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Quote from: mspringer on October 01, 2021, 04:48:07 AM
I wasn't in this specific FG investment but did have similar results for a Church's Chicken in the Orlando area. I think the issue with the board now is FG and IIRM played the long game and it looks like it is going to be successful. Many of us had investment (small to large) and the initial visceral reaction was in part due to losing money and also losing opportunity cost, given how the marker performed. It's been so long, and many have just "written this off" both financially and as a lesson learned, that this board and the investment(s) aren't at the top of our daily checks. I'm not saying this is right or how it should be, but just my thoughts.
Quote from: Dgilpin on September 30, 2021, 01:30:56 PM
Where did everyone on this forum go? When Franchise Growth was failing, this board was blowing up, now we are getting the stunningly poor settlements and no one has anything to say? I spoke to Ian Mclaughlin, the attorney representing the class action against FG, about the Taylor Michigan Dog Haus deal. He said that with the communication we received in January of 2020 about the closure being "signed sealed and delivered" for a .91/1.00 return, only to be nixed so that IIRRM could bundle other investments into the deal, he believed we had an compelling case against IIRRM for disingenuously representing our interests above and beyond the suit involving the larger FG portfolio. To those wondering, the final settlement message came last week as follows:
"This investment is being moved to Closed status.
IRM was engaged by RealtyShares to manage this investment in June 2019.
Since then, IRM has used every possible resource at our disposal to try and
maximize the possible return for investors. In certain problematic
investments, IRM has deployed Asset Managers to physically tour the
property, commissioned third party appraisals, held discussions with local
brokers, competitors, and potential buyers. IRM has used third party forensic
accounting, private investigators, senior leadership negotiations and both
in-house and out-sourced legal teams in an attempt to extract the best
possible financial outcome for investors. IRM does not endorse the
underwriting, investment agreements or asset management work provided
previously by RealtyShares Inc., but IRM is bound by those original terms as
signed by investors.
As mentioned in prior updates, IRM has negotiated with a third party to
purchase the individual loans associated with the Franchise Growth
investments the RealtyShares investors had made. Each loan is a stand alone
investment and therefore, each loan has a different purchase price based on
the estimated value, percentage of completion, location, etc. The sale price is
based on a BOV that IRM obtained, and represents the best value for
investors, in our professional opinion, given the circumstances. The vast
majority of the loans were vacant land or only partially completed
The alternative to conducting a loan sale would have resulted in a significant
delay in moving through the foreclosure process, extensive legal costs, back
real estate taxes and other potential delays in foreclosing on the properties.
Even after a foreclosure, there are sales and closing costs associated with that
action. Therefore, a loan sale was the most effective way to get back some of
the RealtyShares investment, and in our opinion and estimate, this was the
method that presents the best value over time for investors. IRM has waived
asset management fees from January 2021 and forward.
Specifically with this investment, the sales price was negotiated at $550,000.
In addition, the borrower made prior payments of $606,262.92 as reported on
historical RealtyShares payment records, for a total gross payment of
$1,156,262.92. This is the gross payment before fees and expenses. IRM has
classified this investment as Closed on 8/23/2021. The static return was a
72% loss or 17.5% per year loss, calculated as follows:
$1,156,262.92 / $4,091,000 = 0.28
0.28 - 1.0 = (0.72)
(0.72) / 4.1 (years of actual hold) = 0.175 or a 17.5% loss per year
This investment will now terminate as all possible payments to investors have
been collected and distributed to investors. Please note that, as is common
practice, certain funds may be held back in order to cover property related
expenses, such as legal fees, back taxes or other invoices. Once all possible
invoices have been paid, any remaining funds will be distributed to investors
IRM will now close this investment, no further updates, payments or
distributions will be made for this investment (except for Held Back balance
distribution, as applicable). IRM has not waived any rights, by any party or
manager, to file claims against the original sponsors in this matter"
How IIRRM could accept a 72% loss on first lien debt is jaw dropping. It speaks to how determined they were to collect their fees on these deals and close the books as fast as possible with complete disregard for investor interests. I am currently seeking counsel to bring claim against IIRRM for this deal but haven't found a suitable attorney. There is certainly better potential as a class action case for all investors of this deal. If any other investors in this deal want to work on this with me, please DM me.
Quote from: dwengca on June 11, 2021, 01:47:39 PM
I agree! I got $20k on this one, and probably all gone now. I really think there might have been some sort of fraud going on here... how did they go from 6.6 million to end up costing 10.5 million?
The sad part I think here is that IRM will probably just let it go.Quote from: cgblack on June 11, 2021, 12:46:07 PM
A disappointing update on 1 Sand and Sea:
IRM currently classifies this investment as a Tier 3 asset. Distributions from this
investment have not been distributed in accordance with the original business plan.
Since the last update, the house did sell. It was previously mentioned the closing was
delayed primarily due to the actions of one of the Managing Members (MM). The MM
who was trying to cause the delay demanded he get back his equity investment before
he would consent to the sale of the house. The active MM who completed the house
said the other MM decided not to contest the sale.
The house sold for $9,000,000 and after $450,000 of real estate commissions and
approximately $190,000 of other selling costs, the net sale price was $8,360,000. The
MM reported that the total acquisition, construction and financing cost was $10,528,196,
so the loss was $2,168,196.
The MM who has been involved in completing the house is a CPA. We have requested
much more detail than just a summary of the expenses. We will continue to work on
obtaining the detailed information to determine if the expenses were legitimate and
there was an actual loss. We are also taking steps to determine if there is any recourse
against the MMs for the apparent loss on this investment.
This is outrageous. Here is the original listing for this investment:
The total investment, including purchase price, hard and soft costs, and closing costs is approximately $5,572,642. The senior debt will contribute approximately 47.5% of project costs, while RealtyShares investors will contribute approximately 35.9%, leaving the sponsor with a 16.5% contribution to total project cost. The estimated sales price upon completion is $6,600,000, or $3,185/sf (1). However, in order for the Sponsor to return the investors' equity, preferred return, and annualized exit fee upon sale, the sales price need only be $5,112,903, or $2,468/sf.
Suddenly a net sales price of $8,360,000 comes out as a loss. Something stinks about this one!
Quote from: Kalliste on September 01, 2021, 10:30:58 AM
Allover, what are your lessons?