United Development Funding IV fka UDFI

[Jh5142]

Does anyone know how much money UDF lent against land that was not fully entitled?

Their initial underwriting had to make assumptions on how much density they'd get per acre and what the development costs would be. It's hard to estimate approved density; and challenging to estimate development costs when the site isn't engineered.

Lower than anticipated density and higher development costs can significantly reduce the underlying value of land. I think UDF was loaning close to 100% advance rates and accruing 13% interest. That doesn't leave much room for error even with the strong residential market.

I will be surprised if there is not more value in the portfolio than the current share price. Then again, I'm surprised they haven't disclosed any financials.