Last week, we introduced you to Harvard Grace Capital and what intend to do. Today, we want to talk a little bit about the Harvard Grace Model. It’s a unique model as far as the investing community goes, and as far as investing products that are out there, in that we’re going to take investors’ capital and deploy that as equity into cash-flowing real estate deals, usually a property that can be repositioned. We will have that equity in there for 18 months to 3 years, at which time, we’ll refinance it and pull our capital back out, while maintaining that ownership interest in the property and still receiving capital. After we get our capital back out, we’re going to deploy that into another property, and so forth and so on, so that while we continue to get cash flows from these properties, every year the cash flow stack that we receive will go up and up and up, increasing the pie that investors will receive profits from.
Our offering is a 6.5% preferred stock. A 6.5% dividend you will receive every year on a quarterly basis, as well as a 30% participation in the net profits from all the properties that Harvard Grace Capital owns and controls. Each year as that pie gets bigger, you’ll get the 6.5% on your original investment, plus you’ll get that 30% participation in that ever-growing pie of net operating income, which will be distributed semi-annually or annually.
This is a unique model. It’s a way to have increasing, recurring cash flows, which we think is hugely important and missing from a lot of people’s portfolios. It’s more secure than a dividend strategy, in that all of these properties will be based on real estate and should be more stable. The other unique part about our model is that we are focused exclusively on the Tennessee Valley in the area that we call the “840/565 Corridor,” which is essentially the area south of Nashville down through Huntsville, AL. We’ll talk more about that next time, as to why we’re focusing on that area, but it’s a very target rich area with a lot of growth opportunities for many, many years.