0001193805-17-000993.txt : 20170605 0001193805-17-000993.hdr.sgml : 20170605 20170605154651 ACCESSION NUMBER: 0001193805-17-000993 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20170605 DATE AS OF CHANGE: 20170605 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Owens Realty Mortgage, Inc. CENTRAL INDEX KEY: 0001556364 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 460778087 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-87935 FILM NUMBER: 17891092 BUSINESS ADDRESS: STREET 1: 2221 OLYMPIC BOULEVARD CITY: WALNUT CREEK STATE: CA ZIP: 94595 BUSINESS PHONE: 925-935-3840 MAIL ADDRESS: STREET 1: 2221 OLYMPIC BOULEVARD CITY: WALNUT CREEK STATE: CA ZIP: 94595 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FREESTONE CAPITAL MANAGEMENT LLC CENTRAL INDEX KEY: 0001128159 IRS NUMBER: 261341887 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 701 5TH AVENUE STREET 2: 74TH FLOOR CITY: SEATTLE STATE: WA ZIP: 98104 BUSINESS PHONE: 206-398-1100 MAIL ADDRESS: STREET 1: 701 5TH AVENUE STREET 2: 74TH FLOOR CITY: SEATTLE STATE: WA ZIP: 98104 FORMER COMPANY: FORMER CONFORMED NAME: FREESTONE CAPITAL MANAGEMENT INC DATE OF NAME CHANGE: 20001113 SC 13D 1 e616239_sc13d-orm.htm THE SCHEDULE 13D

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

______________

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

RULE 13d-2(a)

(Amendment No.)¹

Owens Realty Mortgage, Inc.

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

690828108

(CUSIP Number)

Freestone Capital Management, LLC

701 Fifth Avenue, Suite 7400

Seattle, Washington 98104

ATTENTION: LEGAL

(206) 707-7300

ADAM FINERMAN, ESQ.

OLSHAN FROME WOLOSKY LLP

1325 Avenue of the Americas

New York, New York 10019

(212) 451-2289

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

June 1, 2017

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box x.

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

(Continued on following pages)

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


	1	NAME OF REPORTING PERSONS

			Freestone Opportunity Partners LP
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*				(a) ☐
						(b) ☐

	3	SEC USE ONLY


	4	SOURCE OF FUNDS

			WC
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐

			Delaware
	6	CITIZENSHIP OR PLACE OF ORGANIZATION


NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					- 0 -
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					280,509
PERSON WITH			9	SOLE DISPOSITIVE POWER

					- 0 -
			10	SHARED DISPOSITIVE POWER

					280,509
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

			280,509
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐


	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

			2.7%
	14	TYPE OF REPORTING PERSON

			PN


	1	NAME OF REPORTING PERSONS

			Freestone Opportunity Qualified Partners LP
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*				(a) ☐
						(b) ☐

	3	SEC USE ONLY


	4	SOURCE OF FUNDS

			WC
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐


	6	CITIZENSHIP OR PLACE OF ORGANIZATION

			Delaware
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					- 0 -
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					388,549
PERSON WITH			9	SOLE DISPOSITIVE POWER

					- 0 -
			10	SHARED DISPOSITIVE POWER

					388,549
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

			388,549
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐


	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

			3.8%
	14	TYPE OF REPORTING PERSON

			PN


	1	NAME OF REPORTING PERSONS

			Freestone Investments LLC
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*				(a) ☐
						(b) ☐

	3	SEC USE ONLY


	4	SOURCE OF FUNDS

			OO
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐


	6	CITIZENSHIP OR PLACE OF ORGANIZATION

			Washington
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					- 0 -
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					669,058
PERSON WITH			9	SOLE DISPOSITIVE POWER

					- 0 -
			10	SHARED DISPOSITIVE POWER

					669,058
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

			669,058
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐


	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

			6.5%
	14	TYPE OF REPORTING PERSON

			OO


	1	NAME OF REPORTING PERSONS

			Freestone Capital Management, LLC
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*				(a) ☐
						(b) ☐

