revere credit opportunities fund iii, lp asset … · term 12/12 12 months original loan term with...

REVERE CREDIT OPPORTUNITIES FUND III, LP

ASSET MANAGEMENT REPORT

2nd QUARTER 2018

LEGAL DISCLAIMER

NOT A SOLICITATION AND FORWARD LOOKING STATEMENTS

This presentation, furnished on a confidential basis to the recipient, is neither an offer to sell nor a solicitation of any offer to buy any securities, investment product or investment advisory services, including interests in Revere Credit Opportunities Fund III, LP (the “Fund”). This presentation is subject to a more complete description and does not contain all of the information necessary to make an investment decision, including, but not limited to, the risks, fees and investment strategies of the Fund. Any offering is made only pursuant to the relevant information memorandum, together with the current financial statements of the Fund, if available, and a relevant subscription application, all of which must be read in their entirety. No offer to purchase interests will be made or accepted prior to receipt by an offeree of these documents and the completion of all appropriate documentation. All investors must be “accredited investors” and “qualified purchasers” as defined in the securities laws before they can invest in the Fund.

This presentation is not an advertisement and is not intended for public use or distribution and is intended exclusively for the use of the person to whom it has been delivered by Revere Capital Management, LP. This presentation is not to be reproduced or redistributed to any other person without the prior consent of Revere Capital Management, LP.

Past performance results of any principals or affiliates of Revere Capital Management, LP are not indicative of, and do not guarantee, any future results and no assurances can be given that the investments of the Fund will be liquidated at a profit, or the level of profit, if any. Furthermore, there is no guarantee that the performance of the Fund will be similar to the performance of any of the prior investments made by any such principals or affiliates or that similar investments will be made by the Fund. Neither Revere Capital Management, LP, nor any of its principals, officers, employees or associated funds or entities hereby makes any representation to any person or entity as to the suitability for any purpose of an investment in any fund associated with Revere Capital Management, LP.

Figures provided herein are rounded as applicable. Information contained herein is believed to be accurate and/or derived from sources which Revere Capital Management, LP believes to be reliable; however, Revere Capital Management, LP does not represent that the information herein is accurate, true or complete, makes no warranty, express or implied, regarding the information herein and disclaims any and all liability as to the completeness, adequacy, truth, use or accuracy of the information contained herein and for any omissions of material facts. Investment ideas and case studies listed in this presentation are for illustrative purposes only. There should be no assumption that any specific investments identified and described herein will constitute a Fund investment or that such investments were or will be profitable.

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SUMMARY OF KEY TERMS

USE EXAMPLE EXPLANATION (UNLESS OTHERWISE INDICATED HEREIN)

Term 12/12 12 months original loan term with 12 month extension

Origination Fee 3%/1.5%3% fee on the full loan amount paid upon loan origination with a 1.5% fee on the full loan amount paid upon loan extension

Annual Interest Rate 10% 10% per annum on the loan amount, calculated on a 30/360 basis

Exit Fee 2% 2% fee on the full loan amount paid upon loan repayment

Minimum Interest 9 Minimum interest of 9 months due on the loan irrespective of actual loan repayment date

Collateral 1st Lien 1st Lien Mortgage on the subject property

2nd Lien (NR) Soft 2ND Lien Mortgage (Non-Recorded)

Pledge (8) Certificated, opted in to Article 8

Performing Loan Loan on which payments of principal (where applicable) and interest are within the parameters of the loan documents

Non-Performing LoanLoan on which payments of principal (where applicable) and/or interest are not within the parameters of the loan documents

Foreclosure Foreclosure proceedings have been initiated based on defaulted loan

Real Estate Owned (REO) Real estate owned by Revere after an unsuccessful sale at foreclosure auction

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SoutheastSouthwest

WestMidwest

Northeast

INVESTMENT REGIONS

*SEE GEOGRAPHIC DIVERSIFICATION ON PAGE 5

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PERFORMING LOANS

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▪ Experienced Borrower who has an extensive track record in the multifamily space, including current ownership of approximately 5,000 apartment units in 23 properties across the Southeast

▪ Property has recently undergone significant improvements and renovations

▪ $1.6M held in reserve for additional capital expenditures and upgrades

▪ Columbia multifamily market has experienced rapid growth over the last several years and that is projected to continue

