# BLUEROCK CAPITAL MARKETS LLC X-17A-5 (2020-02-28) — Broker-dealer annual report - Company: BLUEROCK CAPITAL MARKETS LLC - Form: X-17A-5 - Filed: 2020-02-28 - Period: 2019-12-31 - Accession: 0001385971-20-000013 - CIK: 1337052 - File #: 8-67058 - Material weakness: No - Auditor: Plante Moran, PLLC - Auditor location: East Lancing, MI - Contact: Chad Kirschenblatt - Phone: 5162229111 - Signed by: Paul Dunn (EVP/CCO) Original filing: https://www.sec.gov/Archives/edgar/data/1337052/000138597120000013/bcmpublic19.pdf --- {0}------------------------------------------------ # **Bluerock Capital Markets, LLC** (a wholly owned Subsidiary of BR Capital Markets, LLC) (a Massachusetts limited liability company) > Financial Report December 31, 2019 {1}------------------------------------------------ UNITEDSfATES SECURITIESANDEXCHANGECOMMISSION Washington, D.C. 20549 ANNUALAUDITEDREPORT FORM X-17A-5 PART Ill OMBAPPROVAL OMB Number: 3235-0123 Expires: August 31, 2020 Estimated average burden hours rres se ...... 12.00 | SEC FILE NUMBER | |-----------------| | 8-67058 | FACING PAGE Information Reqnired of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | REPORT FOR THE PERIOD BEGINNING 01 /01 /19 | AND ENDING 12/31 /19
~~~~~~~~~~ | | | | |------------------------------------------------------------------------------------------------|--------------------------------------------------------|------------|-------------------|--| | | MM'DD/YY | | MM!OO/YY | | | | A. REGISTRANT IDENTIFICATION | | | | | NAME OF BROKER-DEALER: Bluerock Capital Markets, LLC | | | OFFICIAL USE ONLY | | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | | FIRM 1.0. NO. | | | 1345 Avenue of Americas, 32nd Floor | | | | | | | (No. and Street) | | | | | New York | NY | | 10105 | | | (City) | (State) | (Zip Code) | | | | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
Chad Klrsciienblatt | | | (516) 393·5603 | | | | B. ACCOUNTANT IDENTIFICATION | (Area Code | Telephone Number) | | | INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report•
Plante Moran, PLLC | (Name - if individual, state last, firs/, middle name) | | | | | | | | | | | 2601 Cambridge Ct. Ste 500 | Auburn Hills | Ml | 48326 | | | {Address) | (City) | | (Zip Code) | | *•claims for exemption from the requirement that the annual report be covered by the opinion of an independent public accountant n111sr be supported by a statement of/acts and circumstances relied* 011 *as the basis/or the exemption. See Section 240.17a-5(e)(2)* > Polentlal persons who are to respond to the collecllon of Information conlalned In this form ere not required lo respond unless the form displays a currently valid OMB control number. SEC 1410 (11-05) {2}------------------------------------------------ #### **OATH OR AFFIRMATION** | ________________________
, swear (or affirm) that, to tho best of
I, _P_a_u_I D_u_nn | | |---------------------------------------------------------------------------------------------------------------|--| | my knowledge and belief the accompanying financial statement and supponing schedules ponaining to the firm of | | | Bluerock Capital Markets, LLC | | of --=----~-----------------------------------•as December 31 20 19 are true and correct. I funhor swear (or affirm) that **neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account** classified solely as that of a customer, except as follows: | | Signature | |--------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------| | | | | | Title | | | | | | | | | | | This repon **contains (chock all applicable boxes): | | | 0 (a) Facing Pago. | | | 0 (b) Statement of Financial Condition. | | | D (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement | | | of Comprehensive Income (as defined in §210.102 of Regulation S-X). | | | | | | § (d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Panners' or Sole Proprietors' Capital. | | | (I) Statement of Changes in Liabilities Subordinated to Claims of Creditors. | | | | | | § (g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rulo 1Sc3-3. | | | (i) Information Relating to the Possession or Control Requirements Under Rule 1Sc3-3. | | | 0 Ol A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule I Sc3-1 and the | | | Computation for Determination of the Reserve Requirements Under Exhibit A of Rule ISc3-3. | | | 0 (k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of
