Real Estate Debt Fund Investing

Invest in private first position loans to single-family home builders and investors throughout the Pacific Northwest.

Learn More About Investing

Welcome to Truline Capital Fund II

Welcome to Trueline Capital Fund II, a single-family real estate debt fund for accredited investors. Fund II is an asset-based construction debt fund providing investors diversified access to an actively managed portfolio of residential construction loans throughout the Pacific Northwest. This evergreen fund has grown year-over-year and we are eager to share with you an overview of our Fund, our strategies, and specifically how Fund II investors have earned an 8.87% annual cash-on-cash yield since inception. The Fund is designed to generate active income and distributes an 8% annual preferred return each month and quarterly profit distribution.

Offering Size

$50,000,000

Minimum Investment

$25,000

Unit Value

$1,000

Capitalization

$19,250,000

Fundraising Period

Evergreen

Portfolio Size

$32,300,000

Minumum Hold Time

2 Years

Projected Returns

8%-10%

Over the last 18 years, the management team at Trueline Capital has worked in originating and servicing short-term construction loans and have personally underwritten, managed, and financed over 1,300 projects. Having cultivated invaluable relationships with land-owners, builders, and capital providers, this is our fourth fund in the space. Trueline Capital was launched in 2014 to focus on building a sustainable lending platform to navigate the tides of the modern-day real estate market and continues to produce on these guidelines today. Fund II is structured to benefit from the unique aspects of construction loans.

Why Invest in Construction Loans?

  • High-yield
    Residential construction loans generate a reliable high-yield income return for investors.
  • Limited Exposure
    Construction loans are short term, 6-9 months, limiting exposure to market cycles and interest rates.
  • SECURED BY REAL ESTATE
    All loans are secured by a lien on the underlying real property with a conservative loan to value ratio.
  • DIVERSIFICATION
    The Fund is structured to diversify originations and loans across builders, submarkets, and regions diluting regional and even single asset risk.

Portfolio Overview

The Fund is focused on a few major Pacific Northwest (PNW) metropolitan areas consisting of the greater Puget Sound, the greater Portland metropolitan area, and Central Oregon. The PNW housing market is one of the strongest in the country. Nationally, Zillow ranked Seattle as the #3 hottest housing market and Portland shortly follows, ranking at #9. Bend, Oregon has also seen a huge real estate spike with an increase in the average list price of over 48% over the last 5 years. Diversified across this portfolio, we have strong confidence in where this market is headed.

We believe the market fundamentals in this asset class are very strong. We are excited to invite you to join over 150 investors who participate in our premier construction debt fund that features a high-yield income investment in the form of preferred equity, backed by a diversified pool of real estate collateral.

Annualized IRR

8.87%*

Preferred Return

8%

(Distributed Monthly)

Profit Split Above Pref

Quarterly

(50.0% Investors, 50% Manager)

Distribution Commencement

Month 1

(After the First Full Month)

Management Fee

1%

Loan Servicing Fee

1.5%

Property Type

Residential

Total Projects Funded

134

View Full Investment Offering
*Reflects annualized historical returns since the Fund’s inception (2/1/2016) through 6/30/2019, Fund returns depend on many factors and market conditions and historical results may not be indicative of future returns. All investments contain risk.

Key Deal Points

Evergreen Fund

The Fund operates as an “Evergreen” fund meaning that investors can invest at any time and may request a redemption of their investment after a 2-year lockup.

Current Monthly Income

The Fund generates monthly income through fees and interest and distributes an 8% annual preferred return every month. Additional profit distributions are returned to investors quarterly. Fund II’s annualized return since inception is 8.87%.

Focus on Capital Preservation

All loans are secured by a deed of trust on the underlying real property. Loans are made at conservative loan-to-value ratios to provide protection in a real estate market correction. The Fund can foreclose and liquidate properties if necessary, to obtain repayment of the loan.

