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In this podcast transcript I talk with an attorney who was responsible for structuring four separate distressed assets funds including the equity raise strategies over the last 12 months. We talk about the 6 key components to a successful distressed assets fund
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1 of 16 Wednesday, January 6, 2010 | distressedpro.com
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PODCAST
TRANSCRIPTwww.distressedpro.com
6 Key Components to a Successful Distressed Assets Fund
Brecht Palombo and Warren Kirshenbaum
Brecht:Gooda&ernooneverybody.IampsychedtohaveWarrenKirshenbaumonthephonetoday.Warren’sana:orneyImetmaybeayearortwoormaybeeventhreeyearsagonow.Heislocaltome,he’sjustoutsideofBostonandI’mexcitedtohavehimonthephonetodaymainlybecauseofonethinginparDcularthathe’sbeenpre:yinvolvedinandthat’sbeenstructuringdistressedassetfunds.
Infact,Warren’sbeentheleada:orneyinassemblingandstructuringdistressedassetfundsandcreaDngtheequityraisestrategiesforfourseparatedistressedassetinvestmentfundsin2009.FullyleveragedthefundsizeWarren’sbeenworkingonrangefrom$3millionto$35million.
ThefundsrangefromthoseseekingsinglefamilyhomestothreetosixfamilyhomesandcommercialproperDesbothretail,industrial,flex,mulD‐familyandreallythewholegamete.
WarrenhasalawdegreefromNewEnglandLawandamaster’sincorporatelawfromNYU.HepracDcedinNewYorkbothin‐houseforWallStreetInvestmentHouseandinprivatepracDceforalawfirm.
Hewasthegeneralcounseltoalargerealestatedeveloper,managerandbuilderbasedinTexasandnowuseshiscorporatesecuriDesbackgroundinrealestatetaxbackgroundtothegreatbenefitinstructuringdistressedassetfunds.
SoWarrenthanksforbeingonthecall.
WarrenKirshenbaum:ThankyouBrechtthatwasreallynice.Thankyou.
Brecht:Well,thereasonIwantedtohaveyouonthecallisrecentlyIsawsomethingthatyouwroteanditjustreallystruckmebecauseinmyposiDonIhavealotofpeoplewhoaretalkingtomeaboutfundsandthey’repuYngtogetherafundorthey’rejustclosingonafundorthey’rebirddoggingforafundorwhathaveyouwhereyouarereallygeYngalotofexperiencewiththisquicklyrightinthethickofitthatyou’dbejusttherightguytotalkto.
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So,tellmewithoutrevealingtoomuchaboutafundmaybethatyou’vesetuprecently?
WarrenKirshenbaum:Okay.There’stwofundsthatareinteresDng.Oneisafundthatisfocusingoncommercial,I’msorry,residenDalassets.Andthey’relookingforsingle‐familytypedistressedassetslikesinglefamilyhomesandsmallmulD‐familyuptoabout12units.
Brecht:Okay.
WarrenKirshenbaum:AndtheyhaveanintricatestructureinthattheyarepuYngtogethertheholdingcompanyandthenraisingthefunds,severalfunds,subsequenttothat.
ThefirstonewillbethisonethatfocusesonsinglefamilyandsmallmulD‐familyandthenit’sgoingtomoveontodifferenttypesofassets.Somewillbelargeapartmenttypecomplexesaswellasthey’relookingtopurchasethemortgagesandnotesandthingslikethatandputthatintoafund.
Soit’skindofacomplexfundwhichisstarDngoutraisingmoneyrightatthetopattheholdingcompanylevelandthengoingdownfromthere.
Brecht:Okay.
WarrenKirshenbaum:Thesecond,onejustbriefly,ispurelyfocusingoncommercialassetsanditisabunchofdevelopersthatareexperiencedinaparDcularareathathavethelocalcontacts.Theyknowit’stheirbackyard,ifyouwill,andsothey’reraisingalargeamountofmoneyandthey’relookingtopurchaseassetsthattheyknowareundervaluedinthemarketplaceandthatisagoodonebecausethey’veveryfocused.They’reknowledgeableintheirparDcularareaandtheinvestorsareinvesDnginsomewhatofaknownquanDty.