	3	SEC USE ONLY


	4	SOURCE OF FUNDS

			OO (see Item 3)
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐


	6	CITIZENSHIP OR PLACE OF ORGANIZATION

			Delaware
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					- 0 -
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					673,475
PERSON WITH			9	SOLE DISPOSITIVE POWER

					- 0 -
			10	SHARED DISPOSITIVE POWER

					673,475
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

			673,475
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐


	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

			6.6%
	14	TYPE OF REPORTING PERSON

			IA


	1	NAME OF REPORTING PERSONS

			Freestone Capital Holdings, LLC
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*				(a) ☐
						(b) ☐

	3	SEC USE ONLY


	4	SOURCE OF FUNDS

			OO (see Item 3)
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐


	6	CITIZENSHIP OR PLACE OF ORGANIZATION

			Delaware
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					- 0 -
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					673,475
PERSON WITH			9	SOLE DISPOSITIVE POWER

					- 0 -
			10	SHARED DISPOSITIVE POWER

					673,475
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

			673,475
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐


	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

			6.6%
	14	TYPE OF REPORTING PERSON

			OO


	1	NAME OF REPORTING PERSONS

			Erik Morgan
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*				(a) ☐
						(b) ☐

	3	SEC USE ONLY


	4	SOURCE OF FUNDS

			OO & PF (see Item 3)
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐


	6	CITIZENSHIP OR PLACE OF ORGANIZATION

			USA
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					5,290
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					673,475
PERSON WITH			9	SOLE DISPOSITIVE POWER

					5,290
			10	SHARED DISPOSITIVE POWER

					673,475
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

			678,765
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐


	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

			6.6%
	14	TYPE OF REPORTING PERSON

			IN


	1	NAME OF REPORTING PERSONS

			Gary I. Furukawa
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*				(a) ☐
						(b) ☐

	3	SEC USE ONLY


	4	SOURCE OF FUNDS

			OO & PF (see Item 3)
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)				☐


	6	CITIZENSHIP OR PLACE OF ORGANIZATION

			USA
NUMBER OF			7	SOLE VOTING POWER
SHARES
BENEFICIALLY					103,352
OWNED BY			8	SHARED VOTING POWER
EACH
REPORTING					673,475
PERSON WITH			9	SOLE DISPOSITIVE POWER

					103,352
			10	SHARED DISPOSITIVE POWER

					673,475
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

			776,827
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES				☐


	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

			7.6%
	14	TYPE OF REPORTING PERSON

			IN

The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).

Item 1.

Security and Issuer.

This statement relates to the common stock, par value $0.01 per share (the “Shares”), of Owens Realty Mortgage, Inc., a Maryland corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 2221 Olympic Boulevard, Walnut Creek, California 94595.

Item 2.

Identity and Background.

(a) This statement is filed by:

(i)

Freestone Opportunity Partners LP, a Delaware limited partnership (“FOP”);

(ii)

Freestone Opportunity Qualified Partners LP, a Delaware limited partnership (“FOQP”);

(iii)

Freestone Investments LLC, a Washington limited liability company (“FI”);

(iv)

Freestone Capital Management, LLC, a Delaware limited liability company (“FCM”);

(v)

Freestone Capital Holdings, LLC, a Delaware limited liability company (“FCH”);

(vi)

Erik Morgan; and

(vii)

Gary I. Furukawa.

Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

(b) The address of the principal office of each of FOP, FOQP, FI, FCM, FCH and Messrs. Morgan and Furukawa is 701 Fifth Avenue, Suite 7400, Seattle, Washington 98104.

(c) The principal business of FOP is investing in securities. The principal business of FOQP is investing in securities. The principal business of FI is serving as the general partner of FOP, FOQP and other private investment vehicles. The principal business of FCM is serving as an investment manager, including as the investment manager of FOP and FOQP. The principal business of FCH is, directly or indirectly, holding all of the equity interests of FI and FCM. The principal occupation of each of Messrs. Morgan and Furukawa is serving as Manager of FI, FCM and FCH.