Strong Pacific Northwest (PNW) Real Estate Market

The Fund is focused on a few major (PNW) metropolitan areas consisting of the greater Puget Sound, the greater Portland metropolitan area, and Central Oregon. The PNW housing market is one of the strongest in the country.

Read the Business Plan

Historic Fund Returns & Track Record

Trueline Capital Fund I was restructured into Trueline Capital Fund II in February 2016 to take advantage of a more scalable fund structure. We have averaged investor return of 8.87% since the inception of Fund II.

- Trueline Capital Fund II

Fund Projects

The Fund originates construction debt that is secured by a first-position deed of trust on a diversified portfolio of assets located across the Pacific Northwest.

  • Residential Construction Loan
    Promissory notes executed in escrow.
  • Short-term
    Loans mature and pay off in 12 months on average but could go longer if the project’s size and structure require it.
  • First-position Deed of Trust
    Notes are backed by real estate at attractive LTV ratios.
  • Origination Fee & Interest Income
    The Fund generates revenue from fees and interest income. Interest on loans is charged on the Gross Loan Amount regardless of how much of the funds have been advanced. Funds are advanced monthly on strict draw procedures to reimburse builders for work completed.

Watch Our Investor Presentation

Ryan Andrews, Director of Capital Markets and Investor Relations, takes potential investors through Trueline Capital Fund II’s investment strategy, fund returns to investors, and investment terms.

Access Our PPM

Sign Up for the Q2 Investor Call

July 18th, 2018 at 1:00 PM PDT



Investor Webinar Computer

How We Pick Projects

TRUELINE CAPITAL begins underwriting by assessing a homebuilder’s track record. This includes each builder’s past experience managing projects with a keen eye on time-to-completion and budget.

TRUELINE CAPITAL underwrites based on quantitative and qualitative factors including product relevance in the market, price point, design, lot location, sale-ability, quality of materials. Strict loan-to-value (LTV) standards are maintained with values being based on a fully built certified appraisal.

TRUELINE CAPITAL reviews several criteria in the subject property’s sub-market including standing inventory for sale within subject property’s price point, absorption rate, permit volume, and additional relevant data indicators.

Learn More About Fund II

Lending Criteria & Guidelines

Short term construction loans are the company’s primary investment and are expected to make up a substantial portion of the company’s assets. These types of loans are a significant source of funding for professional real estate developers/builders who wish to acquire and build residential housing units.

The following is a general summary of the parameters and underwriting guidelines the Manager expects to utilize when making decisions to originate and acquire Fund Assets.

Loan Types

The company’s loans are anticipated to be for the purpose of business and investment. These loans can be for the construction of Single-Family or Multi-Family Residences, Short-Term purchases, Fix-and-Flip (Rehabilitation) loans, Rental Property purchase and seasoning. Loan funds for development and construction are typically held in construction reserve and disbursed according to a line item disbursement schedule. From time to time the company may make other business purpose loans to facilitate the company’s and customers’ objectives. The company does not plan to make any consumer purpose loans.

Loans may also be made to businesses or investors helping them to achieve strategic business investment goals to acquire, season, or renovate an existing structure. To control the quality of the collateral given to secure the Mortgage Loans, the Manager expects to utilize the following guidelines and procedures:

  1. All loans must be secured by real property.
  2. The security instrument (typically a Deed of Trust) for each loan must be recorded with the company named in first position in the office of the county auditor where the real property is located.
  3. A lender’s policy of title insurance is required in an amount equal to the face amount of the Mortgage Loan.
  4. Fire and hazard insurance is required on all improved property.
  5. The company must be named as an insured on all insurance policies.

Collateral

Loans are to be secured by real property. Further security may be provided by personal guaranties, additional real property collateral or the borrower’s additional liquid assets. The type of property that will likely secure most of the company’s loans will be 1-4 family detached homes and townhomes. The typical single-family project is anticipated to be a new house on a developed building lot in a residential zone. Currently, the primary target home is in the lower to mid-range price point for single-family new construction. The company does not plan to finance high-end homes but may originate, underwrite and close them on a case-by-case basis. The company does not currently target multifamily apartment buildings, commercial or condos but may originate, underwrite, and close them on a case-by-case basis.