Brecht:Okay.Welllet’sgetintothedetailsthenali:lebitormaybeaboutthespecificfundsorhoweveryouwanttodoit.ButIknowthatyouhadlaidoutsomeveryclearpoints,sixofthem,andIkindofwanttomovethroughthoseali:lebit.AndthefirstonethatyouhadwasknowyourpurposeandIwonderifyoucouldtalkaboutthatali:lebitandsortoftheconversaDonsthatyou’rehavingwithyourclientsasyou’repuYngthesefundstogetherandknowingtheirpurpose.
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WarrenKirshenbaum:Okay.Whatwe–IstartedthisasIsensedinthemarketthatcapitalwasbecomingverydifficultformyclientstosecureeventhoughtheopportuniDeswhereoutthereintermsofundervaluedproperDesandgoodbuysfortheclients.
Althoughwedidn’tinventtheconceptwestartedtotryandrefineitinthesensethattheseparDcularclientsthatI’dbetalkingtowouldtryandcreateapoolofinvestorfundswhichtheywouldholdinafundtypeenDtyandtherebybecreaDngtheequitythattheyneedtogooutandpurchasedistressedassetsandtheconceptisthatthiswillgivethemtwothings;onebeingthey’llbeabletomeetevenmorerestricDveunderwriDngrequirementsfrombanksorthey’llbeabletonegoDatewithoneinsDtuDoninparDcularthattakesalookattheirbusinessplanandispreparedtoridewiththeminacquiringtheseassetsknowingthattheyhaveapoolofcapital.
Brecht:Okay.
WarrenKirshenbaum:Okay,andsecondlywe’vefoundthatthereareanumberofinvestorsoutthereinthemarketparDcularlywiththeresidenDaltypedistressedassets,moreifit’ssinglefamilyhometypeproperDeswheretheseinvestorsbecomecashpoorandtheyhavesecuredpurchaseandsaleagreementsorevenclosedonsomeassetsbuttheyneedtogetridoftheseassetsquickly.Andthey’rehappyifthey’vepurchasedormet50centsonthedollartomakea10or15centprofitandthengivethemofftoclientsofmine.
SohavingafundinplacemakesmyclientshaveapreferableposiDonwiththesellersofassetsandtheyhaveasourcetogetridoftheirdistressedassetswhentheyhavepurchasedtoomanyortheyneedtoloosenupsomecash.
Brecht:Okay.AndsoasIunderstanditthen,letmejustkidofrecapthatbecausemaybeI’mali:ledumbbutIjustwanttomakesureIunderstand.Soyourclients,inthisparDcularfundanyway,intermsofknowyourpurpose,whattheirsisisthey’resortof–itsoundslikethey’realmostarescuefundwherethey’veassembledcapitalandthey’regoingtocomeoutandkindofswoopinonsomeotherpeoplewhoaredigginguptheopportuniDesoramIgeYngthatright?AmIclose?
WarrenKirshenbaum:Yeah,thatisclose.
Brecht:Okay.
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WarrenKirshenbaum:Ithinkthattheywouldalsotalktopeoplelikeyouwhohaveknowledgeofassetsinthemarketplace.Maybeevenlendersthathaveablockofassetsthattheywouldbepreparedtoletgo.
Brecht:Isee.
WarrenKirshenbaum:Sobuttheconceptis,isifthere’safundinapoolofcapitalthey’llbeabletogetbe:erpricingoraslewofbe:erassets.
Brecht:Okay.
WarrenKirshenbaum:Soinasenseitmeansthattheconceptistopullinvestorequityandgooutandpurchasetheseassetsbutknowwhatyourbusinessplanisbeforegoingintoit.
So,forinstance,ifyou’reonlylookingatsinglefamilyhomesoryou’relookingtopurchaseblocksofproperDesfrombanksorapproachingpeoplelikeyouthesearealldifferentsourcesandIthinktheyrequiredifferentplanningandstrategies.
SoI’msayingcreateyourbusinessplanindetailupfront.
Brecht:Okay,allright.Sonumber1,knowyourpurpose.Number2,createaso&offering.What’saso&offering?