(d) No Reporting Person has, during the last five (5) years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) No Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Each of Messrs. Morgan and Furukawa is a citizen of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

The Shares beneficially owned by each of FOP and FOQP were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule A, which is incorporated by reference herein. The aggregate purchase price of the 280,509 Shares beneficially owned by FOP is approximately $3,557,883, including brokerage commissions. The aggregate purchase price of the 388,549 Shares beneficially owned by FOQP is approximately $5,118,728, including brokerage commissions.

The Shares to which FCM may be deemed the beneficial owner that are held in managed accounts and employee accounts were purchased with personal funds of the account owners (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market transactions. The aggregate purchase price of the 4,417 Shares held in managed accounts and employee accounts is approximately $58,148, including brokerage commissions.

The Shares beneficially owned by Mr. Furukawa are held in personal accounts, accounts for his children and/or their spouses and in an estate planning vehicle, and were purchased with personal funds (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market transactions. The aggregate purchase price of the 103,352 Shares beneficially owned by Mr. Furukawa is approximately $1,441,896, including brokerage commissions.

The Shares beneficially owned by Mr. Morgan are held in Mr. Morgan and his wife’s retirement accounts, and were purchased with personal funds (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market transactions. The aggregate purchase price of the 5,290 Shares beneficially owned by Mr. Morgan is approximately $70,990, including brokerage commissions.

Item 4.

Purpose of Transaction.

The Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

On June 1, 2017, the Reporting Persons sent a letter to the Chairman and Board of Directors of the Issuer (the “Board”) highlighting the significant long-term destruction of shareholder value at the Issuer. Further, the letter questioned the Management Agreement with the Issuer’s external manager, Owens Financial Group, Inc., raising the issue of conflicts of interest and an above-market fee structure. The letter concluded by calling for the immediate liquidation of the Issuer to close the value gap between the Issuer’s current market price and estimated liquidation value. The full text of the letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

For the reasons stated in the attached letter, the Reporting Persons plan on withholding their vote in the election of Gary C. Wallace, who is up for election at the Issuer’s 2017 Annual Meeting of Stockholders (the “Annual Meeting”), to be held on June 19, 2017. The Reporting Persons intend to make a request for a stockholder list and related records of the Issuer to communicate with the Issuer's stockholders on matters relating to the Issuer and its operations.

No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, continuing to engage in communications with management and the Board of Directors of the Issuer, engaging in discussions with stockholders of the Issuer or other third parties about the Issuer and the Reporting Persons’ investment, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares, including swaps and other derivative instruments, or changing their intention with respect to any and all matters referred to in Item 4.

Item 5.

Interest in Securities of the Issuer.

The aggregate percentage of Shares reported owned by each person named herein is based upon 10,247,477 Shares outstanding, as of May 8, 2017, which is the total number of Shares outstanding as reported in the Issuer’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on May 15, 2017. All holdings are reported as of the close of business on June 2, 2017.

FOP

(a)

FOP beneficially owns 280,509 Shares.

Percentage: Approximately 2.7%

(b)

1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 280,509
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 280,509

(c)

FOP has not entered into any transactions in the Shares during the past sixty days.

FOQP

(a)

FOQP beneficially owns 388,549 Shares.

Percentage: Approximately 3.8%

(b)

1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 388,549
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 388,549

(c)

FOQP has not entered into any transactions in the Shares during the past sixty days.

(a)

FI, as the general partner of each of FOP and FOQP, may be deemed the beneficial owner of the: (i) 280,509 Shares owned by FOP and (ii) 388,549 Shares owned by FOQP.

Percentage: Approximately 6.5%

(b)

1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 669,058
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 669,058

(c)

FI has not entered into any transactions in the Shares during the past sixty days.

D. FCM

(a)

FCM, as the investment manager for FOP and FOQP, as well as various managed accounts and employee accounts, may be deemed the beneficial owner of the: (i) 280,509 Shares owned by FOP; (ii) 388,549 Shares owned by FOQP; and (iii) 4,417 Shares held in the various managed accounts and employee accounts.

