An Ignoble Experiment: Why Fund Structure Matters as Much as Underwriting

Dear Investor,

Goodman Capital is breaking down why fund structure is so important. Especially when it comes to liquidity, income, and protecting investor capital. They explain the difference between closed-end and evergreen funds, the risks of duration mismatch, and how their short-duration lending strategy is intentionally paired with an evergreen structure designed to support ongoing liquidity.

By way of disclosure, we have an advertising relationship with Goodman Capital, meaning we get paid for making this introduction and sharing this content. As always with these types of deals, consider this an introduction and not a recommendation. Every deal is unique and the responsibility to vet any and every deal you invest in still lies with you. This opportunity is available to accredited investors only.

Over the past several newsletters, we examined how underwriting discipline, thoughtful structuring, and proactive asset management work together to protect investor capital. The next logical step is to consider the structure through which investors participate. Fund design plays a critical role in shaping the investor experience, ensuring that liquidity expectations, income generation, and portfolio behavior remain aligned with the underlying investments.

Equally important to investment-level risk management is structuring the investment vehicle itself to complement the assets it holds. Even a well-underwritten loan can produce a poor investor experience if the fund structure does not align with the duration and liquidity profile of the portfolio.

Our strategy centers on short-duration, senior-secured loans. Because these assets naturally recycle capital through repayments and refinancings, they are best paired with a structure designed to distribute and redeploy capital continuously. For this reason, we operate within an evergreen format—not for marketing appeal, but because the structure reflects the behavior of the underlying assets.

Closed-End vs. Evergreen Structures and Our Experience in Both

A traditional closed-end fund raises capital during a defined fundraising window (the "Offering Period"), deploys it over a fixed investment period (the "Investment Period"), and winds down as portfolio investments are exited (the "Harvest Period"), and together, these three periods comprise the fund life. Investors generally receive a return of their initial investment, together with gains, during the Harvest Period.

An open-end (evergreen) fund maintains a perpetual Offering Period and Investment Period, and liquidity is obtained through an investor-initiated redemption process outlined in the respective offering documents—instead of a predetermined termination date of the fund life.

Over nearly four decades of experience, we have managed capital through both structures. In our view, the investment strategy should dictate the structure of the investment vehicle. For example, growth-oriented investments with longer, less-predictable time horizons are better suited for a closed-end fund vehicle, one which has a longer fund life structured to accommodate the time horizon required to steward the underling investment from acquisition through sale. Conversely, income-oriented investments—particularly those with either short-duration or predictable time horizons—fit well within an open-end structure, where liquidity can be made periodically available to investors from the return of capital generated from the orderly repayment of the underlying assets—instead of the forced fire-sale thereof.

The Risk of Duration Mismatch

One of the most common structural risks we see across private markets is duration mismatch: long-term assets paired with short-term investor liquidity expectations.

When a fund invests in multi-year or illiquid projects yet offers investors near-term redemption optionality, liquidity generally comes from the forced sale of assets—and often at ill-timed periods in the market. The alternative: suspended distributions and gated redemptions. Of note, the underlying investments themselves may still be sound and unimpaired—but the misalignment of structure creates the liquidity distress that can impair fund solvency.

Understanding the structural implications of the investment vehicle requires the same level of diligence as evaluating the underlying investments themselves. This perspective is informed by nearly four decades of managing capital across multiple market cycles and investment structures.

How We Facilitate Liquidity at Goodman Capital

At Goodman Capital, we originate short-duration senior-secured mortgage financing on primarily Class A residential-oriented assets across the core Northeast U.S. markets, emphasizing capital preservation and tax-efficient monthly income. Whether structuring our investments through closed- or open-end fund vehicles, we have satisfied 100% of all liquidity requests since inception, a track record we attribute to several critical drivers built to function across market cycles:

Short Loan Repayment Cycle (average 12 – 18-month loan-term): Regular borrower payoff and refinancing activity provide the first line of liquidity immediately available to service investor redemption needs.
Committed Financing Facilities: Our management companies maintain committed bank financing facilities available to backstop investor redemption requests to ensure liquidity as and when needed.
Secondary Market Transactions: At Goodman Capital, we've built a community of 100+ family offices who facilitate secondary purchases of investor interest in our funds, providing yet a third backstop of liquidity

Many evergreen funds primarily rely on the first mechanism above—or new investor capital—to facilitate liquidity for prior redeeming investors. At Goodman Capital, our liquidity architecture is uniquely differentiated by our ability to leverage a multi-pronged framework to provide our clients with periodic liquidity on terms consistent with the largest investment management firms in the private credit sector, as illustrated in the table below:

Goodman

Thoughtful structuring is an often-overlooked form of risk management. When the structure of the investment vehicle matches the duration of the underlying loan investment, liquidity becomes a source of flexibility—not fragility.

LCSF II – Fund Overview

Goodman Capital Liquid Credit Strategy Fund II ("LCSF II"), our second flagship private mortgage REIT, is designed for high-income professionals seeking consistent, tax-efficient income with significant downside risk protection and quarterly liquidity. Like its predecessor, LCSF II will focus on providing short-term, low-LTV senior-secured mortgage loans to best-in-class real estate sponsors on primarily Class A residential-oriented assets in core Northeast U.S. markets.

Key features of the LCSF II offering include:

10 – 11%+ net annual return target, with monthly distributions and optional compounding (DRIP)
Low-LTV senior-secured real estate lending strategy (max 60% LTV; first two deals <50% LTV)
Access to Class A residential-backed assets in primarily high-barrier Northeast U.S. markets
Tax efficient: 20% QBI tax deduction and discounted Roth conversion benefits (40 – 50%, est.)
No UBIT/UDFI, making the fund ideal for qualified investors (e.g., self-directed IRA, etc.)
Open-end (evergreen) structure with quarterly liquidity subject to 5% of NAV
Seamless onboarding with Fidelity and Schwab, as well as other custodians

Allocation Window Currently Open – March 2026 Closing

With the current allocation round scheduled to close in March 2026, investors evaluating participation are encouraged to begin discussions in advance of the closing date to allow sufficient time for review and onboarding. As with prior rounds, allocations are accepted on a rolling basis and may close earlier depending on capacity. To request additional details:

Schedule a call: Please click here
Email us anytime: invest@goodmancapitalllc.com
Visit our website: www.goodmancapitalllc.com/whitecoatinvestor

Goodman Capital is an alternative real estate investment firm specializing in senior-secured, real estate-backed private lending, built on a multi-decade family lending history that began in 1987 with the origination of our first senior bridge loan on multifamily properties in New York City. Since inception, the firm has completed over $1 billion in closed mortgage transactions and partnered with more than 1,000 investors, including high-net-worth individuals, family offices, and institutional allocators.

Our platform combines disciplined underwriting, conservative loan-to-value structures, and a cycle-tested approach designed to prioritize capital preservation across market environments. We operate within an institutional framework supported by dedicated in-house investment and legal teams, third-party administrators, independent auditors, and SEC counsel. Our mission is to educate investors and provide access to senior-secured private credit opportunities structured to deliver consistent, tax-efficient passive income, while maintaining a disciplined approach to risk management and capital preservation across market cycles.

To learn more, watch the Goodman Capital webinar.