WarrenKirshenbaum:WellthewaythatI’vebeendoingitisaprivateequityoffering.WhichmeansthatweareseYngupanenDtyandthensellingoffalargepercentageofthatenDtytoinvestorssoit’sasaleofsecuriDesbutit’sexemptfromregistraDonunderboththefederalandthestatesecuriDeslawssolongasyoufollowthelegalrequirement.
SoI’msayingthatyoushouldbecreaDngasetofofferingdocumentswhetherthat’saprivateplacementmemorandumoraninvestorpresentaDoncoupledwiththeoperaDngagreementorlimitedpartnershipagreement,subscripDonagreements,investorquesDonnairesandyou’remeeDngallthelegalrequirementssuchthatyou’refullydisclosingtoinvestorswhatthedealis,whatthey’regeYng.AndyouaregeYngappropriateinvestorsfortheinvestment.
Brecht:Okay.Sointheso&offeringisthisfamilyandfriendsmoneyisthatwheretheygenerallystart?
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WarrenKirshenbaum:Itisfamilyandfriendsmoneybutitneedstoexpandali:lebitbeyondthattogetthefundofftheground.
Brecht:Sure.
WarrenKirshenbaum:Soyouwillbe–inevitablyit’sgoingtobefamilyandfriendsandthensome.
Brecht:Okay.Andsoareyoulimitedatalltothescope?Iguessthistakesustonumber3,raisecapital.Arewelimitedatallinscopeintermsofwhowe’retalkingtoorhowmanypeoplewe’retalkingtoorhowmuchmoneywe’retakingfromthemindividually?
Tellmeabouthowthatworks?
WarrenKirshenbaum:Yeah,excuseme.It’sallofthosethingsinvariaDons.
Brecht:Okay.
WarrenKirshenbaum:BasicallythesecuriDeslawdefinesaccreditedinvestorsandnon‐accreditedinvestors.WithaccreditedinvestorshavingaparDcularrequirementsastowhattheirnetworthannualincomepriorandexpectedannualincomeistheirknowledgeofthesetypeofinvestmentsandthere’saspecificsetofparametersthatthefederalsecuriDeslawsgointowhichensuresthatpeopleare,socalled,accreditedinvestors.
AndyoucanlimityourofferingtoaccreditedinvestorsifthatisallthepeoplethatareinvesDnginyourparDcularfundthenitisunlimitedinhowmanyyoucanhave.
Brecht:Okay.SoIseealotoffundswhereyoudohavetobeanaccreditedinvestor.What’sthedifferencewhenyoudon’thavetobe?Howdoyoumakeitokaythatthey’renotaccreditedinvestors,yourinvestors?
WarrenKirshenbaum:Wellit’smuchriskierandclearlyanon‐accreditedinvestorcouldbesomebodythattheinvestmentisnotappropriateforthem.
AndagoodexampleusuallyisthatyoumayhaveaninvestorbecausethesecuriDeslawparameterstalkaboutannualincome,networth,thingslike
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thatsoyoumayhaveapersonthatactuallyhasahighenoughincomeoralargenetworth,forinstance,fromanestateyetthatpersonisnotsophisDcatedinthistypeofinvestmentsoitwouldbeinappropriateforthem.
AndthosearethekindoflegalissuesthatIgetafraidofandI’madvisingmyclientstobecarefulabout.
Brecht:Sure.
WarrenKirshenbaum:Sointhatcircumstanceifyouhaveanon‐accreditedinvestortheymightbecomingtothetablewithafinancialadvisorandifthatfinancialadvisorisgoingtobereceivingallthedocumentaDon,analyzingitandthenmakingthedecisiontogetherwiththeirclientthenthatmightturnouttobeappropriate.
Brecht:Okay.
WarrenKirshenbaum:Butit’safactualbasedconsideraDon.Soifyouareanaccreditedinvestorthenit’sclearlyamuchmoreappropriateinvestorfromthefundsperspecDve.
Brecht:Okay.AndareyouseeingtheprinciplesinthefundshowupandstartthefundwithsomesignificantiniDaldepositorwhat’shappeningthere?