Percentage: Approximately 6.6%

(b)

1. Sole power to vote or direct vote: 0
2. Shared power to vote or direct vote: 673,475
3. Sole power to dispose or direct the disposition: 0
4. Shared power to dispose or direct the disposition: 673,475

(c)

FCM has not entered into any transactions in the Shares during the past sixty days. The transaction in the Shares on behalf of the various managed accounts and employee accounts are set forth in Schedule A and are incorporated herein by reference.

FCH

(a)

FCH, as the holder of all of the equity interests of each of FI and FCM, may be deemed the beneficial owner of the: (i) 280,509 Shares owned by FOP; (ii) 388,549 Shares owned by FOQP; and (iii) 4,417 Shares held in the various managed accounts and employee accounts.

Percentage: Approximately 6.6%

(b)

(c)

FCH has not entered into any transactions in the Shares during the past sixty days. The transaction in the Shares on behalf of the various managed accounts and employee accounts are set forth in Schedule A and are incorporated herein by reference.

Mr. Morgan

(a)

Mr. Morgan beneficially owns 5,290 Shares which are held in Mr. Morgan and his wife’s retirement accounts. In addition, Mr. Morgan, as a Manager of FI, FCM and FCH, may be deemed the beneficial owner of the (i) 280,509 Shares owned by FOP; (ii) 388,549 Shares owned by FOQP; and (iii) 4,417 Shares held in the various managed accounts and employee accounts.

Percentage: Approximately 6.6%

(b)

1. Sole power to vote or direct vote: 5,290
2. Shared power to vote or direct vote: 673,475
3. Sole power to dispose or direct the disposition: 5,290
4. Shared power to dispose or direct the disposition: 673,475

(c)

Mr. Morgan has not entered into any transactions in the Shares during the past sixty days. The transaction in the Shares on behalf of the various managed accounts and employee accounts are set forth in Schedule A and are incorporated herein by reference.

Mr. Furukawa

(a)

Mr. Furukawa beneficially owns 103,352 Shares which are held in personal accounts, accounts for his children and/or their spouses and in an estate planning vehicle. In addition, Mr. Furukawa, as a Manager of FI, FCM and FCH, may be deemed the beneficial owner of the (i) 280,509 Shares owned by FOP; (ii) 388,549 Shares owned by FOQP; and (iii) 4,417 Shares held in the various managed accounts and employee accounts.

Percentage: Approximately 7.6%

(b)

1. Sole power to vote or direct vote: 103,352
2. Shared power to vote or direct vote: 673,475
3. Sole power to dispose or direct the disposition: 103,352
4. Shared power to dispose or direct the disposition: 673,475

(c)

Mr. Furukawa has not entered into any transactions in the Shares during the past sixty days. The transaction in the Shares on behalf of the various managed accounts and employee accounts are set forth in Schedule A and are incorporated herein by reference.

Each Reporting Person, as a member of a “group” with the other Reporting Persons for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, may be deemed the beneficial owner of the Shares directly owned by the other Reporting Persons. Each Reporting Person disclaims beneficial ownership of such Shares except to the extent of his or its pecuniary interest therein.

(d)

No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.

(e)

Not applicable.

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

On June 5, 2017, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to the securities of the Issuer to the extent required by applicable law. The Joint Filing Agreement is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 7.

Material to be Filed as Exhibits.

99.1

Letter to the Chairman and Board of Directors of the Issuer, dated June 1, 2017.

99.2

Joint Filing Agreement by and among Freestone Opportunity Partners LP, Freestone Opportunity Qualified Partners LP, Freestone Investments LLC, Freestone Capital Management, LLC, Freestone Capital Holdings, LLC, Erik Morgan and Gary I. Furukawa, dated June 5, 2017.

99.3

Powers of Attorney.