consolidation. | | | (I) An Oath or Affirmation. | | | (m) A copy of the SIPC Supplemental Repon. | | | ~ | (n) A repon describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | | *\*\*For conditions of confidential treatme11t of certai11 portions of this filing, see section 240. I 7a-5(e)(J).* {3}------------------------------------------------ | | Contents | |-----------------------------------|----------| | Independent Auditor's Report | 1 | | Financial Statements | | | Balance Sheet | 2 | | Notes to Financial Statements | 3-8 | | Required Supplemental Information | | | Report Letter on Exemption Report | 9 | | Exemption Report | 10 | | | | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) **Plante & Moran, PLLC Suite 500 2601 Cambridge Court Auburn Hills, Ml 48326 Tel: 248.375.7100 Fax: 248.375.7101 plantemoran.com** #### **Report of Independent Registered Public Accounting Firm** To the Officers and Member Bluerock Capital Markets, LLC #### **Opinion on the Financial Statements** We have audited the accompanying statement of financial condition of Bluerock Capital Markets, LLC as of December 31, 2019 and the related notes (collectively referred to as the "financial statement"). In our opinion, the statement of financial condition presents fairly, in all material respects, the financial position of Bluerock Capital Markets, LLC as of December 31, 2019 in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** This financial statement is the responsibility of Bluerock Capital Markets, LLC's management. Our responsibility is to express an opinion on Bluerock Capital Markets, LLC's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Bluerock Capital Markets, LLC in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. ~f l'/..LC We have served as Bluerock Capital Markets, LLC's auditor since 2013. Auburn Hills, Michigan February 28, 2020 ![](_page_4_Picture_11.jpeg) {5}------------------------------------------------ ### **Bluerock Capital Markets, LLC Balance Sheet December 31, 2019** #### **Assets** | Cash | \$
1,803,433 | |--------------------------------------------|-----------------| | Accounts receivable | 235,869 | | Prepaid expenses and other assets (Note 2) | 1,084,225 | | Due from Related Party (Note 4) | 4,671 | | Equipment and software -
net (Note 5) | 248,152 | | Total Assets | \$
3,376,350 | #### **Liabilities and Member's Equity** | Liabilities | | |--------------------------------------------------|-----------------| | Accounts payable, accrued, and other liabilities | \$
743,704 | | Due to Related Party (Note 4) | 59,162 | | Payable to commissioned agents | 919,987 | | Total liabilities | \$
1,722,853 | | | | | Member's Equity | \$
1,653,497 | | | | | Total Liabilities and Member's Equity | \$
3,376,350 | See Notes to Financial Statements {6}------------------------------------------------ ## **Bluerock Capital Markets, LLC** ### **Notes to Financial Statements December 31, 2019** ### **Note 1 - Nature of Business and Significant Accounting Policies** **Organization and Nature of Business** - Bluerock capital Markets, LLC (the "Company"), is a Massachusetts limited liability company that is registered with the Securities and Exchange Commission, for the purpose of conducting business as a brokerdealer in securities. The Company is exempt from the reporting requirements under Rule 15c3-3(k)(l). The Company was formed on August 5, 2005 as Sunbelt New England Equities. It was then sold to Halcyon Holdings on June 15, 2009 and the name changed to Halcyon capital Markets, LLC. BR capital Markets, LLC (currently the Company's sole member) purchased 20 percent of the Company's LLC units on December 23, 2010. BR capital Markets, LLC purchased the remaining LLC units in 60 percent and 20 percent increments on April 5, 2011 and October 21, 2011, respectively. Upon completion of these purchases, the Company's name was changed to Bluerock capital Markets, LLC. **Basis of Accounting** - The Company maintains its accounting records and prepares its financial statements on an accrual basis, which is in accordance with accounting principles generally accepted in the United States of America. **Business Cycle** - The financial affairs of the Company generally do not involve a business cycle since the realization of assets and the liquidation of liabilities are usually dependent on the Company's circumstances. Accordingly, the classification of current assets and current liabilities is not considered appropriate and has been omitted from the balance sheet. **Cash** - For financial statement purposes, the Company considers all investments purchased with a maturity of three months or less to be cash equivalents. The Company periodically holds cash in excess of federally