Red Oak Capital Bonds 2026: Fund III Liquidation, 5 Issuers Read

Who the five issuers are

Red Oak Capital bonds are sold by separate Delaware companies under Regulation A, each with its own bondholders, its own balance sheet and, for the secured series, its own trustee. They share a sponsor (The Oak Companies, Inc., after a September 10, 2026 merger of Red Oak Capital Holdings, LLC into it) and a manager, Red Oak Capital GP, LLC. They also lend to each other: the funds buy participations in each other's loans, share a $50 million Cross River Bank credit line, and owe each other money. That is why one fund's trouble shows up in another's filing. The table is the whole group in one place.

Adding the face amounts gives about $306.0 million (our arithmetic: $43,980,000 + $218,346,000 + $29,167,000 + $4,092,000 + about $10.4 million). The Intermediate Income Fund's figure is the sum of the rounded amounts in its filing. The earlier Series A bonds of Fund III were redeemed in full on September 15, 2022, so any Fund III holder today holds Series B.

Red Oak Capital Fund III: what the June 30, 2026 filing says

Fund III raised the maximum $50.0 million in 2019 ($4.4 million of 6.5% Series A and $45.6 million of 8.5% Series B bonds, minimum purchase $10,000) to buy senior commercial mortgage notes. Its loans went bad, it took the properties back, and by June 30, 2026 it owned two hotels in Natchez, Mississippi, after selling a medical office building in Pembroke, North Carolina on May 7, 2026 for about $2.7 million.

The forbearance has conditions. The June 2026 filing says the company “had not met certain disposition milestones under the Forbearance Agreement, including obtaining a binding purchase and sale agreement for the Pembroke property by the December 31, 2025 deadline.” The Pembroke sale then closed on May 7, 2026 and the trustee “has not, as of such date, terminated the forbearance.” A holder should read that as a standing risk: the trustee can end the forbearance and accelerate the bonds if a later milestone is missed.

The balance sheet, line by line

The $11,214,900 deserves a closer look because it did not change between December 31, 2025 and June 30, 2026. The filing explains why: “Bond interest continues to accrue at the 8.5% contractual rate through the anticipated liquidation date.” At 8.5% on $43,980,000, a year of interest is $3,738,300, and three years is exactly $11,214,900 (our arithmetic). So the line already includes interest to December 31, 2027, three years from the last payment date, and the split moved from $3.7 million unpaid at December 2025 to $5.6 million unpaid at June 2026 as the estimated part shrank. It is not a sign that interest stopped accruing.

What the numbers imply for a Series B holder (our arithmetic)

This is an illustration built only from the June 30, 2026 balance sheet. It is not a forecast, and the filing's estimates can change with every property sale.

Why the second lens is the more realistic one. The filing says the preferred returns and capital repayment of The Oak Companies, Inc., an affiliate of the sponsor, “are senior to the Company’s common membership interests in the distribution waterfall for each hotel entity”, and that management “expects to fully satisfy The Oak Companies Inc’s preferred interests upon disposition of the Natchez Hotels.” The costs of finishing renovations and running the hotels until sale are accrued as liabilities too. We left out the $2,362,713 due to the managing member because the filing does not say it ranks ahead of the bonds; if it did, the second lens would fall to about 13.5 cents (our arithmetic). Neither lens counts hotel sales above or below the filing's estimates, which are “based on independent third-party appraisals and internal valuations determined by the Manager.”

Two sentences in the same filing are worded differently. The business discussion says the company does not expect to repay “the full amount of principal and accrued interest.” Note 8 says management “does not expect sufficient proceeds to fully satisfy all accrued interest obligations on the Series B Bonds in addition to the outstanding principal.” A reader could take the second as a hint that principal is covered. With $19.1 million of assets against $43.98 million of principal, the balance sheet does not support that reading, so we treat the first sentence as the operative one.

Red Oak Capital Fund Series, LLC: four former funds, one filing

The Series LLC is where most of the money is. In September 2023, Red Oak Capital Fund II, IV, V and Red Oak Income Opportunity Fund (ROIOF) merged into one Delaware series company and became ROCF II Series, ROCF IV Series, ROCF V Series and ROIOF Series. Anyone who bought bonds of those four older funds now holds a bond of a series. Its one Form 1-SA reports each series separately.

