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OTC securities aren’t reported on 13-F filings, so it’s hard to know what institutions own this.
Interestingly, Rosehill Reserve was mentioned in Greenlaw’s affidavit as an example of damages caused by Bass. UDF V lost a $6 million profits interest and the senior lender was brought in because UDF didn’t have access to financing. UDF V’s loan balance was around $26 million, which surprised me because I think it was under $15 million at 9/30/15. That $26 may include accrued interest...I’m not sure.
Map of Rosehill Reserve. Looks like there are 110 lots in this 10 acre tract.
https://www.lennar.com/images/com/files/new-homes/18/28/3626/spf/LNR-HOU_Rosehill-Reserve_1_CM-compressed.pdf
At $70k/lot, that implies $770k per acre of homesites. I have no idea what % of acreage goes to homesites vs streets, parks, etc. I also don’t know how much it costs to go from raw acreage to ready-to-sell lots.
I know this is V, not IV, but if I can determine that V isn’t losing money on this deal, I’ll feel more comfortable that the collateral is sufficient on IV’s loans as well.
It looks like the finished lots sold for around $70k each. That’s based on comparing the partial lien releases to the payments shown on the loan rollforward that I linked to.
So, the 143 lots UDF received are worth $10 million. No idea what the acreage and the MUD pmts are worth.
The senior note was for $24,690,000 and had a 1 yr term. Like the UDF loans, it wasn’t funded all at once.
On 4/1/19, the total amount of the advances was increased to $25,575,000. The loan balance at that date was $11,875,467.
https://www.cclerk.hctx.net/applications/websearch/EComm/ViewEdocs.aspx?ID=ihpahpMbvcoWkF5RdbzIVTkv19/6uOjyrgR7ASnB9g+nl3i+qrW4Qh4Qcq2VB1h0QYXxmbTSg1w3R9fasLBQ9+PEN7Ec++KznC+wAQAjO/m0CBfxUFsQ6C72vAIuG+yWCmLjzJarNpegOD7BaQMBZw==
You probably need to create an account to view that link.
The 8-k said there needs to be “sufficient financing or cash proceeds” to pay off the Senior Loan. So, I assume the senior lender (John F Howell, Jr, Trustee) got tired of funding (the total advances were over the original agreed amount) and wants to be repaid.
Perhaps UDF didn’t want to subordinate itself to a new lender (although, I doubt that’s plausible).
Bass is expecting a restatement, but UDF hasn’t filed anything stating that its prior financials can’t be relied on (which I think it’d have to do if it was in the process of restating old financials).
Bass says “headed for bankruptcy” but that doesn’t seem likely since debt is under $10 million and there are basically no other liabilities.
It seems this has gotten (or always has been) personal between Bass and Greenlaw.
The $43 million was the maximum loan amount, not the funded amount. At 9/30/15, the largest loan was 62% of the portfolio (ie about $27 million). I assume that was this loan. The maximum loan amount for all 8 loans was $132 million.
I doubt they funded the whole thing since I think Bass put the kibosh on UDF V’s fundraising activities.
I’d also note that the 8-k doesn’t mention any loss associated with the deal...I assume they’d mention it if it was material. If they really loan at a max of 85% LTV, and real estate values have increased the last 5 years, then there may not be a loss. Apologies if this is blather and worthless speculation... ;)
Seems that UDF V had to foreclose on one of its loans.
https://www.sec.gov/Archives/edgar/data/1591330/000110465919076184/tm1927356d1_8k.htm
I don’t know. One of Bass’s big presentations was on Shahan Prairie and all of those loans were repaid (including accrued interest) per Greenlaw’s deposition.
My guess is that it’s not a fraud like Bass claims, but it’s also not a squeaky clean entity like Greenlaw claims. The truth likely lies somewhere in the middle...just like it does in most he said / she said cases.
I think there is definitely some kind of issue. The appointment back in August of the director with REIT audit expertise was a pretty big hint, imo. I don’t think a disagreement is necessarily a big deal though. I’d guess it’s about some technical accounting issue as opposed to something major (like collateral issues, etc).
I’m just basing it on principal receipts from 2014 & 2015...which were over $100 million/year. Plus, I assume repayments were accelerated in 2016 due to UDF’s lines of credit being called.
As far as new loans, if you’re a developer, would you want to borrow from a company that was accused of being a ponzi scheme and can’t show you a current financial statement? If UDF ends up liquidating and can’t fund your future draws (remember, these loans aren’t all drawn at once), you look like a moron. Or to put it another way, if you’re a developer and can borrow from UDF (no financials, accused ponzi scheme) or another lender, which one are you going to choose?
When I talked to IR last year, the guy said the key to underwriting more loans is to get the audit done. Of course, that begs the question of why the hell it’s taking so long.
I assume their loan portfolio as of 9/30/15 has largely been repaid (70%?) and if they can’t make new loans, then their income will obviously decrease.
How about another 6.5 cent dividend?
It’s obvious there’s been a pretty big seller (relatively speaking) lately. Most of the volume the last few weeks has been at the bid. Could be someone that bought in after the VIC writeup and is tired of waiting on the financials.
I called IR last week and they had no update on the financials. The lady I spoke to was completely clueless. I’d called before and spoken to someone else that was actually helpful...luck of the draw, I guess.
Based on the recent addition to the board (an accounting guy), my complete guess is that they are having some kind of disagreement with the auditors, and that’s why it’s taking so long.
