I am not investing in the Tulsa Real Estate Fund – 3 Reasons Why

June 4, 2018

 

People from the African diaspora have been in search of a “Promised Land” - A corner of this place called Earth where Black people are free from genocide, slavery, human trafficking, drug epidemics, chemical testing, and gentrification.

 

God’s chosen people, the original Black Jews, where promised Canaan, the land of “milk and honey”. Dr. Martin Luther King, Jr. spoke of a promised land in his 1968 sermon, I’ve Been to the Mountaintop. Others have chosen a holy land rather than a promised land. At least once in their lifetime, devout Muslims will hajj to Mecca to commune with other believers and pay homage to God.

 

Over the last decade or so, more and more Black folks have found a new “unofficial” promised land – ATLANTA. Atlanta (tied with the DMV) ranks #1 in cities where African-Americans are prospering. With access to higher-wage jobs, your choice of historically Black colleges and universities, and entrepreneurs making 20% of its population, Atlanta is ideal for creating a land of hope and prosperity for Black and Brown people.

 

The Black community apparently also has a Moses to lead the people towards economic freedom. His name is Jay Morrison, CEO of the Tulsa Real Estate Fund located in Atlanta, Ga. Per the fund’s “About” page, the TREF is a $50 million-dollar Regulation A+ Tier 2 real estate crowdfund that finances urban redevelopment. Tier 2 of Regulation A is an SEC qualification that allows unaccredited investors to access real estate investment opportunities. Previously, to invest in a real estate fund, you needed to possess an annual income of $200,000, or $300,000 for joint income, for the last two years with expectation of earning the same or higher income as an accredited investor. 
 


Inspired by the historic Black Wall Street of Tulsa, Oklahoma, TREF was created for the “revitalization of urban communities and as a means for investors to own shares and equity in a portfolio of real estate assets that will combat gentrification.” The TREF began its initial public offering on June 1, 2018. Opening an investment account costs as little as $50 but the minimum investment is 10 shares, $500.

 

Being that I am rooting for everyone that is Black, upon learning about this opportunity, I was ready to invest like many others have already done. But unlike others who have invested, I am not moved by emotional speeches, aspiring power couples, Rolls Royces and mansions when it comes to my coins. I just need the facts.

 

I follow Jay Morrison on both Facebook and Instagram. He is a passionate orator who makes moving speeches focused solely on communities of color that have be redeveloped by “others” who do not look like us. Inhabitants of said communities are savagely displaced and worst, are not recipients of the new-found wealth from their old neighborhoods.

 

I have my reservations about investing in the Tulsa Real Estate Fund and here are my 3 reasons why:

 

1. You can't withdraw or sell your shares for 1 year.

 

Because this is not a typical IPO within a competitive market, the lock-out period for transferring shares or withdrawing your money is longer than the usual 90-180 days.

 

2. You also can not receive any information about investment properties prior to investing.

 

Upon viewing a promotional video on Facebook of Jay and his team, high-fiving each other outside of an elaborate mansion that smoothly transitions to Jay stepping out of a Rolls Royce, I immediately asked what happened to the message of revitalizing the Black community. The video announcing the date of the initial public offering did not translate into the mission to "improve the economic condition of Black people." It looked like a rap video or the opening to a Tyler Perry movie.

I would have preferred to see the investment property.

I watched a second Facebook live video, a walk-through of a Korean church that allegedly is to be purchased by the fund. The walk-through showed a sanctuary, a nursery, & meeting space that tripled as a kitchen (because there was a sink and range) and parking (since a white van was also visible).

 

The property didn't look as if it were worth more than $100,000 but Jay never stated the value of the property. He also didn't state if the property was commercial or residential. He didn't explain any of the zoning in the area, didn't say anything about the property the church is on or the surrounding area. I assume it would not remain a church but there was no mention of redevelopment plans.