WarrenKirshenbaum:Theycandoiteitherway.I’veseenthatthefundstendtobemoresuccessfulinraisingmoneyandgiventheinvestorsconfidenceifthefoundershaveinvestedactualmoneyintothefundthemselvesinaddiDontopayingthestartupexpensesorthesweatequitythattheyareobviouslypuYngin.
Brecht:Right.
WarrenKirshenbaum:Sothosedealsthatcomeupwithfoundersofthefundnothavingputtheirownmoneyinthosebecomemoredifficult.
Brecht:Okay.AndsogetsomecredibilitybypuYngsomeskininthegame.Gotoyourfamilyandfriendsandthatsortofathingtokindofstartandthenhowelsearepeopleraisingcapital?
WarrenKirshenbaum:Peopleareraisingcapitalthroughappropriatecontactwithindividualsandindustriesthattheyknow.
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Brecht:Okay.
WarrenKirshenbaum:Theclearlegalparameterhereisthatforanofferingtobewhatyoucalltheso&offeringsoitwouldbeexemptfromregistraDon.ItcannotbewidelydistributedoradverDsedandyoumustbeabletobeincontrolofwhoreceivesthesedocumentssothatyoucandeterminewhetherit’sappropriateornot.
Soitispossiblethatifthere’sseveralfounderstogetherwiththeirprofessionaladvisorsandeachofthemcompilealistofpersonsthatmaybeappropriatetheycouldspreadsheetthatanddosomeinvesDgaDonandcomeupwithalistofpeoplebeyondfamilyandfriendsthattheybelieveareappropriate.
Brecht:Okay.
WarrenKirshenbaum:AslongasyouaremakingsurethattheyhavenondisclosuredocumentaDoninaffectwithallthesepeople.YouknowwhohasreceivedthedocumentaDon,youhavecontrolnumbersandyoucanidenDfythatthenyou’recomplying.
Brecht:Okay.
WarrenKirshenbaum:It’swhereyouwidelydistributeitorhireabrokerdealerorgointoamassdistribuDonofthesedocumentsandyoucannottellwherethesedocumentshavelandedthatyoumaybecome–oftheregulaDons.
Brecht:Okay.Allright,soitsoundslikeprofessionalnetworkingisprobablythethirdpieceofthatinordertokindofkeepitundercontrol?
WarrenKirshenbaum:Yes.AndalsoIwouldsayjustfromexperiencethatevenifyou’refollowingalltherulesandregulaDonsandyouhaveaverywellcra&edsetofdocumentsthatcomplieswiththesecuriDesregulaDonsyouhavetoexecuteonthatappropriately.
Soforinstanceifyouthen,oneofthepeopleworkingwithyouwentovertoanursinghomeanda:emptedtosellthesekindoffundsecuriDestoanelderlypersonthatwouldDeup90%oftheirnetworthormorethanthatwouldbeinappropriatedespitethefactthatyourdocumentaDonisgood.
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Brecht:Okay.Okay,sodefinitelyitsoundslikethere’ssomemoralhazardsintheretoo.Andyou’regoingtojustmakesure–well,Iguessyou’vegottohavepropercounselonhowyou’reapproachingwhoyou’reapproaching.
WarrenKirshenbaum:Correct.
Brecht:Okay.Andsonumber4youhavehere,idenDfyappropriateopportuniDes.AndIknowthatthat’ssomethingthatIspendalotofDmewithandcertainlythemembersofthesitethat’slargelywhypeoplearememberslookingforappropriateopportuniDeswithbanksandthatsortofthing.Howelseareyour–thefundsthatyou’vehelpedputtogether,howaretheyfindingopportuniDes?
WarrenKirshenbaum:SubscribingtoWebsiteslikeyours.SomeprofessionalnetworkingsiteslikeLinkedInmayhaveasubgrouptherewherepeopleneedeachotherandsomepeopleareprivytocertainliststhatfinancialinsDtuDonshave.
They’renetworkingwithbrokers.It’sjustwhoyouknowIwouldsay.
Brecht:Right.Okay.Sonumber5,I’vekindofsurmisedit,andthesearemywordsandnotyourssoI’dliketohearyourwords.Iputknowyourlimits.
Itkindof–Igotasenseforwhatyouhadwri:en.Tellmeali:lebitaboutthatpoint.