insured amounts. **Accounts Receivable** - Accounts receivable are based on current contracts and stated at estimated net amounts due. The Company considers all accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts is required. If amounts are determined to be uncollectible they are charged to operations at the time of such determination. **Equipment and Software** - Equipment and software are recorded at cost. Depreciation is computed using straight-line methods for all assets over a period of three to five years. **Impairment of Long-Lived Assets** - The Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be fully {7}------------------------------------------------ #### **Note 1 - Nature of Business and Significant Accounting Policies (Continued)** recoverable. An impairment loss would be recognized when the estimated future cash flows from the use of the asset are less than the carrying amount of that asset. To date, there have been no such impairment losses. **Managing Broker Dealer and Marketing and Due Diligence Fees and Expense** - The Company recognizes managing broker dealer and marketing and due diligence fees on the trade-date as securities transactions occur. The company acts as principal as it relates to these fees given it is primarily responsible for fulfilling all marketing and due diligence functions related to its offerings. The company in turn pays a portion of these fees to third party broker dealers. **Income Taxes** - Income or loss of the Company is allocated wholly to its sole member. No income tax provision has been included in the financial statements since income or loss of the Company is required to be reported by the sole member on its income tax returns. **Estimates** - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. #### **Note 2 - Commission Financing Agreement** On May 2, 2018, the Company entered into a Commission Financing Agreement with Total Income+ Real Estate Fund, a Delaware Statutory Trust (the "Fund'') and ALPS, a wholly owned subsidiary of Kansas City based DST Systems, Inc (the "Distributor'') The Fund is a closed-end registered investment company under the Investment Company Act of 1940, as amended, and in the case of certain share classes of the Fund, an investor pays no commission on its purchase, but the Distributor has agreed to pay commissions to the selling broker-dealer pursuant to the Fund's prospectus ("Advanced Commissions''). The Distributor is entitled to receive distribution and shareholder servicing plan fees ("Plan Fees'') for a period of time, and contingent deferred sales charges ("CDSCs'') as repayment of the Advanced Commissions. Pursuant to the terms of the Commission Financing Agreement, the Company is to assist the Distributor in its efforts by providing for the Advanced Commissions, and the Distributor has assigned its recoupment rights to the Company, such recoupment in the form of Plan Fees and CDSCs payable proportionally over the 12-month period succeeding each Advanced Commission payment. The Plan Fees are based on Fund Net Asset Value ("NAV'') and can fluctuate from month to month. {8}------------------------------------------------ ### **Note 2 - Commission Financing Agreement (Continued)** The Company carries the balance of Advanced Commissions net of any recoupment related thereto as a component of "Prepaid expenses and other assets" on the balance sheet. The Advance Commissions are payable monthly on an arrearage basis, but are not included as a component of Accounts Payable, accrued or other liabilities as of the balance sheet date because the Advanced Commissions do not meet the true definition of a liability as it is the liability of ALPS, and not the liability of the Company. As of December 31, 2019, the Company paid total Advanced Commissions of \$4,945,883, of which \$4,276,975 has been recouped through Plan Fees, resulting in \$668,909 in future recoupment, which is presented as a component of Prepaid expenses and other assets on the balance sheet. ### **Note 3 - Net Capital Requirements** The Company is subject to the Securities and Exchange Commission Uniform Net capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1. The Rule also provides that equity capital may not be withdrawn, or cash dividends paid if the resulting net capital ratio would exceed 10 to 1. At December 31, 2019, the Company had net capital of \$383,343, and net capital requirements of \$102,360. The Company's ratio of aggregate indebtedness to net capital at December 31, 2019 was 4.00 to 1. #### **Note 4 - Related Party Transactions** For