The asset ratios are a rough guide only: series assets include money other series owe them, and each series has liabilities besides its bonds. They show that the four series are in very different positions. ROCF II Series has assets worth about a quarter of its bonds, yet its bonds do not fall due until December 2028. ROCF IV Series has the most assets relative to its bonds and the nearest due date.

The loan book

On June 30, 2026 the Series LLC held 16 senior secured loans with about $99.9 million of principal and two unsecured seller-financing notes. Its aging table classes $65,550,000 of $102,709,000 of loan principal as 90 or more days past due, 63.8% (our arithmetic): $7,425,000 in ROCF IV Series, $25,150,000 in ROCF V Series and $32,975,000 in ROIOF Series. Eight loans were on non-accrual status, loan loss reserves were $15.2 million (against $13.8 million six months earlier), and the filing says the company's cost of capital across the series is “approximately 11.5% to 12.3%”, against a weighted average loan rate of 11.78%. Six-month net loss was $11,092,969.

Some of that has moved since June. ROCF V's Princeton loan, on its 17th forbearance amendment, was paid off in full on June 18, 2026. ROCF II Series repaid its own matured Series B bonds in full on August 21, 2025, about five months after the trustee's March 13, 2025 notice of default on them. Other problem loans (a San Diego loan on non-accrual, a Chicago loan in receivership, an Arizona hotel taken back in foreclosure) remain.

ROCF IV Series: going-concern doubt and a December 31, 2026 due date

The auditor's report in the FY2025 Form 1-K says ROCF IV Series “has suffered recurring losses from operations, has a net capital deficiency, and has bonds payable coming due, which raise substantial doubt” about its ability to continue as a going concern. The series' Series B (8.25%) and Rb (9.00%) bonds were due June 30, 2026. On March 5, 2026 the company used its indenture right to extend them to December 31, 2026, and on August 28, 2026 it paid down $4.5 million of principal, leaving $39.5 million. Management's plan, in the filing's words, includes “scheduled loan payoffs from performing portfolio assets, ongoing negotiations to accelerate payoffs on select non-performing loans, and the anticipated liquidation of REO assets”, and it “also anticipates disposing any remaining loans and REO at the end of 2026 to the Sponsor, The Oak Companies, Inc., at par and at values consistent with current appraisals.” A sale of loans and properties to the sponsor is a related-party transaction; the filing gives no price test beyond “current appraisals”.

Fund VI, Fund VII and the Intermediate Income Fund

Red Oak Capital Fund VI raised $28.7 million of 8.00% Series A and $0.5 million of 8.65% Series Ra bonds, plus $19.3 million of preferred units. The bonds are, in the filing's words, “unsecured obligations and rank junior to senior secured indebtedness”, and they mature on December 31, 2028. On June 30, 2026 the fund had total assets of $65,029,404, eleven senior secured loans of $60.9 million at a 10.50% weighted average rate, and two layers of debt ahead of the bonds: notes payable of $10,923,121 to a third party and a Cross River Bank credit facility of $9,651,043. Together those are $20,574,164, leaving $44,455,240 of assets against $29,167,000 of bond face value, a cushion of 1.5 times (our arithmetic). One loan, $5,700,000 to McKinney Capital Hermosa Partners LLC in Avalon, California, went on non-accrual on March 18, 2026 and is in receivership, 9.4% of the loan book by our arithmetic. Two loans were paid off after June 30 (July 27 and August 27, 2026). Net income for the half year was $296,801, against $509,601 a year earlier.

Red Oak Capital Fund VII is small. It had sold $4,092,000 of Series A bonds when it terminated its offering on August 8, 2026, raised the coupon on bonds already sold from 8.00% to 9.00% on October 1, 2025, and held one loan participation of $1,250,000 at 11.00%, due November 30, 2026. Its total liabilities of $4,909,437 exceeded its total assets of $4,315,687, a member's deficit of $593,750, and in the half year its interest expense of $178,229 was more than twice its revenue of $85,507. The bonds are unsecured and mature December 31, 2029.

