Capable and experienced management is critical to Investment Fund success. Nothing can replace experience and a long record of investment success. WINPRO Managers have over 50 combined years of experience in commercial real estate investing, management, and debt investing. Recently, WINPRO had the opportunity to demonstrate its fund management expertise.
In 2019, WINPRO purchased two individual loans encumbering a commercial real property in Boulder, CO. The two loans represented a 1st and 2nd lien-hold position in the title. The 1st loan was purchased from a regional bank, the 2nd loan from a governmental entity. Both loans were in default at the time of purchase. The 1st loan was accruing interest at the default interest rate of 21%. WINPRO received a substantial discount when it purchased the 2nd loan. In the aggregate, WINPRO’s investment basis in the two loans was approx. $650,000. Based on its underwriting, WINPRO estimated the value of the real estate collateral to be approximately $1,000,000.
WINPRO’s Management Team made exhaustive attempts to negotiate a loan work-out with the Borrower(s) – to no avail. After these work-out attempts failed, WINPRO instructed the Boulder County Public Trustee to initiate foreclosure proceedings pursuant to the 1st lien-hold position. This was a strategic decision. Based on WINPRO’s expertise in foreclosures, Management contemplated that a 3rd party investor would purchase the property at the foreclosure sale – for a sale amount in excess of what was owed to WINPRO on the 1st lien position – including all accrued default interest! Management determined that if the 3rd party bid was not in an amount sufficient to satisfy WINPRO’s investment return thresholds, then WINPRO could redeem the property from the 3rd party investor per WINPRO’s 2nd lien-hold position. These strategic maneuvers required a significant amount of knowledge of the intricacies of foreclosure law and tactics. After the foreclosure filing, a new, but not an unanticipated, event occurred – the borrower filed for bankruptcy protection. Management’s original underwriting had analyzed the bankruptcy risk, and Management was prepared for this eventuality. WINPRO knew that the total amounts owed on the property were more than the subject property’s market value, and as such, the borrower would have difficulty consummating a bankruptcy plan. WINPRO petitioned the bankruptcy court for a Relief of Stay, which was granted by the court. Thus, based on the court’s ruling, the Boulder County Public Trustee proceeded with the foreclosure action.
In May 2020, the subject property was sold at Public Trustee’s sale. At the sale, a 3rd party investor did, indeed, purchase the property by overbidding WINPRO’s initial bid by a whopping $125,000 (3rd party overbid). This 3rd party overbid did not, however, satisfy WINPRO’s investment return expectations, so WINPRO decided to file an Intent to Redeem pursuant WINPRO’s 2nd lien-hold position. Per Colorado State Statute, WINPRO had approximately 25 days to effectuate the redemption. During these 25 days, several investors approached Management inquiring whether WINPRO would consider selling its 2nd lien-hold position. WINPRO’s Management weighed the various offers, calculated the possible returns, and consider the market risks associated with the COVID crises. After a thorough analysis, WINPRO’s Management decided to accept an offer for its 2nd lien-hold position – thus entirely liquidating its remaining lien interests. WINPRO’s Management decided to sell its remaining lien interest via a seldom used, or heard of, transfer document – Assignment of Certificate of Redemption. This allowed WINPRO to sell the entirety of its lien-hold interest without ever having to take title to the subject property – thus avoiding any attendant risks. At the conclusion of this transaction, WINPRO realized a 20% investment return for its investors – all without ever taking title to the property.
This example exemplifies the add-value of active management. WINPRO’s Management Team brought their knowledge and expertise in commercial real estate underwriting, loan sales, market knowledge, negotiating skills, foreclosure law and tactics, bankruptcy law, and risk management into a single transaction so to achieve an excellent return for its investors. Many sponsors in today’s real estate investment, and debt investment industry, claim management expertise; but very few Fund Managers have the depth and breadth of experience required to execute complex real estate transactions as described above.
WINPRO is currently accepting investments in its recently launched real estate debt fund: WINPRO Debt Opportunity Fund II, LLC (WDOF II). WDOF II offers investors:
- 10% Preferred Return on Invested Equity
- 80/20 Carried Interest Splits
- 50/50 share of Loan Fees
- $50,000 Minimum Investment – perfect for IRA, 401k, individual investors
- ESG Investing
- Quarterly Reporting and Distributions
- Professional Management