 

When I asked, investors called me a hater (this is typical). The Fund did respond in the form of a comment to a post on my Facebook Fan Page and it reads as such:

 

Good morning, we apologize if your question hasn’t been answered, as you can imagine we are receiving an influx of questions and it’s quite difficult to answer every one as soon as they come. Also, as transparent as we are with live calls, live streams etc., there is information that can not be shared because until certain details are finalized or because of FCC regulations. Since the fund IPO doesn’t officially launch until June we can not receive any investments. When we launch those with investors account will be able to fund our account and have full access to the deal room the projects. If you’d like to direct your question to the executive team feel free to dial into Tulsa Talk Thursday tonight from 8pm - 12am 515-604-9995 pin 640076# or watch live on our FB or Instagram platforms.

 

They went on to say…

 

To clarify per the SEC we have not promised what the return will be. Partners in the fund will potentially receive an 8% preferred return on their investment as well as a 50% share of the profits from investments not just from one project please visit the website for an overview of the fund. And the property is a currently church yes, but as mentioned it is not staying a church. Fund partners will have access to that information in our deal room. Also, we can not go into detail about zoning, purchase price etc. on a live stream. You are welcome to dial into hear directly from the funds executive team tonight from 8pm EST to 12am. 515-604-9985 pin 640076# or you can watch on our FB live.

 

Yeahhhhh. I could be grateful anyone from TREF bothered to clarify but I am side-eyeing this response. They post a lot of motivation to "rebuild Black Wall Street" but no details and no substantial plans. I think it is suspect as hell that you have to first open an account before you are provided any information about assets the fund plans to acquire. Potential account holders are not given the opportunity to evaluate real estate purchases made by TREF beforehand. That is more than risk, it is simply blind faith.

 

3. The founders also made no investments of their own prior to creating the fund; they are gambling with other people's money.

 

Jay likes to repeat himself. His pitch is “we’re making history…”, “we’re the first…”, “TREF is 100% Black Owned and SEC ‘qualified.’” If history can tell us anything, we have witnessed many firsts have failed. Prior to becoming SEC qualified, the fund had zero assets and $15,350 in liabilities. Under the law, SEC is only required to ensure that the Company tells investors everything but so far, I have more questions that answers like if Jay and his team believe so heavily in buying back the Black community, where is the initial financial investment from the founder and his team?  

I said I had 3 reasons why I am not investing but since we are talking about “teams”, I will provide one last reason investing in the Tulsa Real Estate Fund issa no for me.

 

According to the SEC disclosure guidelines, TREF is required to provide a prospectus for the fund managers, provide details about other funds they manage, their experience, how they are to be compensated, potential conflicts, ownership of securities in the fund, etc. I am sure if asked they'd supply but revenue-generating participants should not have to ask. Again, when visiting the TREF website and clicking the hyperlinks of the team members, I am not satisfied with the bios provided. I am not confident the team members have the experience to manage a $50 million-dollar fund.

 

Per the Offering Circular provided by TREF, the funds own independent auditors Artesian CPA, LLC, has concerns: Our independent auditors included an explanatory paragraph in the report on our 2016 financial statements related to the uncertainty in our ability to continue as a going concern.

 

And...

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 2 to the financial statements, the Company has not yet commenced planned principal operations and has not generated revenues or profits since inception. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

 

 *Screenshot of the Tulsa Real Estate Fund's Offering Circular

 

The above listed has grieved my spirit since June 1. Dude talks a good game and I have no doubt in my mind that he has a resume of real estate investments he has made in the past. Unfortunately, none of his prior investments are listed on the website. No testimonials from previous business partners. No evidence of prior to success with any crowdfund.

 

*Photo Credit: bridgemi.com

 

Listen. I am for anything that is provides and evidence-based solution to ending gentrification in black neighborhoods that displaces people, eradicates redlining, prevents inhabitable and un-affordable housing that is unsafe, in communities that are over policed and taxed disproportionately. Something certainly has to give. I am not 100% sure the Tulsa Real Estate Fund is the answer, but I do admire the effort.

 

However, I suspect as the fund grows and properties are purchased, Jay Morrison will show the progress of the 1st project as well as a report of the ROI...if it is near the 8% mark, then at that time I will reconsider participating. I will check back in a year. Between now and then, invest wisely y’all.

 

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