WarrenKirshenbaum:Ithinkthat’sverysmartonyourbehalf.Ithinktheunderlyingthemehereisthatyouneedabusinessplanandthatgoesthroughstep–that’sbehindthestep1point,thestep4andnowstep5.
Andifyou’veidenDfiedwhichtypeofassetsyouaregoingtotargetinwhichparDcularareaandyouhaveasetofinvestmentparametersintermsofevaluaDngtheassetknowingwhatit’sgoingtotaketorehabilitatethatintermsofmoneyandeffort,thepihallsthatareinparDculartypesofassets.You’llbemoresuccessful.
SoIthinkifyoudon’tknowyourlimitsandyou’rejustgoingoutthereandthinkingthatyou’llbeabletosnaganytypeofundervalueassetwhetheritbeafourfamilyhomeorasinglefamilyhomeorsomethingmorethanthatIthinkthatisastrategythatmayleadtoissues.
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Brecht:Okay.
WarrenKirshenbaum:Ialsothinkthatyouneedto–ifyouaregoingtodevelopafundonceyou’veraisedthemoneyandyou’reouttherethere’salotofworkandthere’salotofpaperworkasadministraDon.
Forexample,therewouldbeleasingissues.You’vehavetofilltheunitsup,youhavetohavethelegaldocumentaDoninplace,you’vegottohaveapropertymanagereitheronsiteoravailableatoddhourstodealwithtenantissuesbutyou’vegottohaveintheofficetheabilitytomanagethepropertyfromthestandpointoffinancingandthosebehindthescenefactors.
SoittakesupalotofDme,effortandenergyandIthinkyouneedtoknowormakesurethatyou’recapableofexecuDngonthat.
Brecht:Especiallya&eryou’vemadepromisesandtakenmoneyandthissortofathingIwouldassume.
Ali:lehigherstakesthenifyou’rejustinthegameaskindoftheloanwolf.
Okay,soittakesustoournextpointwhichwaspointnumber6,communicaDonorcommunicate.Tellmeali:lebitaboutsortofwhatyourecommendorhowthat–what’sappropriateinthissortofafundsituaDon?
WarrenKirshenbaum:Well,ItriedtobeassimpleasIcouldintheseDpsbutitcangetverycomplicated.Andonceagaingoingbacktothebusinessplanthey’llbecertainthingswhichyoumayormaynotpromiseinyourofferingdocumentsandsobywayofexampleyoumaybemakingdistribuDonsonanannualbasisoreverytwoyearsoryoumaybeafundwherethere’snodistribuDonsthataregoingtobemadeatall.AndIthinkyouneedtobeclearinyourofferingdocumentsastowhetherornotyou’remakingdistribuDons.Andwhat–andthereforewhattypeofaninvestmentthisisbecausefirminvestorswillequatethistoaninvestmentwheretheyhavetheabilitytoretrievetheirfundsinthreeyearsiftheyfeellikeitwhereasthisisnotthattypeofinvestment.
Sothatneedstobemadeclear.Butifyouhavemadethekindofpromises,ifIcouldusethatwordinyouofferingdocuments,thatyouaregoingtobemakingdistribuDonsthenthatnowleadstoanobligaDontomakesurethatyouarereporDngappropriatelytotheinvestors.CreateacompliancefuncDonbecauseyoumayhavetobesellingassetsatpre‐
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determinedDmesinordertomakethesedistribuDonsversusjustrunningtheoperaDononcashflow.
AndsoI’msayingthatyouneedtobecareful.Youneedtokeepyourinvestorsinformed.YouneedtofulfilleveryoneoftheseobligaDonsorpromisesyoumadeintheofferingdocuments.Andtodothatyou’regoingtohavetohavesomekindofbackofficeoperaDon.
Brecht:Okay.
WarrenKirshenbaum:AndIthinkthatneedstobethoughtthroughveryclearlyastohowyou’regoingtoexecutethis,howmuchit’sgoingtocostandhowyou’regoingtokeepyourinvestorsinformedandcommunicatewiththem.
Brecht:Okay,goodstuff.Sowhat’sthebiggestmistakeoristheremorethanonethatyouseepeoplemakingwhentheywanttogetadistressedassetsfundgoing?
