Frequently Asked Questions

Do I need to be a veteran to invest?

No, this is not a requirement.  Most, but not all, of our investors are veterans.  The fund is run by veterans with a mission to increase the economic power of veterans and industry leading professionals.  We also like to use a portion of net proceeds to help veteran charities.  
 

What is an accredited investor? How do I know if I am one?
To be accredited, you would need to have a net worth of at least $1,000,000, excluding the value of your primary residence, OR have income of at least $200,000 each year for the last two years (or $300,000 combined income with your spouse).

 

What is the return target?  
Each fund has a target, 6% current annual yield that is paid (or added to capital account) quarterly.  Each fund also has an additional preferred return component of 2% annually, paid upon fund wrap-up and liquidation of investors.  We have a separate fund (BMG Yield Fund 2020) for high net worth individuals/institutional investors (minimum investment $1.0M), which has an additional return component.  Please contact us to receive more information if interested in the BMG Yield Fund.  

 

Can I use money from my IRA/ 401k/ TSP (will it stay tax deferred)? 
Yes, absolutely. The key is getting you set-up with an account that has a self-directed option, and then it’s just a matter of directing that investment amount to one of the BMG funds.  We typically use an unaffiliated third-party called Entrust to help with that process.  

 

By using a third-party administrator, you never take possession of those funds and they maintain their tax deferred status through the transfer and as long as they stay in that account with BMG.  You will still receive quarterly statements and see how your earnings are accumulating and the impact of annual compounding
 

Can I reinvest my quarterly yield payments?
Yes, you can choose to either take payment (check or ACH) of your quarterly yield earnings or reinvest and compound them if you wish.  Compounding occurs annually, not quarterly – but you still receive a quarterly statement showing the yield contribution each quarter to your capital account.   

 

What is BMG’s track record?  
We now have over five- years of consistent performance.  We have never missed, nor altered, a quarterly coupon payment for any investor.  One of our largest sources of investor capital is unsolicited re-investment by existing investors.  They are obviously happy with the predictability of their return and how the fund is run. 

 

How has BMG been impacted by the COVID-19 crisis?  
All our purchased assets are performing as expected or even better (as evidenced by early renewals). This is because we only acquire defensive assets, like discount dollar stores, which means they perform well even with an economic downturn.  Investor principal and returns were both maintained throughout the crisis.

 

What are the risks?  
As with any investment, there are risks, but our fund is intentionally a very conservative, low risk investment.  The risk factors are covered very thoroughly in the Private Placement Memorandum (PPM), but some of the common ones are: risk of store closure, interest rate risk, and concentration risk. 

 

What is the expected life of the Funds?
The target duration for each Fund is seven years from completion of the capital raise.  We accept new investors and purchase properties on a rolling basis until we become fully subscribed.  This offers a benefit to our investors as they begin to earn returns from the first day of their investment and do not have to reserve money until a capital call, creating a drag on return.  

 

What happens when a fund “ends”?
At the end of the fund life, investors can expect to receive their original investment principal as well as any outstanding preferred return due.  We cannot promise but will most-likely have new funds available for re-investment at that time.  If you invested retirement funds from an IRA/401K account, the principal and accumulated returns will be returned to your self-directed account and you can keep them there or re-direct to a new investment (possibly a new BMG fund).

 

What type of assets do the funds acquire?
Each BMG fund buys the same type of single-tenant commercial property – properties we call “defensive” in nature, meaning they will perform just as well, and arguably even better, with a downturn in the economy, i.e. recession, COVID-19 crisis, etc.  Most of our properties are in the discount dollar segment, i.e. Dollar General & Family Dollar, and located in rural communities.  These locations are often the only means of essential goods for their communities and are a vital resource, making them very secure properties to own for an extended period.  

 

Where are the purchased properties located?
All the properties in the current BMG portfolio are east of the Mississippi, and concentrated primarily in the Southeast.  

 

What happens if a location you own gets closed (lease not renewed)?  
If this does happen, we will initiate our Plan B strategy for the given property, which is to seek a replacement tenant, or to sell the land and building outright.  As long as the lease is in effect, the L/L has to pay rent even if they decide to close a store.  This usually gives us several months of time to execute our Plan B strategy.

 

What is the reason you buy older stores instead of brand-new stores?  
A very important objective with our diligence is to ensure we are buying assets with a strong likelihood of continued performance.  One of the absolute best ways to ensure this is a successful track record. Previous lease renewals are a tremendous indication of success for that specific location; whereas – brand new units are still not fully proven, and they may or may not make it.  Ironically – and to our benefit – the market overvalues the new locations and undervalues the older, proven locations – this fits our strategy of value purchasing.   

 

What happens if the real estate market crashes?
We first want to emphasize the defensive nature of the assets that we acquire, capable of withstanding swings in the real estate market, even potentially a crash.  A lot of due diligence goes into each asset we purchase to ensure it meets these criteria.  Speaking specifically to the real estate market, we are not as concerned about underlying property values as you might think.  What is most important to us is the strength of performance of the specific location and the strength of the corporation guarantying that lease and rental stream.  

