ERC Communities 1, Inc.

Key economics

Preferred return

—

Hurdle rate

—

LP / GP split

—

GP catch-up

—

GP clawback

—

GP commitment

—

Diligence findings (16 · 6 high/critical)

• high
  DDQ gap: Does the fund engage an independent auditor?The offering documents don't answer a standard institutional DDQ question (Governance). An allocator will ask this directly — the GP should be ready with an answer.
• high
  DDQ gap: Does the fund have a GP clawback provision?The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.
• high
  DDQ gap: What is the LP/GP carried-interest split above the preferred return?The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.
• high
  DDQ gap: What is the preferred return (hurdle) rate offered to LPs?The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.
• high
  Numeric inconsistency — Class A Preferred shares outstanding at December 31, 2022Preferred shares outstanding at Dec 31, 2022 are stated as 177,584 in Note 1 but 90,672 on the balance sheet and in Note 5.
• high
  Numeric inconsistency — Class A Preferred Stock dividend ratePreferred dividend rate is stated as 10% per annum in the body but as 8 percent in the financial-statement equity notes.
• medium
  DDQ gap: Does the fund use a third-party fund administrator?The offering documents don't answer a standard institutional DDQ question (Governance). An allocator will ask this directly — the GP should be ready with an answer.
• medium
  DDQ gap: Is there a GP catch-up, and at what rate?The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.
• medium
  DDQ gap: What distribution-waterfall structure does the fund use?The offering documents don't answer a standard institutional DDQ question (Structure). An allocator will ask this directly — the GP should be ready with an answer.
• medium
  DDQ gap: What is the GP's capital commitment (skin in the game)?The offering documents don't answer a standard institutional DDQ question (Economics). An allocator will ask this directly — the GP should be ready with an answer.
• medium
  Document-quality defect — Auditor's report audit-period statementAuditor's report audits the balance sheet as of Dec 31, 2022 and 2021 but states the related statements cover the calendar year periods ended 2021 and 2020.
• medium
  Numeric inconsistency — Class A Common Stock outstanding after the offeringShares outstanding after the offering (2,608,968) cannot be reconciled with 131,898 outstanding before plus the up-to-5,000,000 shares offered.
• medium
  Unfilled placeholder text — [__________], 2023Unfilled bracketed placeholder for the sales commencement date shipped in the offering circular.
• low
  Numeric inconsistency — Date of name change to ERC Communities 1, Inc.Same name-change event is dated December 3, 2020 in the Summary but December 3, 2021 in The Company's Business section.
• low
  Numeric inconsistency — ERC Zephyrhills 2 intended unit countZephyrhills 2 is described as a 60-unit site in prose but listed as 58 units in the statistics table and elsewhere as 58-lot/58 unit.
• low
  Spelling / typo — Forum selection clause (Securities Being Offered)Broken sentence in the forum-selection clause omits the state name: 'the Court of Chancery in the State of or alternatively...'.

DDQ readiness — 38% covered

5 answered · 0 partial · 8 gaps of 13 standard questions.