WarrenKirshenbaum:Theyarenotfocusedenoughintheirbusinessplanandthey’rekindofshooDngallovertheplace.Ithinkthatpeoplealsodon’t–theydon’tunderstandhowdifficultitistoraisemoneyandwhatisinvolvedinthat.Sothatprocessisalwaysmorearduousthenpeoplereallybelieve.
IwouldsaythosearethetwobigonesIwouldfocusonhere.
Brecht:Okay.Soletmeaskyouthisandwewon’tholdyoutoanything.I’mnotgoingto–we’renotgoingtocallandseehowthisworksoutbutthisissomethingthatIliketoaskeverybodyI’mhavingthesecallswith.
Useyourcrystalballandtellmehowlongthisdistressedrealestateopportunityisgoingtolastandwhyifyouwould?Whyyouthinkthat.
WarrenKirshenbaum:Okay.Ithinkthatit’ssDllgoingtobequiteawhile.
Brecht:Okay.
WarrenKirshenbaum:Meaningdefinitely2010andprobably2011andmaybebeyond.
Ithinkthatthefactors,theunderlyingeconomicmetricfactorsarethesamenowastheywerewhentheworldwasfallingapartinfallof’07.
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Brecht:Okay.
WarrenKirshenbaum:InthesensethatIthinkthereisafeelingthatwe’reoutoftherecessionandthingsarebe:erandcertainlytheyhaveimprovedbutalotofthesamefactorsaresDllprevalentandIthinkthatthedefaultsituaDonhas,intermsofresidenDal,hasshi&edtoconsumersthathadordinarytypeloansandnotjusttheexoDcloansorthesubprimetypeproduct.
There’shighunemploymentandjoblossesandthingsofthatnatureandIthinkintermsofthethingsthatthegovernmentwasabletoadvocateshouldbedonelikeloanmodificaDons.Idon’tknowthattheymadealotofsensetothefinancialinsDtuDonssoIdon’tknowthattheydidorcompletedalotofthemandsoIthinktherewerecertainlawsputinplace,forexample,inMassachuse:swehavetogiveaconsumera90daybreakiftheyfallbehindinthemortgage.ThatandthefactthatIthinkfinancialinsDtuDonsmayhavejustbeenholdingbackonactuallymovingforwardorforeclosures.
TherewasthecourtdecisioninMassachuse:sthatseemedtoinvalidateforeclosuresbasedonassignmentbackdaDngissues.
Sothere’salotoffactorswhichsignalifthere’sbeenastabilityinforeclosurepercentagesofforeclosuresoritlookslikeitmayevenbedroppingthatthat’safalseposiDve,ifyouwill.
SoIthinkthatthat’ssDllgoingtobeoutthereandsDllbeathreattoourmarketplaceandthere’sbeenwidespeculaDonthatthecommercialmarketplacehasn’treallyseenitsworstdaysyet.
SoforthesereasonsIwouldthinkthatwe’regoingtoseethisthrough2010andinto2011atleast.
Brecht:Yeah,Ithinkyou’rerightandjusttopickupononepointthatyoumenDonedtherewhereyoutalkedaboutmaybebanksnot,mywords,notpullingthetriggeroncertainassetsthatmaybeshouldbemovingthroughtheforeclosureprocessandthissortofthing.
Youdefinitelycanseethatinthebankprospectordatathatthebulkoftheproblemsareinnon‐accrual.It’snot–there’smany,manybillionsofdollarsthatjusthaven’tmovedoutofthenon‐accrualstageintowherethey’reactuallybeingprocessedandbecomingREOorelsebeingsoldoff.
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AndsoIthinkyou’rerightonalotofthosepointsthere.
WarrenKirshenbaum:Thankyou.
Brecht:AndDmewilltell.
WarrenKirshenbaum:Yeah,exactly.Youwon’tcallmeupthough,right?
Brecht:Sowhoareyoulookingtomeetandnetworkwithoutthere?Justwho’s–wherecanyouworkIguessisonethingpeoplemightwanttoknow.Ifsomebody’ssiYnginKentuckycanyouputtogetherthepaperworkforthemtodoadistressedassetsfundorisitMassachuse:sonly?