▪ Exit is expected to be through refinancing via Fannie Mae upon completion of planned capital improvements

SOUTH CAROLINA APARTMENTS

Status Performing

Product Type Multifamily

Initial Loan Amount $15,957,000 ($38,084/unit)

Fully Funded Amount $18,140,000 ($43,294/unit)

Acquisition Cost $22,270,000 ($53,150/unit)

Loan to Cost (initial advance) 72%

Initial Term/Extension Term

Loan Amount $18,140,000

Origination Date March 2018

Original/Current Maturity Date March 2020

Term / Extension 24/12

Origination Fee 1%

Annual Interest Rate Prime + 3%, with a 7.50% floor

Exit Fee 1%

Location Columbia, SC

Description 419 unit apartment complex in Columbia, SC

Security

- 1st Lien Mortgage/Deed of Trust

- Blanket lien on all personal property of the Borrower

- Assignment of 100% of the sponsor’s ownership/membership interests in the Borrower

GuarantyA carveout guaranty for “bad boy acts” with standard springing recourse provisions from one of the sponsor’s “warm body” members

CURRENT LOAN OVERVIEW

LOAN TERMS

COLLATERAL DESCRIPTION

HIGHLIGHTS

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▪ Loan to owner of Shiekh Shoes, a privately held athletic shoes and apparel retailer founded in 1991 with more than 100 stores in 10 states

▪ Loan proceeds used to refinance a commercial property in Santa Monica and fund working capital of company

▪ Collateral includes a 1st lien on a 10,723 SqFt, beachfront property in Santa Monica, CA that has been listed for sale for as much as $29M, a 1st lien on a fully leased, standalone retail property in Humble, TX (Houston MSA) and a pledge of 100% of the ownership interest in a holding company that wholly owns 8 properties

▪ Revere has issued a conditional commitment letter to fund an additional $5M which would increase the loan amount to $15M

SHIEKH SHOES

Status Performing

Product Type Retail and Commercial Property


Value $18,000,000

LTV 56%



Origination Date February 2018

Original/Current Maturity Date February 2020

Term 24/12

Origination Fee 1%

Annual Interest Rate Prime + 3.85% with a floor of 8.35%

Exit Fee 1%

Location Various (California and Texas)

Description Nine Properties (90,000 SqFt)

Security

- 1st Deed of Trust on Santa Monica and Humble Properties

- Pledge of 100% of ownership interest in holding company that wholly owns 8 underlying properties


LOAN TERMS


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GuarantyFull recourse to the Borrower and full recourse to the aforementioned holding company

HIGHLIGHTS

▪ A 183,310 SqFt retail shopping center that is anchored by Levine’s Department Store, Family Dollar, and an incoming fitness gym, Fitness Connection

▪ Upon the addition of Fitness Connection, the property will be 88% occupied

▪ Borrower purchased the center in December 2017 and signed a 15 year lease with Fitness Connection

▪ Revere’s initial loan advance of $1,956,156 was used to refinance a seller carryback

▪ At closing, Revere funded reserve accounts (held by Revere) in the amount of approximately $3.5M to be used for budgeted tenant improvements and leasing commissions related to the Fitness Connection lease as well as property capital expenditures

▪ Property is appraised for $11,425,000 at stabilization and following all planned capital improvements

SQUARE 67 SHOPPING CENTER

Status Performing

Product Type Retail – Shopping Center


Value $5,400,000

LTV 49%



Origination Date February 2018

Original/Current Maturity Date February 2020

Term 24

Origination Fee 1.5%

Annual Interest Rate LIBOR + 6.25% with a floor of 7.75%

Exit Fee 0.5%

Location Dallas, TX

Description 183,310 SqFt retail shopping center

Security

- 1st Deed of Trust

- Assignment of leases and rents

- Assignment of contracts, agreements, management agreements, franchise agreements, etc.