Red Oak Capital Intermediate Income Fund buys small slices of loans made by its sister funds, so it depends on their lead lenders. On June 30, 2026 it had $5.3 million of Series F bonds (6.75%), $2.0 million of Series G and $3.1 million of Series H (8.00%, due December 31, 2028), a member's deficit of $4,570,939 and a $1.6 million loan loss reserve. Its largest participation, $4,067,000 in the YP Trillium loan led by ROCF V Series, matured on November 8, 2024 and sits in receivership. The filing says the fund gets “first priority of proceeds” from the lead lenders when those properties sell, so its recovery turns on the sale prices in the Series LLC.

Your exit rights, compared

Red Oak's newer bonds let a holder ask the company to buy them back, but only at a discount, only up to a yearly cap and only “in the order that notices are received.” For most of these bonds the company has up to 120 days to pay (90 for ROIOF).

Worked example (our arithmetic). A $25,000 Fund VI holding redeemed at $800 per $1,000 returns $20,000 plus accrued interest, a 20% haircut, and the 15% cap on $29,167,000 of principal is about $4.4 million for all holders together in 2027 (before the company's right to delay). If requests exceed the cap, later requests wait for the next January 1. The same cap logic applies to Fund VII, where 15% of $4,092,000 is about $613,800.

What a reader can do with this

• Find out which Red Oak issuer, and which series, you hold. The names are confusing: an older “Red Oak Capital Fund IV” bond is now a bond of the ROCF IV Series of Red Oak Capital Fund Series, LLC. Your account statement or bond certificate names the issuer; the table above tells you which filing to read.
• If you hold Fund III Series B, read each new Form 1-U and Form 1-SA on EDGAR for the trustee's notices and for sale prices of the two Natchez hotels, because those prices set the recovery. The next milestones are the October 1, 2027 end of the forbearance period (December 31, 2027 if a sale is under contract) and the estimated end of liquidation in December 2027.
• If you hold ROCF IV Series bonds, the date to watch is December 31, 2026. The company has already used its extension right once, so check the 1-U filings in December for what it does next.
• If you hold Fund VI or Fund VII bonds, the $800 redemption price starts on January 1, 2027 and is capped, so whether to ask is a decision to take with your own numbers, not a default setting. Their FY2025 annual reports show no going-concern statement, and both rank behind other lenders.
• Add up all your Red Oak exposure. The funds lend to each other and share one credit line, so the bonds are not independent bets. The Series LLC's four series alone total $218,346,000.
• If you were sold these bonds by a broker, adviser or sales agent, or think the sales material was misleading, you can file a complaint with the SEC and with your state securities regulator, and with FINRA if a broker-dealer was involved. Time limits apply, and a lawyer can tell you which.
• Compare with other Regulation A bond issuers in our real estate bonds census, our guide to real estate notes, the Reg A real estate offerings page, Bequest Bonds I, and the reviews of Compound Real Estate Bonds and Worthy Bonds.

Sources: Red Oak Capital Fund III, LLC (CIK 1780633) Form 1-SA, accession 0001213900-26-104829, filed September 30, 2026; Form 1-K, 0001654954-26-004153, April 30, 2026; Form 1-U, 0001654954-25-014009, December 16, 2025. Red Oak Capital Fund Series, LLC (CIK 1817069) Form 1-SA, 0001213900-26-105809, October 1, 2026, and Form 1-K, 0001654954-26-004188, May 1, 2026. Red Oak Capital Fund VI, LLC (CIK 1957571) Form 1-SA, 0001213900-26-105783, October 1, 2026. Red Oak Capital Fund VII, LLC (CIK 2023066) Form 1-SA, 0001213900-26-103101, September 24, 2026. Red Oak Capital Intermediate Income Fund, LLC (CIK 1817413) Form 1-SA, 0001213900-26-103075, September 24, 2026. Percentages, ratios, the $306 million total and the recovery lenses are our arithmetic. Dollar amounts marked “approximately” are the companies' rounding. This is analysis of public documents, not investment, legal or tax advice.