The FixedFunds Program^® FAQs

The FixedFunds Program^® is only available to accredited investors as defined by applicable securities laws. This typically includes individuals with a net worth exceeding $1 million (excluding primary residence) or annual income exceeding $200,000 individually or $300,000 jointly with a spouse.

The FixedFunds Program^® is a secured fixed-rate debt investment program offered by Phoenix Industrial Capital, Inc. (‘PIC”), designed to raise capital for investing in multi-tenant industrial real estate properties. It allows accredited investors to lend money to the PIC Secured Income Fund 1, Inc., (the “Fund”), a wholly-owned subsidiary of PIC which is the first in a series of Funds supporting the FixedFunds Program® The Fund uses its invested capital to to make preferred equity investments in specific industrial real estate Project LLCs formed by Phoenix Industrial Redevelopment, LLC (“PIR”).

A Project LLC is a special purpose limited liability company formed by Phoenix Industrial Redevelopment, LLC (PIR) to acquire, renovate, and stabilize a specific industrial real estate asset. The Fund uses the the private capital raised through the FixedFunds Program^® to make preferred equity investments in these Project LLCs.

PIR focuses on small-bay, multi-tenant industrial properties in select markets across the continental United States. They target properties that need moderate to substantial renovation and have potential for significant increases in lease rates and net operating income.

The Fund uses the private capital it raises to make preferred equity investments in PIR Project LLCs. These PIR Project LLCs typically have a capital structure of 60-70% senior debt, 30-40% preferred equity from the Fund, and 0-10% common equity from Phoenix Industrial Holdings, LLC.

The FixedFunds Program^® offers two types of notes: Income Notes and Growth Notes. Both have the following key features:

• Minimum investment: $50,000 with additional investments in $10,000 increments
• Term: 5-year notes with a 2-year extension option at the Fund’s discretion
• Tiered interest rates based on investment amount:
• $50,000 – $499,999: 8.00% annual interest
• $500,000 – $999,999: 8.25% annual interest
• $1,000,000+: 8.50% annual interest

Income Notes pay out interest monthly, with principal repaid at maturity. Growth Notes compound interest monthly, with the total accumulated value paid at maturity. Both note types are secured by the Fund’s assets, including its preferred equity investments in Project LLCs. The program also offers an Early Payback Option, subject to certain conditions and an administrative fee.

The FixedFunds Program^® offers two types of notes:

Income Note:

• Designed for investors seeking regular cash flow
• Interest is paid out monthly
• Principal is repaid at maturity
• 5-year term with a 2-year extension option at PIC’s discretion

Growth Note:

• • Designed for investors focused on long-term wealth accumulation
  • Interest compounds monthly and is added to the principal balance
  • No monthly payouts, maximizing compound growth
  • Total accumulated value (principal + compound interest) paid at maturity
  • 5-year term with a 2-year extension option at PIC’s discretion
  • A Growth Note held 5 years generates a 8.30% rate of return

Both note types offer tiered interest rates based on the investment amount, with a minimum investment of $50,000.

The notes are secured by the Fund’s assets, including its preferred equity investments in Project LLCs. This security is outlined in a Security Agreement, which grants noteholders a security interest in the Fund’s assets on a pari passu basis.

The investment process involves the following steps:

1. Complete an Investor Questionnaire to verify your accredited investor status
2. Review the Master Private Placement Memorandum (PPM)
3. Complete and submit the Subscription Booklet
4. Sign a Commitment Letter indicating your intended investment amount
5. Receive and review Project Funding Summaries for specific potential Project LLC investments
6. Sign a Note Purchase Agreement for the Project LLC investments you select
7. Respond to capital calls by wiring capital to the Fund

At the end of the 5-year term, the Fund has the option to extend your note for two additional one-year periods. If not extended, your principal (and any accrued interest for Growth Notes) is repaid to you. If you choose to, you have the option to re-invest your capital at the same terms with priority over new FixedFunds Program^® investors.

The Early Payback Option allows investors to request early repayment of their notes. The Fund will honor up to $2 million in early payback requests each year, offered in June and December. Requests must be submitted at least 90 days before the early payback period, and there’s a 2% administrative fee for all early paybacks.

The Fund uses a proprietary “ledger” system to track the allocation of each note’s proceeds to specific Project LLC investments. This system allows for targeted repayment of notes when Project LLCs refinance or sell properties.

For Income Notes, interest payments are typically treated as ordinary income for tax purposes and reported on Form 1099-INT. For Growth Notes, while interest compounds, it is still considered taxable income in the year it accrues. Investors should consult with their tax advisors for specific advice on their situation.

There is no established secondary market for the notes issued under the FixedFunds Program^®. The notes are not freely transferable and any transfer requires the Fund’s prior written consent. Investors should be prepared to hold their investment for the full term.

The FixedFunds Program^® offers several compelling reasons for accredited investors to consider:

1. 1. Attractive Fixed Returns: With tiered interest rates ranging from 8.00% to 8.50% annually, the program provides competitive returns in today’s market.
   2. Real Estate Backed Investment: Your investment is indirectly supported by a portfolio of industrial real estate properties, a sector known for its stability and growth potential.
   3. Real Estate Backed Investment: Your investment is secured by the assets of the Fund, including its investments in a series of Project LLCs each of which owns a PIR industrial property. This means your investment is supported by a portfolio of industrial real estate properties, a sector known for its stability and growth potential.
   4. Transparency: As a Specified Fund, you receive detailed information about each property investment before committing your capital, providing greater clarity compared to blind pool funds.
   5. Professional Management: Benefit from the expertise of Phoenix Industrial Redevelopment, LLC (PIR) in identifying, acquiring, and managing industrial properties.
   6. Diversification: Your investment is secured by PIC’s assets, which include preferred equity positions in multiple Project LLCs, providing a form of diversification within the industrial real estate sector.
   7. Diversification: Your investment is secured by the Fund’s assets, which include preferred equity positions in multiple Project LLCs, providing a form of property and geographic diversification within the industrial real estate sector.
   8. Lower Volatility: Fixed interest rates can provide more stable returns compared to direct property ownership or REITs, which may be subject to market fluctuations.
   9. Passive Income: Especially with Income Notes, enjoy regular monthly payments without the responsibilities of direct property ownership.
   10. Potential Tax Efficiency: Interest payments are typically treated as ordinary income, which can be simpler for tax planning compared to more complex real estate partnership structures.
   11. Lower Minimum Investment: With a $50,000 minimum, the program allows access to institutional-quality real estate investments at a lower entry point than many private equity real estate funds.
   12. Alignment of Interests: PIR maintains skin in the game by holding common equity in each Project LLC, aligning their interests with those of FixedFunds investors.

While all investments carry risks, the FixedFunds Program^® is designed to offer a balance of attractive returns, transparency, and flexibility, making it a compelling option for accredited investors looking to diversify their portfolio with real estate-backed fixed income investments.

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