2. Overview – The Fund
What is TREF I
• Investment fund focused on secured first loans on small commercial and non owner
occupied properties in the greater Chicago area
• Transitional lender for the Real Estate Investor
• Founded and managed by investment professionals with more than 50 years of
combined mortgage and real estate investment experience
Objective
• Provide investors direct access to the lucrative lending market that exists today
• Distribute a high and stable income stream
• Protect investment principle through structure and underwriting
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3. Overview – The Managers
Richard von der Sitt, Chief Executive Officer of Tower Capital Advisors LLC .
• Vice President of NorthPoint Lending Group, Inc. that he founded in 1995. NorthPoint is a Chicago area Mortgage
Broker that has funded over $1 billion in residential and commercial loans.
• Previously, Richard founded Mortgage Masters, Inc. in 1990 which became one of the Largest Mortgage Brokers in
the Chicago area with over 60 employees. Annual origination volumes exceeded $200 million. The company was
acquired by a Texas mortgage banker in 1994.
• In 1986 Richard acquired a Series 7 Securities License and was a top Financial Planner at Waddell & Reed Financial
Services for 5 years. Richard has maintained an Advisor status, managing portfolios for a select base at Foliofn.
Robert von der Sitt, President of Tower Capital Advisors LLC .
• President of NorthPoint Lending Group, Inc., since 2007, where he is responsible for all state and national
compliance as well as day to day accounting activities.
• Robert is also an Originator, consistently producing $20 million in annual loan originations through his vast
network in Chicago.
• Masters Degree in Finance from DePaul University
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4. TREF I - Investment Opportunity
• Banks have reduced lending due to regulation and balance sheet repair
• The size of the market TREF focuses on is too small for major banks
• Unique borrowing needs and fast closings reduce the number of lenders
• Loan sourcing is local and investors need managers tied to the local market
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Small commercial loans offer a unique and timely
investment opportunity
Experts Agree
The following is an excerpt from an interview in Barron's on 5/19/14 with George Roberts co-founder and co-CEO of
the multibillion dollar global investment firm KKR.
Yet if he were starting an investment firm today, Roberts says, he would focus on smaller real-estate deals, not
private equity. The big banks don't bother with small deals, and smaller developers are shut out of the market.
"In certain areas there are shortages of capital," he says. "That's why direct lending has become attractive”
5. TREF I - Investment Opportunity
• When you deposit money in a bank, the bank lends that money out at a
higher rate and keeps the difference
• In TREF, your investment is lent at the higher rate and the majority of the
interest is paid back to you
• We allow a 1 year rolling redemption period from initial investment, if you
choose to withdraw some of your funds
• Current average rate charged by TREF is 10.867% (2.28/17)
• Current yield distributed to investors is 8.757% (2016 Income Tax Return Yield)
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TREF I investors become the bank
6. • Generated a 7.8% yield for 2014, 8.6% in 2015 & 8.76% in 2016
• Funded over $29 million with $12 million Paid in Full
• Diversified collateral: 194 residential and commercial units
• Diversified by borrower: 62 different borrowers
• Secured with title: Title insurance on 100% of the loans
• Borrowers personal guarantee: 100% of the loans
• Secure loan to value: Average Portfolio 55.39%
• Lower risk collateral: 100% of the loans are secured by income
producing properties
• 2-28-17
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2014, 2015 & 2016 Performance
TREF I - Investment Opportunity
7. • TREF can close a loan in 1 week, most banks are 60-90 days to close
• TREF will close small loans < 300,000 while most banks have a minimum that is much
higher
• TREF will lend money on property that needs rehab or repairs
• TREF has flexible guidelines
• TREF puts an emphasis on the property vs. the borrower’s personal credit
• TREF takes a common sense approach and looks at the borrowers other assets
• TREF has the expertise to get the job done while most banks will only make “cookie
cutter” loans that fit squarely in the box.