the year ended December 31, 2019, substantially all of the Company's revenues, were earned from investor transactions in various investment funds related to the Company by common control. As of December 31, 2019, the Company is due reimbursable expenses in the amount of \$4,671 from a related entity through common ownership and owes expenses in the amount of \$59,162 to a related entity through common ownership. For the year ended December 31, 2019, the Company expensed \$431,846 to Bluerock Real Estate Holdings, LLC, an entity related by common control, for shared office space in Michigan and New York, use of personnel, and certain overhead expenses. These costs are included in general and administrative expenses on the statement of operations. {9}------------------------------------------------ #### **Note 4 - Related Party Transactions (Continued)** For the year ended December 31, 2019, the Company's member, BR capital Markets, LLC, made contributions of cash in the amount of \$14,205,000 to the Company. These transactions are conducted in the normal course of business and are measured at their exchange value, which is the amount established and agreed to by the related parties. #### **Note 5 - Equipment and Software** Major classes of property and equipment are as follows: | | Amount | Depreciable
Life -
Years | |--------------------------------------------|---------------|--------------------------------| | Computers and equipment | 120,166
\$ | 3-5 | | Furniture and fixtures | 31,090 | 5 | | Leasehold improvements | 12,327 | 5 | | Computer software | 24,259 | 5 | | Leased office space under operating leases | 187,454 | 4 | | Total Cost | 375,296
\$ | | | Accumulated Depreciation | (127,144) | | | Net equipment and software | ~ 248,152 | | Depreciation expense was \$27,028 for the year ended December 31, 2019. Repairs and maintenance costs are charged to expense as incurred. All repairs or maintenance that increases the value, capacity, or lives of assets are capitalized and depreciated over their estimated useful lives. #### **Note 6 -Leases** The Company occupies office space at 4100 Newport Place, Suite 710 and 720 in Newport Beach, under lease agreements through January 31, 2022. {10}------------------------------------------------ #### **Note 6 - Leases (Continued)** Minimum future rental payments under non-cancelable operating leases are as follows: | Years Ending | Rental Payments | | | |-----------------------------|-----------------|--|--| | 12/31/2020 | \$
103,555 | | | | 12/31/2021 | 106,389 | | | | 12/31/2022 | 8,887 | | | | Total future lease payments | \$
218,831 | | | | Less Imputed Interest | 31,377 | | | | Lease Liability | \$
187,454 | | | #### **Note 7 - Adoption of New Accounting Standards** As of January 1, 2019, the company has adopted ASU 2016-02, "Leases Topic 842." The amendments in this update require, among other things, that lessees recognize the following for all leases (with the exception of leases with a duration of less than 12 months) at the commencement date: (1) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-to-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. The Company applied a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company reviewed all contracts related to this standard and determined the present value of the lease payments. The impact of adoption was not material and had no impact on the results of operations. #### **Note 8 - Economic Dependency** The Company is dependent on related entities, properties, and equity offerings, for revenue and equity contributions that are essential and critical, including but not limited to commission income, reimbursed costs, and member contributions. In the event that these related entities and properties are unable to provide substantial income and equity contributions, the Company would be required to seek revenue from other sources. {11}------------------------------------------------ #### **Note 9 - Liabilities Subordinated to Claims of General Creditors** The Company had no liabilities subordinated to the claims of general creditors during the year. Therefore, no statement of changes in liabilities subordinated to the claims of general creditors is presented in these financial statements. #### **Note 10 - Subsequent Events** The Company has evaluated subsequent events through February 28, 2020, the date on which the financial statements were available to be issued for possible recognition or disclosure in the financial statements. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.