“How does Stadia Capital Group differ from my financial advisor or broker?”
Stadia Capital Group is neither a financial advisor nor a brokerage firm. We are a private investment firm that efficiently deploys capital directly into investments where we can use our expertise to add value. This allows our clients to earn higher investment income. Our Income & Capital Preservation Fund provides investors with higher rates of return while maintaining stable principle valuations and preservation of capital. It is designed to serve as part of an overall investment portfolio, particularly as part of a fixed income strategy.
“What is the Stadia Capital Income & Capital Preservation Fund?”
The Income & Capital Preservation Fund was created to provide investors with predictable monthly income while focusing on capital preservation. The fund is a private placement fixed income offering with secured promissory notes structured under Regulation D, Rule 506c of the Securities Act. The fund aggregates capital and deploys these funds into strategic investments with the objective of providing higher yields while seeking capital preservation through stable principle valuations.
“How does the fund work?”
When you deposit funds at a financial institution such as a bank or credit union or purchase a bond or a CD, you are essentially lending your money to that institution at a stipulated rate. This rate of interest the financial institution has agreed to pay you is known as their cost of funds. In the case of demand deposits, such as checking and savings accounts, the financial institution knows that customers will withdraw only a percentage of these funds for living expenses and discretionary purchases.
Most of your money at the bank, especially in the case of retirees, remain on deposit at the financial institution. The Federal Reserve requires that banks maintain cash reserves to cover the amounts likely to be withdrawn by depositors on a regular basis. This reserve can change but typically averages 10%. The remainder of customer funds on deposit are available to provide business loans, personal loans, car loans, home equity lines of credit and home mortgages.
The difference between the rates the bank pays depositors and the amount charged to borrows is how financial institutions generate profits. As of this writing, the interest rate paid on checking accounts is currently in the range of .1% and deposits requiring a minimum investment of $25,000 for three years pays 1.4%.
The Stadia Capital Income & Capital Preservation Fund works by providing investors the opportunity to participate directly in a structured manner with stipulated terms while at the same time earning substantially higher yields. Like banks, the Income & Capital Preservation Fund provides short and midterm financing for business and real estate development projects and holds senior lien rights which offer the highest level of asset protection for investors while providing attractive returns.
“How does the fund differ from other investment opportunities?”
While marketable securities such as stocks, bonds, and REITs offer short-term liquidity, they also introduce risk to principle from market volatility. Mature investors seeking income usually don’t require this level of liquidity and prefer investments that provide steady income with an emphasis on capital preservation.
Traditionally, there is an inverse correlation between liquidity and return. The greater the liquidity, a money market account for example, the lower the rate of return. Inversely, the longer the time frame an investor is willing to commit to an investment, the greater the return. Historically, an investor could purchase a 10-year CD and earn respectable rates of return with little to no risk to the principle. Bonds are also a preferred vehicle for generating income while focusing on capital preservation. However, actions by the Federal Reserve and subsequent economic conditions have pushed the returns on all investments down to historic lows and the difference between the rate on short and long-term investments, also known as the yield curve, has narrowed or flattened.
Earning higher rates of return on invested capital to fund retirement has become much more difficult. Investments that emphasize capital preservation with minimal risk are likely to provide returns in the 2.5% to 3.5% range. The reality of these historically low rates has caused individuals and professional money managers alike to search for other investments that offer higher rates of return. In this search for yield, a significant portion of investable assets has moved into equities or shares of companies that provide income by distributing a portion of their profits in the form of dividend payments. Unfortunately, this global search for income has driven up the demand for these stocks, driving share prices of these firms to lofty levels.
For investors seeking income, the market risks associated with high priced dividend-paying stocks often exceed the benefits. Marketable securities offering returns in the 6%-8% are much more susceptible to market volatility. Market corrections are normal events and even a modest 10% correction could offset earnings and push the investment into negative territory. The Income & Capital Preservation Fund is designed to be held to maturity and not traded or listed. As such, it is not exposed to price volatility often created by traders, short sellers or an emotionally fickle investing public. The fund focuses on making wise investments with the goal of protecting capital and providing regular monthly income.
“How can the fund pay higher fixed rates of return and is my investment secure?”
