017

2018

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

10.3%

9.4%

7.7%

10.4%

9.4%

7.4%

10.4%

9.4%

8.4%

10.0%

9.4%

8.7%

10.0%

9.4%

8.3%

10.0%

9.4%

8.2%

10.1%

9.0%

11.3%

10.1%

9.0%

11.3%

10.1%

7.8%

8.6%

10.2%

8.5%

8.7%

10.2%

8.0%

9.0%

10.2%

7.4%

9.0%

Average Yield—Income*:2016 - 10.2% | 2017 - 8.8% | 2018 - 8.7%Average Yield—Reinvest*:2016 - 10.7% | 2017 - 9.2% | 2018 - 9.1%

*as of December 31, 2018



(855) 889 - 7626

PORTFOLIO BY MATURITY DATE:

The Opportunity Fund is consistently searching for value investment opportunities with forward-thinking strategies. The Socotra Opportunity Fund accomplishes this with a portfolio of loans with a distributed range of maturation dates, but places a greater emphasis on the longer term than the Socotra Fund. Currently, 50.6% of existing loans will mature in 2019, and 24.5% in 2020. The remaining 24.9% will mature in 2021 or thereafter.

50.6%

24.5% 24.9%

% o

f Inv

estm

ents

PORTFOLIO BY ASSET TYPE (COM, RES, LAND):

The Socotra Opportunity Fund is composed of loans on a variety of asset types, hedging against full exposure to market changes within a particular region or asset type. 57% of funds are invested in loans on residential properties, while another 43% have been used to make loans on commercial real estate. No loans were applied to undeveloped land.

57%

43%

0%

Single Family Residential

Commercial Real Estate

Land





(855) 889 - 7626

ounded in 2007, Socotra manages over $150 million in assets, specializing in business purpose real estate loans. All loan documents are prepared by Socotra Capital, with all loans serviced in-house.

To ensure proper due diligence and to protect the interests of the firm’s investors, Socotra Capital uses independent escrow and title companies, as well as independent appraisers and environmental specialists.

Socotra Capital has successfully funded more than 1,000 loans, producing average yields of more than 8.5% to their clients.

ABOUT THE FIRM

F

LOAN TO VALUE RATIO (LTV BY ASSET TYPE & AGGREGATE):

The Socotra Opportunity Fund invests in a range of property types, including residential, commercial, multi-family, and undeveloped land. The average LTV of our single family residential investments is currently 50.35%, while commercial averages 52.14% LTV.

52.14% 50.35%

% o

f Inv

estm

ents

89.9%LOANS CURRENT

51.1%

8.7%

PORTFOLIOLOAN-TO-VALUE

2018 YIELD - INCOME

9.1%2018 YIELD -

REINVEST




(855) 889 - 7626

he Opportunity Fund requires a minimum investment of $25,000 and an initial lockup period of 12 months. The performance quoted represents past performance

and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted, and numbers may reflect small variances due to rounding.

DISCLOSURE & LIQUIDITY

T39 Senior Loans, 1 Years

35 Loans Current

3 Loans Delinquent at 91+ Days, 1 Non-Performing Loan Acquired, 1 REO

1 Foreclosure in Trailing 12 Months

SOCOTRA CAPITAL GOALS

iShares Barclays MBS Bond Fund - MBB

iShares Commercial Mortgage Backed Securities – CMBS

iShares Core US REIT - USRT

Vanguard Mortgage Backed Securities – VMBS

Vanguard REIT Index Fund – VGSIX

The Opportunity Fund

FIXED INCOME BENCHMARKS END OF 2018

BENCHMARK 1 YEAR 2 YEAR 3 YEAR

0.8%

0.6%

-4.6%

0.9%

-6.1%

9.1%

1.5%

2.2%

2.8%

1.5%

2.2%

9.6%

2.2%

3.8%

6.7%

1.9%

6.4%

9.7%

One of the most attractive features of the Opportunity Fund is that it is designed to generate higher annual yield than most traditional funds and securities, while also providing consistency and security in the long-term. Key comparisons to consider include the Vanguard High-Yield Corporate Fund, which generates a slightly higher yield in the first year, but falls to under 6% annual yield after 3 years, and the Vanguard REIT Index Fund (VGSIX), which has trailed the Socotra Fund during the last 3 years.


2208 29th St. Suite 100, Sacramento, CA 95817 | (855) 889 - 7626

FIXED INCOME SECURED BY REAL ESTATE

Documents

THE SOCOTRA OPPORTUNITY FUND...Socotra Opportunity Fund is designed to take advantage of slightly higher risk investments than the more conservative Socotra Fund. This higher risk