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Transitional borrower will pay higher rates
TREF I - Investment Opportunity
8. TREF I - Investment Opportunity
• The population of Cook County is 5,231,351
• Approximately 60% are between the ages of 25-65
• High School Grad or higher age 25+ is 83.70%
• The # of dwelling units in cook county is 2,175,941
• 53.90% of those units, or 1,172,832, are zoned multi-unit
• Average market value of $400,000, shows $470 Billion of multi-units in Cook
County
Data is from the cook county website’s 2014 estimated figures 8TREF I
Size of Chicago’s Market
9. • 52% of sales failed due to lack of financing
• Cash comprised 33% of all transactions
• 70% of respondents reported shrinking or unchanged
availability of capital
• 85% of sales were valued at or below $2 Million
• 26% of most recent sales were between $500-1,000,000
• 22% of most recent sales were between $250-500,000
• 21% of most recent sales were below $250,000
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Survey Results NAR Research Division 2014 Lenders
TREF I - Investment Opportunity
10. TREF I 10
Mixed Use Multi Family
Single Family for Rent Store Front/Strip Malls
Types of Property We LIKE
TREF I - Investment Opportunity
11. TREF I – Safety of Investment
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We focus on protecting principle and cash flow
Portfolio Composition
• Low individual asset risk with loans of
$50,000 - $500,000
• Large number of assets securing loans
• High concentration in lower risk
properties
• Avoid riskier asset types such as land
• Loan term typically 6 months to 3 years
Loan Underwriting
• 21 Point Underwrite
• Service loans in house
• Only first lien positions
• Significant collateral
• Require additional collateral when needed
• Title insurance
• Personal guarantees
12. TREF I – Safety of Investment
• Our Loan Closing Documents are produced with Laser Pro, a leader in
mortgage and legal documentation. 80% of all the Community Banks
use Laser Pro for their loan documents.
• Our Laser Pro license includes $1,000,000 in liability coverage for our
mortgage documents.
• We get Title Insurance on every property
• Chain of title and property liens are carefully scrutinized
• Most Reputable Title companies & Expertise are utilized
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First Lien Position – We Get Paid First
13. TREF I – Safety of Investment
• Site inspection of the Property by loan committee prior to funding
• Collateral/property is inspected by an independent appraiser and the
market value is determined
• Require property/hazard insurance. Min coverage is replacement cost
of improvements as well as rent loss coverage
• Fix & Flips are inspected prior to release of each draw
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We Ensure Collateral Exists
14. TREF I – Safety of Investment
• Notice given to borrower if 30 days past due
• Typical borrower will work out the loan with us
• Our Assignment of Rents allows us to take possession of the property
and collect rents directly, even before the foreclosure process is
completed
• Default interest rate of 10% Plus Note Rate
• Typical Foreclosure timeframe is 90-120 days. Much faster than
“owner occupied”
• Even if borrower files Bankruptcy, that can only slow us down but not
stop us
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In Foreclosure we enforce borrower’s promise to repay
15. Fund Loan Example
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Property Description
Type: 14 unit apartment building
Appraised Value: $635,000
Loan Amount: $450,000
Loan to Value: 71%
Interest Rate Charged: 10.4%
Term: 3 Year Balloon
Fund Economics
Monthly Gross Interest $3,900
Servicing Costs -0- Currently absorbed by the Manager
Other cost -0- Covered by loan fees .
Net Income Available for Distribution $3,900
Managers Share (20%) -$780
Distributed to investors (80%) $3,120
Annualized yield to Investor 8.32%
16. Tower Capital Advisors LLC
Rick von der Sitt
rick@northpointlending.com
Office 847-729-1400 Cell 847-612-0900
7434 N. Harlem Ave
Chicago, IL 60631
Rob von der Sitt
rob@northpointlending.com
Office 773-665-8555 Cell 773-450-1176
7434 N. Harlem Ave
Chicago, IL 60631
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