United Development Funding IV fka UDFI

[ofirm]

I agree with you about the way management treated unitholders is not
right, but we have to look at the whole picture:
1. the collateral over here is subject to a lot of assumptions in order
to come up with a value. since those lands take years to become lots
and years to be finished and sold and since time is money (discount
rate determines value) and since you have to apply discounts due to
the builder being involved together with a third party financing
company (UDFI can not make the construction loan due to no funds for
that) - you have an issue.
2. would you want to be the auditor who would make a valuation fight
with Bass in court regarding YOUR opinion? I would not. that is
(my guess) a big reason why nobody would sign off on the books while
there is an ongoing litigation regarding the validity of the books.
3. argument #2 has a twist to it (or so I understand): I understand
that UDF suggested to basically skip years 2015,2016 and just do the
books as of 2017 and forward. this way the problematic periods that
are related to the litigation would be skipped and later on filled
after the lawsuit is done. the sec refused (for logical reasons)
and here we are. Bass thinks he has a card by leaving the fund unit
holders in limbo and one of his semi partners comes along and offer
$1.10 per unit - how generous. if the latest part could be proven
as coordinated - that is material for yet another lawsuit...
4. here is what we can tell - some of the collateral is being
developed and those loans should be converted into cash. actually
its a decent part of the parcels that have been developed in parts
so far. we also know that instead of selling loans to payoff debt,
UDFI simply did not rollover some loans and made the developers
get the cash. its horrible for UDF, but good for NAV of UDFI. they
probably liquidated many of the over secured loans in this way, but
they got their debt balance to close to zero by 2017 without a huge
hit to their NAV. they did have the one write off we know off.
Bottom line: UDF did not present UDFI as what it is and people did
not understand the true proposition and HOW LONG IT TAKES TO MAKE
MONEY USING THE TRUE BUSINESS MODEL. once you get over that, you
should realize the value should still be there. I wish I had a way
of buying more units even at $1.50. that is my opinion.