LOAN TERMS


HIGHLIGHTS

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Guaranty

Full recourse to Borrower; completion of the capex budget, all landlord obligations of the Fitness Connection lease, non-recourse carveouts and the environmental indemnity will be guaranteed by Sponsors

▪ An affiliate of Borrower has been the building’s tenant for nearly 20 years and has maintained a successful relationship with its single client, a very large player in the retail grocery space, throughout those years

▪ With ownership of the property, Borrower plans to expand the property’s SqFt and take on more business for its client

▪ Cold Storage buildings that are already constructed carry considerable value as it is very cost prohibitive to build a new one

▪ The 6 individual Sponsors are financially strong with a diverse portfolio of business holdings

HOUSTON COLD STORAGE

Status Performing

Product Type Industrial – Cold Storage


Appraised Value $6,700,000

LTV 60%



Origination Date December 2017

Original/Current Maturity Date July 2019

Term 18

Origination Fee 2%

Annual Interest Rate Prime + 2.75% with a floor of 7%

Exit FeeIf repaid in months 1–12: 1%If repaid in months 13–18: 2%

Location Houston, TX

Description 66,000 SqFt cold storage facility

Security

- 1st Lien on the property

- Blanket lien on any and all personal property of Borrower

- Pledge of 100% of the ownership interest in Borrower

- Assignment of leases and rents

- Assignment of contracts, agreements, management agreements, franchise agreements, etc.


LOAN TERMS


HIGHLIGHTS

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GuarantyLoan will be full recourse to Borrower and personally guaranteed, joint and several, by the 6 individual Sponsors

▪ Experienced Borrower who has a track record of success in the hospitality industry

▪ Mediterranean and Moroccan themed resort that has won national acclaim

▪ Property has seen NOI grow from $600K in 2014 to over $1M TTM

▪ Located in Palm Springs, a large and growing, tourist destination

▪ Proceeds will be used to acquire and reposition additional boutique hotels

▪ Exit will be through either refinancing or sale

KORAKIA PENSIONE HOTEL

Status Performing

Product Type Hospitality

Investment Amount $3,060,000

Value $11,540,000

LTV 71% (combined with senior debt)


Investment Amount $3,200,000

Investment Date October 2017

Original/Current Maturity Date October 2020

Term 36/12/12


Annual Preferred Return 12%

Exit Fee 2%

Location Palm Springs, CA

Description 28-room, Mediterranean-themed boutique hotel

SecurityPreferred equity investment and springing pledge of 100% of the ownership interests in property; Sponsor personally guarantees the top $1M of the investment


LOAN TERMS


HIGHLIGHTS

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▪ Experienced local Sponsors who have a track record of success in the restaurant industry, particularly on the West Coast

▪ Very desirable lot located in West Hollywood, a high-growth submarket of Los Angeles

▪ Loan proceeds will be used to acquire the property from the current owner with significant cash contributed by the Sponsors

▪ Exit will be through either SBA financing or a sale of the property

SUNSET BOULEVARD

Status Performing

Product Type Retail

Loan Balance $6,161,000

Purchase Price $9,000,000

LTV 68%


Original Loan Amount $6,161,000

Investment Date October 2017

Original/Current Maturity Date April 2019

Term 18

Origination Fee 1%

Annual Interest Rate Prime + 3.75% with floor of 8%

Exit Fee 1%

Minimum Interest 12

Location Los Angeles, CA (West Hollywood)

Description 9,511 SqFt single tenant restaurant sitting on a 33,520 SqFt lot

Security

- 1st Lien on property

- Pledge of ownership interest in Sponsors’ established and profitable restaurant portfolio

Guaranty Full recourse to Borrower and 2 individual Sponsors


LOAN TERMS


HIGHLIGHTS

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▪ Property is held by Sponsor as one of a portfolio of 12 skilled nursing facilities, all of which were being refinanced with US Housing and Urban Development (“HUD”) backed debt until the property was damaged in December 2015 by a tornado

▪ Property was repaired, has begun lease-up and requires stabilization and seasoning prior to folding into the portfolio HUD financing; the loan provides a bridge and placeholder for a HUD refinancing

▪ Property is leased by one of the largest skilled nursing facility operators in Texas with approximately 13 years remaining on the initial lease term as of loan closing

▪ Borrower provided initial cash collateral of $2.5M (Revere’s initial net loan exposure was $7.5M) resulting in a LTV of 68%; Borrower met requirement for release of $1M; Borrower will contribute $1M annually on a monthly basis to the reserve; current LTV based on current reserve balance (~$2.2M)

▪ Revere has a deposit account control agreement on the operating account of the holding company that wholly owns the 12 skilled nursing facilities that generate approximately $14M annually in CFADS

