Offeree Name: _________________________________
Copy No. ___________
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
BR SENIOR SECURED DEBENTURE TRUST, LLC$25,000,000 (Subject to increase to $35,000,000) 9.0% Senior Secured Debentures Due 2013Pursuant to this Confidential Private Placement Memorandum (with all Exhibits, and any future amendments or supplements hereto, the Memorandum), BR Senior Secured Debenture Trust, LLC (the Trust), a Delaware limited liability company, is offering (the Offering) to prospective purchasers (Investors) an investment in Senior Secured Debentures of the Trust, bearing non-compounded interest at the annual rate of 9.0% payable monthly, in an aggregate principal amount of up to $25,000,000, subject to increase to $35,000,000 in the Trusts sole discretion (the Secured Debentures). The Secured Debentures will be secured by the Trusts assets, among other collateral, and will be issued subject to a collateral agency and intercreditor agreement (the Collateral Agency Agreement). The Trust is a wholly-owned subsidiary of Bluerock Real Estate, LLC (Bluerock). Bluerock is a national real estate investment firm headquartered in Manhattan, focused on acquiring, developing, managing and syndicating multifamily and commercial properties throughout the United States. Bluerock and its principals have sponsored and structured real estate transactions totaling approximately 25 million square feet and with approximately $3 billion in value. The Trust is a single purpose entity, formed and to be operated solely to make first mortgage loans that meet and satisfy specific underwriting criteria and collateral requirements, are primarily short-term in nature, and shall not exceed a 75% loan-to-value ratio when made (based on current appraisals by arms-length, MAI-certified appraisers) (the Qualified Loans). The Qualified Loans may include financing for the acquisition or development of real estate projects in which Bluerock or its affiliates have an interest, including but not limited to a $1.28 billion public, non-traded REIT known as Bluerock Enhanced Multifamily Trust, Inc. An investment in the Secured Debentures is speculative and involves significant risks. See Risk Factors beginning on page 9 for a complete discussion of the risks, including, but not limited to, the following: even though the Secured Debentures are secured, there is significant risk with respect to the Secured Debentures, including loss of principal; the Trust is newly formed and has limited capital; the Trust has not yet specifically identified or made any Qualified Loans; the Investors will rely entirely on the Trust to identify Qualified Loans that support the Trusts obligations on the Secured Debentures; there may be significant conflicts of interest among the Trust, Bluerock and their affiliates, which may become borrowers of Qualified Loans; risks inherent to the individual real estate projects securing the Qualified Loans; risks of further national, regional and local economic downturn; risks in connection with financing markets that could affect the ability of the Trusts borrowers to service or refinance Qualified Loans; the Trust may issue additional debt on a basis with the Secured Debentures; there are substantial limitations on an investors ability to transfer the Secured Debentures, which are generally illiquid; risks related to best efforts offerings; and the Secured Debentures are not a diversified investment.