The recent dividend, debt paydown and SEC settlement all argue against a ponzi scheme. Not to mention that a ponzi scheme typically isn’t still in business 4 yrs after it’s uncovered.
Hollis and company can’t be booted fast enough. At this point I’d vote for liquidation over the status quo.
If you look at the lease footnote, the estimated annual minimum lease payment went up this year to $2.355 million from $1.966 million. That implies that the estimate of the number of pallets produced on those 3 machines increased by 24% from just 3 months ago.
Assuming that’s due to the new software (and not just switching production from other machines that came off lease), that seems to be good news. At a minimum, increasing the production on those machines will save interest expense (due to earlier payments).
He probably was blacked out due to the impending release of the 10-Q.
Trial hasn’t started. Apparently, Bass can still appeal to the TX supreme court.
I assume the Bass trial is still starting tomorrow? The court website has no new filings.
For whatever it’s worth, UDF V just declared a 16.7 cents dividend.
UDFI won’t be able to hide its financials from the defendants. Whether or not they are released to the public makes no difference.
Dividend hit Schwab yesterday
I haven’t. Maybe UDF VI is having trouble raising funds. ;)
Well, we probably won’t see them in the next week, as the “Q will be filed within 5 days of the proscribed due date” box on the NT 10-Q wasn’t checked.
I’m sure they have financials and know their numbers. It’s the audited part that’s the problem.
And, uh, does this distribution mean that UDF V was successful in raising more money? ;)
It seems odd to me that Hollis goes on and on and on about the Bass lawsuit and makes no mention of the financials, which are now almost 4 years late.
So Megatel pays $2,000 to Centurion for the privilege of paying above-market rates for lots? Sure...sounds plausible.
On the other hand, it would fit with UDF’s “kick the can down the road” method of doing business.
Yeah. You could always just trade around a set position if you’re worried about that.
Just kind of thinking out loud here, but why haven’t there been any annual meetings since 2015? Seems to me that we should be able to elect new directors even if the financials aren’t audited. I suppose replacing directors might delay the audit (new audit committee, etc), but what’s one more year between friends?
If nothing else, this has been a good trading stock. Buy at/under $4 and sell around $5.
It’s now been 1 year since the SEC case was settled and still no financials. What a f%@king joke.
They should have included Bass as a defendant. If he didn’t make the ponzi claim, none of this would have happened... ;)
UDFI’s April 30th filing is now available.
Hollis Greenlaw’s affidavit and exhibits from March are also now posted....although a lot of the exhibits are either redacted or poorly copied.
https://www.sec.gov/litigation/apdocuments/ap-3-18832.xml
New filings in the SEC case were posted. Apparently, UDF did file something on April 29th, but it’s not on the SEC website. There’s nothing new in the filings, except this little gem:
The SEC brings up a good point. There’s no reason they can’t file financials that have a qualified opinion.
No idea on the stock price impact. Ordinarily, I’d say it’s a big negative, but given that this already trades OTC and hasn’t filed financials for 3+ years, I’d guess most of the current holders don’t care much about an SEC registration.
There are non-registered companies that trade on the pink sheets, so I don’t know if it stays where it’s at or if it goes to the grey market.
SEC’s opposition brief was posted. UDF either didn’t file one or it hasn’t been posted yet.
https://www.sec.gov/litigation/apdocuments/3-18832-event-13.pdf
They’re proposing to file an Omnibus for 2017 and then Regular Qs and K for 2018 and going forward (unless I’ve missed something).
The collateral value should be measured as of the balance sheet date. If the loan was impaired as of 12/31/17, but the collateral recovered in 2018, it would be shown as impaired on the 2017 YE financial. Waiting to file the reports doesn’t change the valuation date.
I suppose if the collateral recovered in March 2019 and they want to release Q1 2019 reports at the same time as 2017 & 2018 reports then it may matter. But at this point I doubt that’s what they’re doing.
It really is bizarre. They’re not restating past results (as far as I know), so it should be no different than any other audit. Maybe the FBI stole all the documents and won’t give them back.
The current collateral,value will have no impact on the past financial statements, so there’s no sense waiting for current values to go up.
I hope it works out too.
I’m looking at the SEC’s assertion that “issuers routinely fulfil their reporting obligations during Commission investigations, including investigations that could result in scienter fraud charges.”
The SEC also says that the “indications of a non-scienter settlement...in June 2017” shouldhave been enough to get the audit started.
Not to mention all the times that UDF assured NASDAQ that the audits were almost done (although this was before the Wells charges).
On the other hand, you have UDF management claiming it was “...certainly not UDF’s fault, that Whitley Penn declined to continue as UDF’s auditor.” Come on...I guess it was Bass, and not UDF mgmt, that changed the Buffington cash flow projection?
I think the asset value is probably still there, but this management group is beyond pathetic. I no longer believe a single word they say. Not to mention that they were basically running a Ponzi scheme. The only saving grace was that it was run due to liquidity issues rather than solvency issues.
UDFI’s and the SEC’s motions were released today. Nothing really new in them, but it doesn’t sound like the financials will be released imminently (the motions were dated at the end of March).
I find the SEC’s motion to be more persuasive. There’s no legitimate reason to not file financials for 3+ years.
https://www.sec.gov/litigation/apdocuments/3-18832-event-12.pdf
https://www.sec.gov/litigation/apdocuments/3-18832-event-11.pdf
The UDFI motion doesn’t have the Hollis affadavit attached. I also don’t know why they wait a month to publicly release these.