TEXAS SKILLED NURSING FACILITY

Status Performing

Product Type Skilled Nursing Facility



LTV 75% (see details in Highlights section)



Investment Date April 2017


Term 24/12

Origination Fee 2%

Annual Interest Rate 10%

Exit Fee 2%

Minimum Interest 12/3

Location Rowlett, TX (Dallas MSA)

Description Skilled nursing facility with 169 licensed beds

Security


- $2.5M initial cash collateral

- $1M annual cash reserve contribution

- DACA on holding company’s operating account

GuarantyFull recourse to Borrower and the holding company that owns the 12 SNF portfolio


LOAN TERMS


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HIGHLIGHTS

▪ Revolving credit facility secured by all assets of a specialty finance company focused on the film and media industry

▪ Borrower has 5 primary financing products on film and media productions: union deposit advances, distributor minimum guarantees, tax credit advances, merchant cash advances and bridge loans/gap financing

▪ Borrower has extensive experience in all aspects of movie production, including budgeting, production, payroll, post-production and sales, including an affiliate film production company

▪ Loan proceeds will be used to finance existing loans and new originations

MEDIA FINANCE COMPANY

Status Performing

Product Type Specialty Finance


Loan Commitment $10,000,000

Advance Rates 65%/80%




Original/Current Maturity Date October 2020

Term / Extension 30


Annual Interest Rate Prime + 7.75%

Exit Fee 0.75%

Location National

Description Senior secured loans on film and media assets

Security 1st Lien on all assets

Guaranty Non-recourse with standard carve-outs


LOAN TERMS


HIGHLIGHTS

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▪ Revere is part of a consortium of lenders to provide a $35M revolving credit facility to wholly-owned subsidiaries of MoneyKey, Inc.

▪ Revere assigned 75% of its loan exposure to a 3rd party for diversification purposes in June 2017

▪ MoneyKey is a technology driven provider of microcredit loans to underserved and “un-bankable” borrowers

▪ Core products are loans ranging from $200 to $1000 for terms of less than 1 year and carry interest rates greater than 350%

▪ MoneyKey also has a “large dollar” product for loans of approximately $2,500 with 18 month terms and interest rates of more than 190%

▪ Loan proceeds will be used to finance existing loans and new originations

MONEYKEY

Status Performing

Product Type Specialty Finance

Current Loan Balance $754,167 (Revere’s Share)

Current Loan Commitment $2,916,667 (Revere’s Share)

Advance Rates 65%-85%


Original Loan Commitment $11,666,667



Term 36 Origination Fee 0%Annual Interest Rate 30 day Libor + 13%Exit Fee 0%Prepayment Fee 3% year 1; 2% year 2

Location National

Description Unsecured subprime loans

Security 1st Lien on all assets of Borrowers and Guarantors

Guaranty Full recourse to Borrower and Corporate Parent


LOAN TERMS


HIGHLIGHTS

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EXITED LOANS

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▪ Experienced local Borrower who has successfully leased the property to its current occupancy of 80% from 30% at the time of acquisition in 2015

▪ Class B office building in a submarket that has experienced significant positive net absorption since the beginning of 2011

▪ Loan proceeds will be used to refinance Borrower’s current senior loan and to fund tenant improvements for an incoming tenant

▪ Exit will be through either conventional financing, once property is stabilized, or a sale of property

SACRAMENTO OFFICE

Status Paid-off (6/7/18)

Product Type Office



LTV 70%



Investment Date May 2017

Original/Current Maturity Date May 2019

Term 24

Origination Fee 1%

Annual Interest Rate Prime + 3.5% with floor of 7.25%

Exit Fee 1%

Minimum Interest 10

Location Sacramento, CA

Description 100,000 SqFt multi-tenant office building

Security


- Blanket lien on all personal property

- Pledge of 100% of interest in Borrower

- TI/LC Reserve

GuarantyFull recourse to Borrower; guaranty from 2individual Sponsors for 20% of the loan amount


LOAN TERMS


HIGHLIGHTS

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Dallas | San Francisco | Darien | Atlanta

www.reverecapital.com

214.227.9337

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revere credit opportunities fund iii, lp asset … · term 12/12 12 months original loan term with...

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