Mature investors often prefer predictable income and capital preservation over reaching for capital gains and incurring extra risk. While it’s exciting to uncover the next home run investment, the reality is that for every Google or Facebook IPO that mints a crop of new millionaires, there are thousands of startups that do nothing more than burn through capital and shut down.
At Stadia Capital Group, we enjoy investment home runs like anyone else. However, we’re realists and prefer that probabilities be in our favor. When considering deploying capital into an investment, we require reliable evidence that the original capital is protected and that there is a clear exit strategy for the return of invested capital. Unlike funds that conduct their research and allocate capital into investments they believe will increase in value, we primarily deploy capital into investments where we can add value. This is the unique but significant difference. Combined with our affiliate businesses and cross-sector capabilities, we can generate profits at multiple points along the investment matrix.
Although we are not a bank, the investments in our Income & Capital Preservation Fund more closely represent the type of investments a traditional bank might hold in their investment portfolio. This includes loans for land acquisition, construction financing, real estate development and real estate redevelopment. The fund’s objective is to hold senior lien positions whenever possible. Unlike funds that invest in high tech startups or stocks whose valuations can fluctuate dramatically, the Stadia Capital Income & Capital Preservation Fund is backed by liens on real assets such as land and buildings. As properties are developed or improved, the value of the underlying asset increases, which increases the level of protection for invested capital.
“Who can participate?”
The Stadia Capital Income & Capital Preservation Fund is open to individuals, businesses and other investment funds, who meet the requirements of “Qualified Investor” or “Registered Investment Advisor” as defined by the SEC.
“How do I know if this investment right for me?”
While every individual is unique, investor objectives typically fall into one or more of the following categories. Capital preservation with income, growth and income, or growth. At either end of these common investment objectives are those who seek capital preservation as their highest priority or those looking for investments with unrealistic expectations for returns. Unfortunately, these strategies often accomplish the opposite effect and typically generate losses either through the impact of inflation or from very high-risk investments. The Stadia Capital Income & Capital Preservation Fund seeks to provide both capital preservation and income. These objectives are often consistent with the goals of mature investors who are no longer working and seek current income.
“What are the terms of the investment?”
The Income & Capital Preservation Fund currently provides up to an 8% annual yield on a 48-month maturity. Interest income is paid monthly via check or direct deposit with principle repaid at the end of the term. Investors can choose to receive their principle in full at the end of the term or reinvest the funds. Since the fund was designed to provide current income, we do not currently offer a reinvestment feature on earned income. The minimum investment, one share, is $25,000. The maximum investment for this offering is 400 shares, or $10,000,000. Shares are secured via promissory notes which are backed by senior lien rights on real properties.
“I would like to invest, but my funds are in an IRA. Can I participate?”
Yes. As a private placement, the Stadia Capital Income & Capital Preservation Fund is designed to be held to maturity and not traded on an exchange. To invest within an existing IRA will require establishing a self-directed IRA investment account. Stadia Capital Group works with IRA Services Trust Company in California when a self-directed IRA is required. Our staff can assist you with processing the necessary paperwork. Interest payments are paid directly to the self-directed IRA account. You can withdraw the funds following your IRA guidelines as directed by your tax professional.
“How often will I receive interest income payments?”
Interest income is paid monthly via check or direct deposit.
“Can I sell my investment or redeem a portion of the investment early?”
The Income & Capital Preservation Fund is designed to provide income and is intended to be held to maturity. However, after 12 months, you may submit a request form to conduct a transfer, sale, or a one-time redemption equivalent to 25% of the original investment amount. An administrative fee is charged for this service. The individuals participating in a transfer or sale will need to meet the requirements of “Qualified Investor.”
“What are the account fees and sales expenses?”
There is a one-time administrative account setup fee. However, there are no sales, broker commissions or management fees on your investment. The administration fee is paid out of earnings rather than principle. This approach means 100% of your investment goes to work earning interest for you.
“How do I get started?”
The best way to get started is to go to the get started tab or call (800) 893-6184.
“Can I apply for a business loan or venture funding?”
Not at this time. We are not licensed loan or mortgage brokers. We currently focus our efforts on our own investment projects.