 

It is helpful to understand that a lease is a strong contractual obligation, and the corporation is required to pay us the same rent regardless of real estate market fluctuations or overall economic cycles.  It is from the collection of rent that we pay investor returns, bank notes and the costs of running the fund – nothing to do at all with the underlying property value.  And again, by focusing on defensive assets – the corporation itself should be doing just as well, and possibly even better, in a down-cycle. 
 

How are yield payment (coupons) taxed?  What is my tax treatment at year-end?  
Our funds are LLC’s and taxed as a partnership.  The LLC files a Form 1065 Partnership Return each year which shows the income/loss for the entity.  This entity filing results in an allocation of the income/loss to each investor via a form K-1. You will need to consult a tax professional for guidance on how this would impact your personal taxes.

 

It is important to note that your quarterly yield payments are not standalone taxable events.  This is considered a distribution to you as a member, not an interest payment, and you do not receive a 1099 interested statement each year.  
 

How much leverage do you use? Who guarantees bank debt?
We currently use about 70% debt and 30% equity capital from investors like you.  We feel this is an appropriate and healthy balance at this time.  We may change our capital structure in future funds depending on a multitude of variables.  For example, as the funds grow, we will have access to portfolio lenders, or we may seek institutional equity.  

 

Investors are not required to guaranty any of the fund debt.  The managing partners personally guaranty all the fund debt, which is a huge demonstration of their commitment and very different in terms of “skin in the game” vs. other funds you may consider.  
 

What information rights do investors have?
We strongly believe in open communication with our investors.  At any point in time, you can pick-up the phone and call any of the fund managers or send us an e-mail and you will get a rapid response.   You are also welcomed to visit our Richmond office at your convenience – we have an open-door policy.

 

You will receive various, regular communications.  Specifically, you can anticipate the following:  quarterly statements showing the status of your investment, semi-annual investor reports and occasional e-mail updates regarding acquired properties or other major news.   We also have a requirement to provide reviewed or audited financials on an annual basis.
 

Some funds state they can give me higher returns. Is there upside beyond the returns in the respective funds?
Investment decisions are all based on risk vs. reward.  We do not try to time market cycles.  We simply buy strong assets that can withstand multiple economic environments.  We take a more “slow and steady wins the race” approach.  Because of this, we can and have paid our investors as targeted.  This makes BMG a great place to park that portion of your portfolio that you have earmarked for a more conservative investment.

 

We would also emphasize that a high percentage of our investors choose to put more capital in our funds of their own initiative. When they see their “higher-risk” ventures getting hurt, vs. the consistent quarterly coupon payment that BMG funds pay without interruption, it motivates many to shift more capital to BMG.
 

How much are fund management fees? 
We would like to first emphasize that nothing we do will dilute the value of your investment.  Period.  Fund overheads are kept at a minimum, we run things “lean and mean” with an investor first mentality.  That said, we do have costs associated with running the fund and maintaining the properties, and utilize two fees to pay for these expenses:  

 

1.    We take a 2% acquisition fee when we close on a new property.  That gets allocated to the cost basis of the property at closing and has no impact to your capital basis or returns.
2.    We also have a property management fee of 0.375% quarterly.  That comes out of the rental income from the properties.  It has no impact to your capital basis or returns. In fact, it is even stated specifically in the PPM that this quarterly fee is subordinated to quarterly yield payments, something virtually unheard of with standard funds.

 

We don’t work with any brokers, so you will never see fees for commissions, and your principal will never be diluted for use in running the fund.  Your yield will always be based on your original investment amount, unless you decide you want to reinvest the quarterly yield, in which case the yield just gets added to your original principal basis.
 

Are there capital calls where I would be required to deposit more money?
No, there are no capital call requirements for any of our funds.  There are capital expenses beyond typical maintenance which arise from time to time, such as roof replacements, HVAC replacements, and parking lot resurfacing, but these are taken care of from capital reserves.  Our experience indicates that a 0.5% reserve of revenue per location covers all required capital expenses.  

 

What happens if I need my money back before the fund reaches maturity?
Our funds are based on patient, long hold investing.  In order to accomplish these stable and durable returns, capital must remain in the properties for a period of 5 to 7 years on average. So, our investors do not have redemption rights.  This means our funds are illiquid and you should not expect to have your initial investment returned to you until the fund life ends.  We can work with our investors on an emergency basis to sell their member interests to other investors.  This is not guaranteed to happen quickly, if at all, since no secondary market currently exists for our fund.    

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

CONTACT

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Tel. 804-644-4924

530 East Main Street, 
Richmond, VA 23219

contact@battlemonument.com

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© Battle Monument Partners, 2014. All rights reserved.

DISCLAIMER: This private organization is a non-federal entity and not an official activity of the United States Military Academy. It is not endorsed, recommended, or favored by the United States government. The views and opinions expressed by this organization do not necessarily state or reflect those of the United States Military Academy, Department of the Army, or Department of Defense.