San Jose, CA Dec 31, 2013
St. John’s Capital Group announced it has successfully closed out its professionally managed fund, SJC Income Opportunity Fund, LLC by disposing the last remaining properties, liquidated everything and distributed all proceeds back to fund’s investors.
SJC Income Opportunity Fund (known as “IOF”) was formed on Dec 11, 2007 by Mr. Edwin Yeh and founders of St. John’s Capital Group. It raised funds from Silicon Valley Angel Investors and includes a contingent from the Keiretsu Forum, other local Accredited Investors, and Asian Investors.
The fund’s investment premise was to invest in undervalued markets and commercial and residential assets in order to generate positive cash flow and partner with local entrepreneurs. It was a unique contrarian fund that was formed at the height of real estate market in California, and set sail beyond the frenzied Californian market to places such as North Dakota and Texas for its investments.
The entire financial market suffered the financial crisis of 2007/2008, where Lehman Brother and a number of banks went under and bankrupted, the real estate market crashed, and nearly all vintage 2008 funds suffered severe beating. Most have lost as much as 50% or more or their original investment and disbanded early.
SJC Income Opportunity Fund and St. John’s Capital Group’s Venture Capital Investment was also severely impacted by the financial storm and underwent major ups and downs. Most significantly, its venture capital investment and reliance on the local operating company to manage properties in North Dakota and Texas suffered the most as the operators went under during the financial crisis.
However, St. John’s contrarian approach and its steadfast resolve to fight for its loyal investors eventually paid off. First, instead of relying on out of state local property managers, as it initially did, St. John’s began to directly operate and manage the portfolio. Second, by investing in undervalued market regions and assets, when those regions experience economic growth and recovery especially in the oil boom, the funds’ remaining assets began to appreciate. St. John’s was grateful to have experienced high integrity by local managers in securing an exit strategy. Third, to heed investors’ concern and to stabilize the operation, the fund also formed an investor advocacy and advisory committee, where members represented investors’ interests directly and provided recommendations and feedback to the managers during the rocky period of the fund. Finally, to supplement the shortage of income, St. John’s provided its investors an additional $200-$300K of interest income yearly – by investing underutilized funds in high yield secured investment of foreclosed properties, which generated an annual interest of 9% APR.
The fund’s final performance is IRR of +4.91% (using actual cash distributed and not counting the tax deferral benefit or earlier write off). The fund has consistently distributed actual cash back to its investors on a quarterly basis since the inception of the fund.
Despite being a vintage 2007-2008 fund, where most our peer funds lost more than 50% of principle, St. John’s is glad to announce it has successfully return all principal to our investors without loss.
Edwin Yeh, CEO, St. John’s Capital Group, and the fund manager for SJC Income Opportunity Fund states:
“We thank our investors for your constant patience, the advisory committee members for their hard work in converging the differing voices of investors during the rocky period of the fund, and God’s grace in allowing us to land safely. We have learned much from this endeavor and hope that you do not hesitate to contact us if we can be at your service again.”