The Distressed Asset Acquisition Program - April 2, 2008

We are pleased to announce the creation of the Distressed Asset Acquisition Program.  This new program will facilitate the acquisition of distressed commercial real estate and debt from institutional and non-institutional capital sources as well as acting as a clearing house for lenders liquidating REO and loans in default.

MISSION:    We will provide the capital to the developer and/or asset management group that has identified a favorable acquisition opportunity and needs debt and/or equity to complete the purchase.  The goal of this is to enable the developer/manager to close very quickly to take advantage of the significant discount typically offered an all cash purchaser.

FUNDING:  We have created strategic alliances with Investors that will provide the requested funds.  This diverse group of capital partners will enable us to fund a wide variety of different asset and property types.

TRANSACTION TYPES:  DAAP will focus on enabling the following kinds of transactions:

• the purchase of distressed commercial real estate from lenders
• the acquisition of loans at discount from lenders
• the funding of short pays or senior debt with a lender subordinating its current debt.
• providing both debt and equity for outstanding turn-around opportunities.

PROPERTY and DEAL TYPES:

• Commercial, multi-family and residential development properties will be considered.  No one off single family homes will be considered.
• Condo's will be considered where the acquisition makes sense as a repositioning opportunity as rentals or in very robust markets.
• Partially completed construction projects will be considered where institutional lenders have ceased to fund.

CRITERIA FOR DEBT TRANSACTIONS:

• The transaction is an outstanding opportunity to acquire either debt or a hard asset at deep discount.
• The Borrower is experienced in developing and operating the asset type.
• The Borrower has a business plan that contemplates a pay-off to the Investor typically in less than 24 months although phased transactions will be considered.
• Transactions that rely on the passage of time for value creation will not be considered.
• The Borrower will put in a minimum of 20% to 30% of the cost of the transaction including redevelopment costs.
• The Borrower has excellent credit and is willing to personally guarantee the loan.
• Estimated costs for these funds are 4 to 6 points and 12% to 16% interest.  Typically, interest is pre-funded for the term of the loan.
• Loan amount is a minimum of $2,000,000

 
Additional Criteria for Debt plus Equity Transactions:

• The Borrower will put in a minimum of 10% of the cost of the transaction including redevelopment costs.
• Investor will realize an IRR of at least 22% on the equity component of the transaction.
• Minimum transaction size of $2,000,000