BBT Fund (Bass Family):
We are currently filling out the paperwork for the BBT Fund which is set to fund July 1 ($100k in Partnership, $250k personally). I was discussing with Andrew Linbeck, who works for Redstone Consulting and introduced us to the Fund, the issue of using the fund as collateral. He said that his clients have had some success with borrowing against the Fund. More importantly, one had borrowed from Bank of America (BA), so a precedent has been set. Andrew was not familiar with our BA contacts, but said that he would be more than happy to familiarize them or any of our other banking relationships with the BBT Fund. If you recall, the Fund is basically a bond alternative that has historically generated around 3 times the risk free rate. He has seen clients borrow against 40% to 50% of the Funds value.
I am going to pursue this further by initially having Andrew meet with BA and Compass. I told Andrew that if he can help get our lenders comfortable with it, then we would be more likely to build our position in the Fund.
Still moving ahead. I know you want to keep Aspen #1 out, at least initially. I am working with Jim Braniff, IV on the insurance. Jim and some of Gallagher Braniff's higher-ups have been very involved, as well as interested in the outcome of all of this. I think that they might want a similar structure for themselves or other wealthy clients that have similar circumstances. Anyway, we are trying to address all the issues on all fronts to ultimately protect you, your assets, and the Partnership.
Braeswood & Kirby Apt. Development - Shawn Gross:
The capital required is still being determined, but should be between $1.6 million and $2.2 million. Per your request, you will have 10% and the Family Partnership will have 8%. I can lower the Partnership's amount if you desire, but I thought somewhere between 5% - 10% was good. I am personally investing 2%. Not sure if the rest of the siblings are going to participate.
Family Partnership - Cash Flow & Commitments:
As you know, the Family Partnership is in need of liquidity due to the following: (i) monthly distributions; (ii) capital calls from outstanding long-term commitments; (iii) additional costs associated with transferring the homes into the partnership; (iv) funds to develop/maintain Aspen #4. Currently, the only source of inflows is coming from the sale of options, which is not generating enough (@ $53/share approx. $675k/mo.). This month alone the Partnership paid out approximately $700k in capital calls for long-term commitments: $588k - SRE Properties, $97k - TCW/Hines Emerging Mkts R E. I know that you do not want the Partnership to borrow from you, but today we had know choice so we borrowed $100,000 against your BA line. As we previously discussed, the only alternative would be to sell a larger (one time) amount of options or exercise and hold. Unfortunately, all of the illiquid investments have yet to distribute anything meaningful of recent.
Family Partnership scheduled payments/outstanding commitments:
1) $210,000 - (due early June) Monthly Distributions to the partners
2) $200,000 - (due June 6) Vanguard Ventures cap call
3) $128,000 to $176,000 - (due mid June) Shawn Gross development
4) $400,000 to $450,000 - (June 30) Sterling Group
5) $100,000 - (July 1) BBT Fund
6) approx. $6.8 million exposure to outstanding long-term commitments (after Vanguard & Sterling are funded)
7) transfer of homes into the partnership would require an additional est. $170,000 per month (approx. $2 million annually, including Aspen#1); excludes the additional costs of Aspen #4 to be developed (est. $2.4 million) and maintained.
Upcoming meeting with Goldman Sachs:
Pete Coneway left me a message confirming our meeting at 3pm of June 13th. Those scheduled to be present are Pete Coneway, Stacey Eastland, Jeff Daly, two other Goldman guys flying in from NY, Barry Margolis, Jan Phipps and me. I wanted to reconfirm the meeting with you before I call Pete back.
I hope Spain is/was enjoyable. Will talk to you soon.