Price to Investors Minimum Investment(3) Minimum Offering Amount(4) Maximum Offering Amount(5) $50,000 $500,000 $25,000,000
Dealer-Manager Fee, Selling Commissions and Allowances(1) $4,375 $43,750 $2,187,500
Proceeds to the Trust(2) $45,625 $456,250 $22,812,500
ORCHARD SECURITIES, LLC The date of this Memorandum is April 30, 2009
The Secured Debentures will be offered and sold on a best efforts basis by broker-dealers (the Selling Group), who are members of the Financial Industry Regulatory Authority, Inc. (FINRA). Orchard Securities, LLC will act as Dealer-Manager for the Offering, and will receive a Dealer-Manager Fee of up to 1.25% (Dealer-Manager Fee) of the gross proceeds of the Offering (Gross Proceeds), selling commissions of up to 6.5% of the Gross Proceeds (Selling Commissions), and a nonaccountable marketing and due diligence allowance of up to 1.0% of the Gross Proceeds (Allowances). The amount of Selling Commissions will be increased or reduced, however, if a lower or higher commission rate is negotiated with a member of the Selling Group. The DealerManager may reallow the Selling Commissions, and up to 1.0% of the Allowances on a nonaccountable basis, to the Selling Group for their sales of Secured Debentures. Of the Dealer-Manager Fee, up to 0.75% of the Gross Proceeds will be reallowed to registered representatives which may be affiliates of Bluerock for marketing costs related to this Offering, including payments to Bluerocks internal and external wholesalers. The total aggregate amount of the Dealer-Manager Fee, Selling Commissions and Allowances (Selling Compensation) will not exceed 8.75% of the Gross Proceeds. The Trust, in its sole discretion, may sell Secured Debentures net of some or all of the Selling Compensation, to persons purchasing through a registered investment adviser or to affiliates and friends and family of Bluerock, the Trust and members of the Selling Group. The Dealer-Manager may sell Secured Debentures as part of the Selling Group, thereby becoming entitled to Selling Commissions and Allowances. See Plan of Distribution and Estimated Use of Proceeds. Amounts shown are proceeds after deducting Selling Compensation, but before deducting organization, marketing and other expenses incurred in connection with the Offering (Organizational Costs and Offering Expenses). Bluerock will receive a fixed fee of 1.75% of the Gross Proceeds to cover Organizational Costs and Offering Expenses incurred by it and advanced on behalf of the Trust. Bluerock will be solely responsible to pay for all Organizational Costs and Offering Expenses, but will be entitled to retain any unused portion of the fee on a nonaccountable basis. See Estimated Use of Proceeds and Compensation and Fees. The minimum purchase is $50,000 in principal amount of the Secured Debentures and is payable in cash upon subscription. The Trust has the right, in its sole discretion, to waive the minimum purchase requirement. Following completion of the Minimum Offering Amount and the break of escrow and distribution of proceeds by the Escrow Agent, the Offering will continue in the Trusts discretion until the earlier of (i) the date that subscriptions for the Maximum Offering Amount ($25,000,000) have been received and accepted (subject to the Trusts sole discretion to increase the Offering to $35,000,000 of Secured Debentures, without further notice), or (ii) April 30, 2010 (subject to the Trusts sole discretion to extend the Offering for two six-month periods, without further notice) (Offering Termination Date). The Maximum Offering Amount is subject to increase to $35,000,000 in the sole discretion of the Trust. The Selling Compensation, if the increased Maximum Offering Amount is sold, would be a maximum of $3,062,500.
The mailing address of the Trust is c/o Bluerock Real Estate, LLC, 680 5th Avenue, 16th Floor, New York, New York 10019. The telephone number of the Trust is (888) 558-1031. The Secured Debentures offered hereby have not been registered under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the Securities Act), or the securities laws of states, and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and such laws. The Secured Debentures are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and such laws pursuant to registration or exemption therefrom. Prospective Investors should be aware that they will be required to bear the financial risks of this investment for an indefinite period of time. In making an investment decision, Investors must rely on their own examination of the Trust and the terms of the Offering, including the merits and risks involved. The Securities Act and the securities laws of certain jurisdictions grant purchasers of securities sold in violation of the registration or qualification provisions of such laws the right to rescind their purchase of such securities and to receive back the consideration paid. The Trust believes that the Offering of the Secured Debentures described in this Memorandum is not required to be registered or qualified. Many of these laws granting the right of rescission also provide that suits for such violations must be brought within a specified time, usually one year from discovery of facts constituting such violation and three years from the violation. Should any investor institute such an action on the theory that the Offering conducted as described herein was required to be registered or qualified, the Trust contends that the contents of this Memorandum constituted notice of the facts constituting such violation. The Secured Debentures have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Memorandum. Any representation to the contrary is a criminal offense. No person has been authorized to give any information or make any representations other than those contained in this Memorandum, and, if given or made, such information or representations must not be relied upon as having been given by the Trust. This Memorandum does not constitute an offer or solicitation nor will there be any sale of Se