Asset Valuation

At its core, Trueline Capital makes asset-based Mortgage Loans. The decision to lend is primarily based on the equity and value of the property being posted as collateral, versus on the borrower’s credit. The company typically requires, in connection with any such Mortgage Loan, a written opinion of value, typically an appraisal from a qualified real estate appraiser located in the same area as the subject real estate. The importance of an accurate and thorough appraisal report is foremost to the company and the loan to value standards apply to properties where existing buildings (if any) are in average or better condition, typical for a given market area, and located where sales activity and occupancy levels allow reliable market value estimates.

The company believes it has built an effective program for collateral (property) evaluations. The Manager sets forth minimum guidelines internally and are responsible for developing their own policies and procedures for evaluations that are commensurate with the well-being of the company.

Loan Origination

A large portion of the loans originated by the company will likely come from development opportunities sourced by the Manager via three different marketing channels: 1) real estate agents and brokers 2) mortgage banks and brokers and 3) home builders directly. The Manager has created a referral network in the company’s primary lending markets area by building upon and extending, the relationships in these existing channels. The referral network and the Manager’s relationships within the primary market area are expected to be A KEY competitive advantage for the company.

Loan Approval

Approving real estate loans for construction, rehabilitation and acquisition and development (A&D) is generally a less automated process than the approval of conventional home loans. It requires considerable knowledge of the builder, the local real estate market, and the various risks associated with this type of lending. The company utilizes established guidelines including the project size or loan amount, the location, the appraisal results, the experience and financial strength of the builder, the marketability of the project, and the current economic conditions in determining whether or not it will approve a construction loan.

One of the primary considerations is the loan-to-value ratio (LTV) and loan-to-after-repair-value (LTARV). The company intends to typically limit the LTARV ratio to 65% or less, and up to 75% LTV on properties without a construction reserve. Approved loans may contain one or more characteristics outside of the company’s general written guidelines if the Manager concludes that the overall risk of the loan is acceptable to the company.

Loan Documentation

For each loan, the company creates a loan file containing the documentation that the company deems necessary to underwrite and secure the loan. The typical loan file includes a promissory note, deed of trust, loan agreement, assignment of project agreements, environmental indemnity, personal guaranty, title insurance policy, opinion of value, evidence of hazard insurance and other documents deemed necessary by the company. Each Loan agreement has, as one of its terms, a date by which the Loan must be paid in full. In its discretion, the company may renew or extend the Loan beyond that date at the request of the borrower. A renewal or extension request requires a loan file and payment history review and may require a new appraisal. The payment of an extension fee and/or modification of loan terms may also be required.

Credit Considerations

The borrower’s credit report and repayment ability are also analyzed but at a less stringent level than conventional mortgage lenders. The company believes that this does not create an unacceptable risk because the company requires more collateral than most lenders and borrower defaults will be addressed more aggressively. The company typically maintains a separate credit file for each borrower that is updated periodically and with each loan request. A credit file may include a financial statement, recent tax returns, credit report, entity documentation, builder application and contractor information, some of which may not be available or practical in every case. Along with each loan request, the Manager on behalf of the company attempts to evaluate the borrower’s experience, financial strength, credit history, integrity and investment level in the company.

Servicing

The company plans to service all loans in its portfolio and has established written policies and procedures for loan set-up, payments, payoffs, insurance tracking, construction draws, delinquencies, assignments, and the general ledger balance. Draw requests from the contractor are typically submitted on a monthly basis. Prior to funding, the company requires a third-party construction inspection to be completed certifying that the work associated with the draw is complete. Lien releases from all major subcontractors performing labor, services or supplying materials for the project are required as well.

Risk-Management

Trueline Capital manages risk carefully across several aspects of its business.

