MREC Management, LLC (“Mosaic” or the “Firm”), a Delaware limited liability
company, formed in 2015, is an SEC-registered investment adviser and is indirectly owned
by its principal Ethan Penner indirectly through his ownership interests in LA Real Estate
Finance, LLC, which is the sole member of JulJak, LLC, which is the sole member of
Mosaic Real Estate Investors, LLC, which is the sole member of Mosaic. Mosaic’s
principal place of business is located in Calabasas, California.
As of December 31, 2022, Mosaic managed $432,345,190 of regulatory assets under
management on a non-discretionary basis.
Prior to Mosaic rendering any advisory services, clients, including funds, are required to
enter into one or more written agreements with Mosaic setting forth the relevant terms and
conditions of the advisory relationship (the “Advisory Agreement”).
On November 4, 2021 Mosaic and Ready Capital Corporation (NYSE:RC) (“Ready”)
announced that the firms had entered into a definitive merger agreement (the “Merger”)
pursuant to which Ready agreed to acquire Mosaic’s three privately held funds, Mosaic
Real Estate Credit, LLC, Mosaic Real Estate Credit TE, LLC, and MREC International
Incentive Split, LP (which is an intermediate holding company through which investors in
Mosaic Real Estate Credit Offshore, LP invest in the Mosaic platform) (collectively
referred to hereinafter as, the “Mosaic Funds”). The transaction officially closed on March
16, 2022, and under the terms of the merger agreement, Ready acquired all of the
outstanding equity interests in the Mosaic Funds in exchange for (i) shares of a newly
designated Ready Capital Class B common stock, plus (ii) non-transferable contingent
equity rights that, depending on the performance of the Mosaic Funds’ asset portfolio over
a three-year period following the closing, may entitle investors in the Mosaic Funds to
receive additional shares of Ready Capital common stock. Post-merger, Mosaic remains as
an independent company and will continue to provide investment management services to
certain existing and prospective clients as well as provide certain advisory services to
Ready in respect to real estate assets acquired through the Mosaic Funds.
Mosaic currently advises through a services agreement (“Services Agreement”) Ready
regarding those certain assets formerly held by the Mosaic Funds prior to the Merger that
upon the closing of the Merger are now owned and controlled by a subsidiary of Ready
(the “Covered Portfolio”). Mosaic’s role is ongoing and continuous in support of all
operating facets of the Covered Portfolio.
Apart from the Covered Portfolio, Mosaic also currently advises certain investment
vehicles (each, a “Fund”) and certain co-investment relationships (each, a “Co-Investment
Fund
1” and each Co-Investment Fund and each Fund, a “Vehicle” and all Vehicles taken
together, the “Vehicles”). Each Vehicle may, subject to the terms of its governing and
offering documents (the “Governing Documents”), pursue distinct or similar strategies to
the any of the other Vehicles and may, in certain cases, as is often the case for Co-
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Investment Funds, solely co-invest alongside one or more other Vehicles.
The current Vehicles presently pursue a real estate focused strategy, in particular real estate
debt and debt-like investing in the private markets, however, Mosaic may engage in real
estate and real estate adjacent investing in the public and private markets, as well as non-
real estate investment strategies in current or future vehicles, as permitted by the Vehicle’s
Governing Documents.
The Vehicles and their subsidiaries are generally structured as Delaware entities in the form
of limited partnerships and limited liability companies but may utilize other entity types
within and without the United States.
Mosaic, its principals, employees, or affiliates may make voluntary or required capital
contributions to the Vehicles, in accordance with each Vehicle’s Governing Documents.
While this Brochure generally describes the business of Mosaic, certain sections also
discuss the activities of its Supervised Persons, which refer to the Firm’s officers, partners,
directors (or other persons occupying a similar status
or performing similar functions),
employees or any other person who provides investment advice on Mosaic’s behalf and
who is subject to the Firm’s supervision and/or control.
Investment Management Services
Mosaic provides asset based services and assistance in managing the Covered Portfolio on
a non-discretionary basis and manages the Vehicles on either a discretionary or non-
discretionary basis.
Currently, the Vehicles seek to create stable and predictable risk-adjusted returns and cash
flow with a focus on principal preservation. Mosaic, through the Vehicles, may invest in
various investment forms, including but not limited to first mortgage debt, real estate joint
ventures, mezzanine debt, preferred equity, or corporate ownership of companies that are
involved in or serve the real estate industry. Mosaic, through the Vehicles may diversify
its investment in any specific transaction by syndicating or selling a portion of an
investment to third-parties or Co-Investment Funds, which may involve the Vehicles
retaining a subordinated or junior position in exchange for reduced exposure and a higher
yield. Future Vehicles may have similar or distinct strategies and risk profiles.
While some Vehicles may be structured to accommodate various investors on a pooled
basis, Mosaic’s Co-Investment Funds are typically designed to suit specific client needs by
providing exposure to real estate assets that satisfy the Co-Investment Fund’s particularized
requirements and preferences. Certain Co-Investment Funds may elect to buy into a pool
of Mosaic discretionary assets held by a related Vehicle while others elect to invest in
specific assets on a case-by-case basis at the Co-Investor’s discretion.
Mosaic seeks to tailor its advisory services to meet the specific needs of its clients and
seeks to ensure, on a continuous basis, that client accounts are managed in a manner
consistent with each client’s needs and objectives.
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Co-Investment Strategy
Co-Investment Funds may comprise just one equity investor (the “Investor”) and may be
referred to as a separately managed account or fund of one with Mosaic servicing as the
investment adviser and/or general partner/managing member.
In some Co-Investment Funds, Mosaic will identify and present investment opportunities
for the Co-Investment Fund, and the Investor will review and elect to proceed with the
investment opportunity at its discretion . The terms and conditions of each Co-Investment
Fund vary, including, for example, certain Co-Investment Funds may have terms unique to
that specific fund or more favorable to other Co-Investment Funds or any other Vehicle.
Please see Item 12. “Brokerage Practices” and “Other Compensation” in Item 14 for
additional details on potential co-investment opportunities sponsored by Mosaic and/or its
affiliates.
Trade Allocation
As a result of advising various current and prospective Vehicles, Mosaic acknowledges
and understands that various conflicts and issues may come to exist regarding how
prospective transactions are allocated between or among the various Vehicles (“Trade
Allocation”). Trade Allocation involves how Mosaic decides to (i) present prospective
transactions to one or more Vehicles and/or (ii) allocate any prospective transaction among
one or more Vehicles if such deal or transaction is capable of being jointly held by one or
more Vehicles.
Mosaic has a policy in place that provides a framework and guidelines to administering the
Firm’s Trade Allocation. The general principle promotes the broadest, practicable
participation in a prospective transaction for Vehicles whose strategy aligns with the
prospective transaction. Moreover, other considerations such as each Vehicles Governing
Documents, available commitments and or cash, rotation of presenting new deals to
Vehicles in an orderly manner, and other economic and non-economic factors play a role
in the Trade Allocation Policy. Mosaic understands that if the Firm or its affiliates become
an investment adviser to one or more funds registered under the Investment Company Act
of 1940 and the regulations promulgated thereto, each as amended (“ICA”), certain
provisions of the Trade Allocation policy may require modification to comply with the
ICA.
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