Sotellmeali:lebitaboutwhoyou’relookingtomeetandworkwithandanybodyelsethatoughttocontactyou.
WarrenKirshenbaum:Okay.WellthesecuriDeslawsarefederalsecuriDeslaws.SotheprimarypartofhowIfundwouldbeorganizedandstructuredinordertocomply.ThefederalsecuriDeslawswouldbethesamewhicheverstateyou’rein.
TheneachstatedoeshaveitsownsecuritystatutewhichtheyrefertogenerallyastheblueskylawsandsoifyouaredoinganofferinginaparDcularstatethenyouneedtopaya:enDontotheblueskylawsinthatparDcularstate.
Butitwouldbepossibleforsomebodywherevertheyareinthecountrytobeabletotalktomeorhiremebecausewe–evenifwereseYngupafundinMassachuse:swedon’tknowwherethoseulDmateinvestorsarecomingfrom.
Sosomebody’sfamilyandfriendsmaybeinFloridaorChicagoorNewYork.Soevenalocalfundherewemaybelookingattheblueskylawsofthree,fourorfivedifferentstates.
Soitwouldn’treallyma:ertomeorimpededmeinanywayifsomebodywassiYnginthestateofKentuckyandtheyweregoingtoberaisingtheirmoneytheirinTennesseeorTexas.Itwouldn’tma:eratall.
Brecht:Okay.
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WarrenKirshenbaum:IthinkI’vedevelopedagoodblueprintandtheformulaandbeinginthetrenchesonthisandIthinkthatexperienceiswhat’svaluable.
Brecht:Okay.Andsopeoplethatshouldcontactyouoranybodywho’slookingtoputtogetherafund,arethereothertypesofdistressedassettypebusinessthatyou’redoingtodayoristhatthemainfocus?
WarrenKirshenbaum:That’sthemainfocus.It’sjustthattheproductitselfmaydiffer.Forinstance,there’stalkofcertainfundswhichmayinvolvetaxcreditsoraffordablehousingorbelimitedtoaparDcularassetclasslikeIsaidbeforethepaper,insteadofbuyingthephysicalassetsaparDcularfundmayfocusonpurchasingthemortgagesornotesforadiscount.
Sothefundconceptisallthatwe’reconcentraDngonbuttheactualassetclassisdoingtodiffer.
Brecht:Okay.Sohowdopeoplegetaholdofyou?Howdotheyfindyou?
WarrenKirshenbaum:Telephone,email.TheycouldcheckouttheWebsite,theblog,whereIdescribedhowtosetthisout.
ShouldIjustgoaheadandlistallofthis?
Brecht:Yeah,shoot.
WarrenKirshenbaum:Thetelephoneis781‐239‐[email protected].
Brecht:Okay,great.Andwhat’syourblog?
WarrenKirshenbaum:Theblogish:p://distressedassets.wordpress.com.
Brecht:Okay,awesome.WarrenIreallyappreciateyoucomingontodayandIknowthatthisishelpfulformeespeciallylikeIsaid,I’vegotalotofpeoplecallingmewith–they’redreamingofafundorthey’restarDngafundorthey’vejustclosedafundandthissortofthingandsoyou’vereallybroughtsomeclarityformeonafewthings.
AndI’dlovetotalkwithyouagaindowntheroad.Sothanksforbeingontoday.
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WarrenKirshenbaum:WellthanksBrecht.AndIjustwantedtosaythatthishastobebriefinhavingtheconversaDonbecausethesethingscangettechnical.SotheremaybepointsthatIwasn’tabletocoverorwentoververybrieflyandsothere’samuchlargerlevelofdetailontheblogandcertainlywecouldfollow‐uponthis.
ButIwantedtojustletyouknowthatthisisn’tanAthroughZofeveryissuethatapersoncouldcomeacross.
Brecht:Ohsure,absolutelynot.Wellweappreciateyoulayingoutheretodaywhatyoudidandlookforwardtotalkingtoyouagain.
WarrenKirshenbaum:Thankyouverymuch.
Brecht:Okay,thankyou.
WarrenKirshenbaum:Okay.
Brecht:Bye‐bye.
END
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