  • Conservative Loan-to-value: Trueline Capital originates loans at loan to value ratios (typically 65% or less) that protect the principal balance of the loan from a market correction.

  • Title Protection: Trueline Capital records a Deed of Trust on title at the county with the ability to proceed into foreclosure if the loan defaults. Trueline Capital collects lien releases from subcontractors throughout the project in order to protect the Fund’s position on title from potential liens.

  • Underwriting: Trueline Capital underwrites across three distinct aspects: the asset, the borrower/operator, and the credit of the guarantor. This process ensures the Fund accesses the highest quality projects and borrowers while filtering out sub-optimal operators.

  • Short-term Loans: Construction loans are typically originated within days of ‘breaking ground’ and starting on construction and last for 8-12 months. The short-term nature of these loans means the Manager has an opportunity to exit a project and make a new investment decision as markets evolve. The Fund is not locked into long-term loan exposure.

  • Conservative Leverage: The Fund employs a small percentage of commercial leverage in the form of lines of credit in order to optimize the management of cash flows. Total commercial leverage remains below 25% of the Fund’s capital. Low levels of leverage reduce the risk of magnified investor losses in a distressed market.

Fund Information, Reporting, & Fees

FUND STRUCTURE

Ownership

The Fund will be owned by accredited investors purchasing equity interests or membership units in the Fund (“Members”). Members will own 100% of the Fund, each in a percentage equal to their outstanding Units divided by the total Units outstanding.

Fund Income

The Fund generates income from interest and fees charged on originating and servicing residential construction and short term ‘bridge’ loans. The Fund receives 100% of all interest income on loans in the portfolio as well as a 1-point origination fee for each loan originated in the fund. The interest yield on the underlying loans ranges from 8-15%. The interest rates combined with origination fees and extension fees generate an overall fund return that covers expenses, the preferred investor return, and generates further profits when available.

Management

The Manager of the Fund is Trueline Services, LLC, an Oregon limited liability company (the “Manager” or “TS”). The principal is Chris Maskill. All identification of property, due diligence, and underwriting of Assets for the Fund will be done by the Manager for the benefit of the Fund.

Trueline Services was founded in 2014 and has originated, managed, and serviced over $100,000,000 of construction loans. Trueline Services currently consists of an operating team of six and is headquartered in Bend, Oregon.

Third-Party Fund Administration

The Manager has engaged Opus Fund Management, an experienced fund administrator to provide the Fund with professional administration in the areas of financial statement preparation, investor subscriptions and redemptions, and other back-office administration functions. The cost of these services will be a Fund expense.

REPORTING

Annual Audit

The Fund has engaged Price Fronk & Co., a CPA firm, to perform an annual audit on the Fund. The first year of the audit was 2017. The audit is distributed to Fund investors in March each year, previous year’s audits are available to prospective investors upon request.

Quarterly Summary

The Manager distributes a quarterly investor letter providing a narrative review of the quarter and forecast for future quarters and statistics on the Fund portfolio, the underlying loans, and the individual projects. The Manager also hosts investor calls to share financials and updates with investors as well as a Q&A time for investors to ask questions.

Monthly Statements

The Fund sends out statements each month showing capital balances and distributions for each investor for the current year-to-date.

FUND FEES

Annual Audit

The Fund has engaged Price Fronk & Co., a CPA firm, to perform an annual audit on the Fund. The first year of the audit was 2017. The audit is distributed to Fund investors in March each year, previous year’s audits are available to prospective investors upon request.

Quarterly Summary

The Manager distributes a quarterly investor letter providing a narrative review of the quarter and forecast for future quarters and statistics on the Fund portfolio, the underlying loans, and the individual projects. The Manager also hosts investor calls to share financials and updates with investors as well as a Q&A time for investors to ask questions.

Monthly Statements

The Fund sends out statements each month showing capital balances and distributions for each investor for the current year-to-date.

