Pelorus is an asset-based lender that provides secured term loans, through a private mortgage REIT to a special class of property owners with cannabis use tenants who cannot obtain traditional real estate loans due to the dislocation of the capital markets caused by Federal Regulations.
Pelorus launched the Pelorus Fund in 2018 as a low-cost (1% management fee) diversified strategy of secured notes collateralized by real estate properties with personal/corporate guarantees from the sponsors.
The cannabis portfolio since 2016 represents 34 transactions with 11 payoffs. Pelorus has deployed $70M in the cannabis lending sector since 2016 and since that time has become a leader in lending to commercial properties with cannabis tenants.
The Pelorus Fund is delivering “near equity-like returns” by focusing on providing loans secured by commercial properties and allowing for cannabis-use tenants; we are non-plant touching.
Dan is the CEO of Pelorus Equity Group and the Co-Managing of The Pelorus Fund. He has more than 33 years of extensive industry experience including operating, owning and managing several corporations, loan servicing entities, real estate developments and a real estate fund. Over his career, Dan has successfully underwritten and closed thousands of real estate transactions by raising capital for both debt and equity. His vast transactional experience is invaluable when underwriting complicated scenarios and structuring solution based terms to satisfy a broad spectrum of situations. Dan possesses a deep experience in risk mitigation and has expertly navigated adverse market conditions while maintaining a fully transparent and equitable upside for investors. His primary investment philosophy focuses on mitigating through disciplined underwriting practices developed over three decades and thousands of transactions.
Rob is the Co-Founding President of Pelorus Equity Group and Co-Manager of the Pelorus Fund (a cannabis-focused CRE mortgage REIT) with more than twenty years of experience in the real estate finance industry. Since the formation of Pelorus in 2010, he has raised more than $235,000,000 in secured real estate transactions. Rob’s primary role at Pelorus Equity Group is the development of strategic alliances with both private and institutional investors, the formation of equity partnerships, coordinating the company’s growth into new markets. Today Pelorus funds several million a month through the Pelorus Fund, syndications with family offices and other various debt and equity partnerships.
The illiquidity of capital in the cannabis lending market has created and opportunity with inverted risk to yield ratios that is only seen in very rare circumstances, often created by political or other market forces that last for shorter periods of time. This opportunity allows us to lend to bank quality sponsors and assets with near equity-like returns.
Additionally, we only lend in States in which Medicinal Cannabis has been approved, which offers our borrower's tenants the maximum safe harbor protections offer by the Rohrabacher–Blumenauer Amendment. This Amendment prohibits the Department of Justice from using federal funds to prevent states with medical cannabis regulations from implementing laws that authorize the use, distribution, possession or cultivation of medical cannabis.
We expect the Federal agencies to deconflict the federal agencies with regard to cannabis banking within the next 18 to 36 months. Once the IRS, DEA, FDIC, and other various three-letter agencies are deconflicted the market will become more normalized and our loans will be paid off by lower costs loans. However, our focus will remain the value-add bridge lender market, which we have always successfully completed against institutional banking. This is because we can lend on completed values/stabilized values, which banks must use the cost basis, and move through underwriting to closing in days as opposed to the weeks or months intakes the banks.
The Pelorus Fund is focused on providing lower leverage loans 50% to 60% LTV secured by commercial industrial/warehouse type properties and allows for cannabis-related business tenants.
The Fund Manager shares income with the Fund Members and has a targeted yield of 15%. The Fund operates under the Department of Real Estate and the Department of Business Oversight and is audited by Armanino each year.
Mortgage REIT structure qualifies for a 20% Federal tax savings on income distributed to the Fund Members and cleanses UBTI for Self-directed IRA investors.
We switched from quarterly distributions to monthly distributions with last month at a 14.875% to our investors.
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