Frequently Asked Questions
How much money is the Fund raising through this public offering?
We are currently permitted to raise up to $5 million from California investors between July 30, 2019 and July 30, 2020. We have set a minimum target amount of $450,000 in the first year in order to provide us with sufficient capital to make a serious bid for our first building.
How does the investment process work?
We are bringing together California residents, including individuals and entities such as corporations and non-profits, who wish to support the Fund’s social purpose.
California individuals and entities that wish to invest, and that meet the financial suitability and eligibility requirements detailed in the Offering Circular, may contribute funds in exchange for one of two classes of shares. Each class of shares entitles the holder to certain economic, management, and information rights relating to the Fund.
Guided by its social purpose and a shareholder-elected Board, the Fund intends to purchase, lease, and manage, directly or indirectly, commercial real estate in and around Little Tokyo.
The Fund may issue modest dividends to Shareholders based on revenues from operations and at the discretion of the Board.
Interested California residents may request a copy of the Offering Circular, which contains more information on the terms and risks of investment, by filling out the Request Form at our Invest page.
What will the Fund invest in?
We plan to invest in commercial real estate within and around Little Tokyo. An approximation of our target area for investment is included in the Offering Circular.
Some properties purchased may be mixed use and include residential units as well.
Properties will be assessed by their impact on the community, impact on the businesses, and financial feasibility.
What is the Fund’s social purpose?
Our social purpose is to “contribut[e] to community revitalization and cultural preservation in the Little Tokyo neighborhood of Los Angeles, California, and among the broader Japanese community in Southern California.” This purpose is stated in our articles of incorporation, and requires approval of 2/3rds of both classes of shareholders to be altered.
What mechanisms has the Fund incorporated to ensure accountability to the Little Tokyo community and the Fund’s social purpose?
- The Fund’s Directors must consider the Fund’s social purpose when making business decisions.
- Decisions by the Fund’s Board require the approval of a majority of Directors representing each class of Shareholders, voting separately.
- One non-voting representative (a “Non-Profit Observer”) from Little Tokyo’s social, cultural, and community institutions will be invited by the Board to attend, observe, and engage in all meetings.
- The Fund must issue a public, annual report that includes discussion of actions taken to achieve the Fund’s social purpose.
- Major changes to the Fund’s structure that would alter or eliminate the social purpose of the Fund require approval of at least 2/3rds of each class of Shareholders.
How will the Fund prioritize its social purpose in the leasing and management of the acquired properties?
We hope to:
- Purchase real estate in Little Tokyo and the surrounding area to guarantee community-based control of these properties and the neighborhood’s future.
- Provide affordable rents to Japanese, Japanese-American and other culturally aligned businesses, institutions, and spiritual centers that define and add to the richness of Little Tokyo.
- Continue to make shares such as our Class A shares available to community investors at a relatively low minimum, in order to ensure that future generations continue to enjoy Little Tokyo’s historic businesses, restaurants, and institutions beloved by generations past.
Are there examples of community-based funds like LTCIF?
The Fund can be compared to similar models of community-based investment. Some of those models that inspire this work include:
- Boston Ujima Project is a democratic investment vehicle raising capital to finance small businesses, real estate and infrastructure projects in Boston’s working-class Black, Indigenous, and other communities of color.
- Buen Vivir Fund is a fund investing in community-led initiatives by supporting effective lending practices developed by grassroots groups.
- East Bay Permanent Real Estate Cooperative is a cooperative fund that takes land and housing off the speculative market to create permanently affordable, community-controlled land and housing.
- Iroquois Valley Farmland REIT, PBC is an organic farmland finance company investing in farmland to provide secure land access to organic farmers through innovative leases and mortgages.
- NYC Real Estate Investment Cooperative is a non-profit investment fund in New York City working to secure permanently affordable space for civic, cultural, and cooperative use.
How were the financial suitability and eligibility requirements for potential investors established?
The eligibility and suitability requirements for both classes of shares were negotiated with the California Department of Business Oversight.
The final purchase prices for both classes of shares were determined by the Fund.
Are for-profit businesses and non-profits able to invest? Do the same eligibility requirements apply?
Yes, entities with a principal office located in California are allowed to purchase either class of shares. The same financial suitability and eligibility requirements applied to individuals, purchasing either class of shares, also apply to entities.
Will there be different types of investment options in the future?
We don’t know. At a minimum, we hope to provide further opportunities to purchase shares in the future, but we have not yet determined the timing, price, and eligibility requirements for future issuances of shares following the close of this public offering.
Can my friends and I pool our money together to buy a Class B Share?
No. If an entity is formed solely for the purpose of investment, then we must look through that entity to the actual partners or owners in determining whether they meet the financial suitability and eligibility requirements for a Class B Share.
Can I purchase a share for someone who is under 18 years of age?
In order to purchase a share, you must be over the age of 18. However, you may consider a trust or other financial vehicle if you desire to purchase a share on behalf of someone who is under 18 years of age. Under those circumstances, the trust itself would be required to meet the financial suitability requirements for the purchase of the requested shares.