THE SPONSOR

Trueline Capital, a real estate debt fund, is a leading provider of residential construction finance throughout the Pacific Northwest. The company’s leadership has spent over 17 years in the ground-up residential finance markets and has underwritten over 1,300 projects. Based in Bend, Oregon, Trueline Capital manages a portfolio of projects across Puget Sound, metropolitan Portland, Central Oregon, and other regional markets in Oregon and Washington.

Trueline Capital relies on their expertise in residential construction to work with best-in-class local and regional homebuilders to bring unique and profitable infill projects to the market. They seek to mitigate the risk through conservative underwriting of both the property and the operator and close communication throughout the construction process.

Chris Maskill – CEO/President

Chris Maskill, 50, is a committed and proven entrepreneur who brings a wealth of sales, marketing, management, and leadership skills to the organization. Mr. Maskill was the co-founder and Chief Executive of Builders Capital, a Seattle based home-builder finance company which he launched in 2002. Under his leadership, Builders Capital originated, managed and financed over $300.0 million in single-family residential property throughout the Pacific Northwest. Mr. Maskill was the fund sponsor and well as the fund manager from 2002 until 2012 during which time he successfully navigated the performance and repayment of over $45.0 million in institutional debt during the financial crises as well as the disposition of over 250 single-family projects in four states across the Pacific Northwest.

During 2009, Mr. Maskill launched his second construction debt fund and successfully reoriented Builders Capital to meet the needs of the home builder for the new economy. In 2012, Chris, his wife Sally and their four children decided to relocate their family to Bend, Oregon, whereby Chris sold his managing interest to his then business partner and former board member. Upon the expiration of a non-competition agreement, Mr. Maskill created and launched Trueline Capital to re-address the significant demand for non-traditional lenders among developers while leveraging key JOBS Act legislation and the rise of innovation in the FinTech sector throughout the digital economy. During the first year of operation, Trueline Capital has earned the respect and trust of many builders throughout the states of Washington and Oregon and has successfully financed over 10MM in projects in preparing the operating company for scale and growth across the region.

Prior to the launch of Builders Capital, Mr. Maskill spent 10 years in the high-technology industry including his most significant role as co-founder and president of Activate, Inc. where he helped grow the business from two employees and zero customers in 1997 to 270 full-time employees and annual sales in excess of $20.0 million by 2001. Mr. Maskill was instrumental in effecting a sale of Activate, Inc. to CMGI for $65MM which resulted in a significant return to its equity investors. Over the last 10 years, Chris has invested tremendous amounts of his time and resources into a variety of community organizations including time spent as a volunteer board member at the YMCA of Greater Seattle, as School Board Chair of St. Joseph School (Seattle) and in his role Vistage member, the world’s largest CEO advisory organization where he continues to learn the nuances, agility and leadership skills that are required to successfully manage small business to medium-sized businesses from others.

Mr. Maskill is a graduate of the University of Washington, remains in excellent health, and continues to live in Bend, OR with his lovely wife Sally with whom he shares four incredible kids.

Kate O’Connor – Vice President, Operations

Ms. O’Connor joined Trueline Capital in January of 2019 to focus on strategic initiatives, business operations, and financial performance. She has ten years of executive business experience in technology, big pharma, and residential construction with Hayden Homes–one of the region’s largest privately-owned home-building companies.

Ms. O’Connor has spent the last seventeen years facilitating change within organizations to allow for operational efficiencies, increased profitability, and scalability in both turn-around and rapid growth environments across large and small businesses. In creating the opportunity for change, she has spent considerable time evaluating teams, business processes and related technology needed to drive business outcomes and overall company objectives.

Ms. O’Connor has a Business Administration degree from Southern Oregon University and a Graduate Certificate in Accounting from the University of Washington. She is a CPA and alumni of Deloitte, one of the country’s most respected and largest audit and consulting firms.

Outside of her professional pursuits, Ms. O’Connor works on the family farm growing saffron, raising chickens, gardening and supporting her daughter’s horsemanship activities.