What happens once the Fund reaches the Minimum Subscription amount?
Once the Fund’s account reaches a minimum of $450,000 from the purchase of shares, we will begin to use the funds toward our social purpose.
We will continue to raise money until we close the Offering or reach a maximum this year of $5 million.
Can I sell my investment to another person?
For a period of 6 months after purchasing a share, you may not resell the share to an individual or entity who is not a resident of the state of California.
There are no other restrictions on the transfer of shares.
Do you have an estimate of the dividends that may be distributed?
Once we acquire a property, we estimate that a return of approximately 3% annually may be achievable and still allow the Fund to manage the operational costs of at least one property, maintain sufficient reserves, and begin setting aside assets in anticipation of purchasing additional properties.
A 3% annual return is a goal only, is not guaranteed, and will not cumulate in years that the Fund does not meet this goal.
Are there liabilities to the investor?
No, there is no liability to the investor past the amount of their investment.
The financial suitability and eligibility requirements for potential investors were developed with this risk in mind.
Will there be a program in place to allow for waiver of dividends or fractional shares?
At the time of purchasing shares, Shareholders will be given an option to choose whether or not to receive Dividends. Shareholders may choose to waive Dividends which will in turn reduce costs to the Fund, thereby supporting the Fund’s social purpose.
For administrative reasons, we do not currently offer a fractional share program.
After I have purchased a share, is it possible to cash out if I need the money?
Potential investors in the Fund should not consider this a liquid investment. We strongly encourage you to only invest funds that you are prepared to lose entirely, or at least that can remain in the Fund for a long period of time.
The Fund has established a redemption program. Redemption of your shares may be subject to, among other things, the status of available cash of the Fund, a five-year Lock-Up Period, and redemption fees equal to 5% of the Redemption price, as well as the sole and absolute discretion of the Board.
Are there risks associated with this investment?
Yes, the shares offered are subject to a high degree of risk. Although we will make every effort to mitigate risks, potential investors should carefully consider all of the risk factors detailed in the Offering Circular.
How do I request the Offering Circular?
Fill out the Offering Circular Request Form to receive a copy.
You must be a California resident to receive a copy of the Offering Circular.
Operation of Fund
Who makes decisions for the Fund?
The Board of Directors of the Fund will control and operate all aspects of the Fund’s strategy, properties, and business. This includes all investment decisions for the Fund.
The Board expects to rely on legal and tax professionals, and to hire a property management company to help with various aspects of carrying out the Fund’s business. The Board expects to form an advisory board that may include these professionals and others who can aide the Board in managing and guiding the Fund.
Who are the Directors? How many will there be?
- We have designed a board structure with our community and social purpose in mind.
- We anticipate having between 12-25 Directors. The Board will administer a nomination and election process. We hope that many of our Directors will come from the Fund’s shareholder base.
- The Board will be comprised of no less than 1/3 Directors elected by Class A Shareholders, and the remaining number of Directors elected by Class B Shareholders. For example, if there are 12 Directors, a minimum of 4 would be Class A Directors and up to 8 would be Class B Directors.
- 1 Non-Profit Observer, a designated individual representing one of Little Tokyo’s cultural or non-profit institutions, would also attend, observe, and engage in Board meetings but would not vote.
Is voting for Directors dependent on the number of shares you own?
- Shareholders will receive one vote for each share held, for each seat up for election.
- Shareholders may only vote for those Director seats representing the Shareholder’s class.
- Shareholders may choose to cumulate their votes.
In addition to the sale of shares, are there plans to borrow funds to purchase property?
We are permitted through this Offering to receive up to $5 million, and we hope to achieve that amount.
Depending on the amount of funds received, we could potentially purchase properties outright or could acquire properties with use, in part, of bank or similar loans.
Does the Fund already have properties in mind to purchase?
We have begun looking into potential properties, but we do not currently have options or contracts to purchase any properties.
How long will it take for the Fund to purchase its first property?
We don’t know. The timing will depend on a variety of factors including but not limited to the amount of proceeds raised, finding a property that we believe will fit our budget and allow us to carry out our social purpose, and our ability to get a loan or other financing. Even after the property is purchased, we cannot at this time say what renovations or repairs might be needed. All of these decisions will be overseen by the board.
How will the Fund measure success?
Success will be measured by achieving our goal of protecting Little Tokyo and encouraging businesses consistent with its cultural identity. Tangibly, the purchase of one or more buildings will show our success, as will the continuing legacy of existing Little Tokyo businesses and the addition of new businesses. We have already seen some success in the community coming together around this idea and showing an interest in protecting and investing in the Little Tokyo community.
If I have a question I do not see here, how can I ask someone?
We would love to discuss any of this information with you further! Please contact us with any questions at 213.293.7535 or firstname.lastname@example.org.
THE COMMISSIONER OF BUSINESS OVERSIGHT OF THE STATE OF CALIFORNIA DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF THESE SECURITIES.