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: June 5, 2017

FREESTONE OPPORTUNITY PARTNERS LP

By:	Freestone Capital Management, LLC


By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel

FREESTONE OPPORTUNITY QUALIFIED PARTNERS LP

By:	Freestone Capital Management, LLC

By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel

Freestone Investments LLC

By:	/s/ Scott W. Akins

	Name:	Scott W. Akins
	Title:	General Counsel

Freestone Capital Management, LLC

By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel

Freestone Capital Holdings, LLC

By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel


	By:	/s/ Scott W. Akins
		Scott W. Akins, as attorney-in-fact for Erik Morgan and Gary I. Furukawa

SCHEDULE A

Transactions in the Shares During the Past Sixty Days

FREESTONE CAPITAL MANAGEMENT, LLC (THROUGH CERTAIN ACCOUNTS)

Common Stock

Purchased/(Sold)

Price Per

Share($)

Date of

Purchase / Sale

350

17.31

05/08/2017

EX-99.1 2 e616239_ex99-1.htm LETTER TO THE CHAIRMAN AND BOARD OF DIRECTORS

June 1, 2017

Owens Realty Mortgage, Inc.

2221 Olympic Blvd

Walnut Creek, CA 94595

Attn: William C. Owens, Chairman of the Board

Cc: Board of Directors (the “Board”)

Dear Mr. Owens:

Freestone Capital Management, LLC, together with its affiliates (“Freestone”), beneficially owns approximately 7.6% of the outstanding shares of Owens Realty Mortgage, Inc. (“Owens” or the “Company”), making us the Company’s largest shareholder. As long-term investors since 2013, we have been patient and supportive shareholders of the Company, watching management’s questionable decisions and listening to their promises of long-term value. Unfortunately, those promises have remained unfulfilled and frankly, we can no longer stand by in light of Management’s continued destruction of shareholder value. We believe that Management should explore the immediate liquidation of the Company to close the value gap between the Company’s current market price and our estimated liquidation value, thereby returning capital to the Company’s long-suffering investors.

The Destruction of Shareholder Value and the Enrichment of Management

The Company and its predecessor company Owens Mortgage Investment Fund (OMIF) has a long-term history of trailing market returns. Based on our calculations, from January 1, 2009 to May 31, 2017 an investment in OMIF/Owens has provided a total return to shareholders of approximately -15.7%, compared to the returns of the FTSE NAREIT Mortgage REIT Index of +161.3% and the Russell 2000 Index of +207.7% during this same time period.

We believe that this enormous gap is due to a flawed business model which penalizes shareholders and primarily enriches Management. Based on our analysis, we further believe that Owens pays above-market fees to its external manager, Owens Financial Group, Inc. (the “Owens Manager”), through a Management Agreement that has been in place for years. Currently, Management makes loans at a 7.5-8% interest rate, borrows capital at a 4% interest rate and pays Owens Manager a 2.75% annual management fee and a .25% servicing fee, in addition to 100% of the loan origination fees and a 100% expense reimbursement. In our view, this explains why the Company, with a tangible book value of approximately $214.9 million, incurred an aggregate operating loss from 2010 to 2016 of approximately $7.2 million. Based on these numbers, we believe the only winner here is the Owens Manager, with the shareholders stuck with an underperforming investment.

Perhaps the discrepancy between the Company’s significant tangible book value and its operating loss can be found in the long-term enrichment of the Company’s Management, through the Owens Manager, at the expense of the shareholders. In fact, from 2010 to 2016, Owens paid a total of $28,096,070 to the Owens Manager. During the same time-period, the Company had an operating loss of $7,178,271! The Owens Manager’s compensation keeps rolling in while shareholders lose money – in our opinion shareholders are clearly losing at the expense of Management. Not surprisingly, the Owens Manager is owned by Company insiders. William C. Owens, the Executive Chairman of the Board, holds approximately 62.5% of the Owens Manager, while Bryan H. Draper, the President and CEO of the Company, and member of the Board, holds approximately 16.3% of the Owens Manager.

The Management Agreement With the Owens Manager Creates Material Conflicts of Interest and Has an Outrageous Fee Structure

We believe that the above-market fees paid to the Owens Manager are the result of the Company’s conflicts of interest with the Owens Manager. The Company itself recognizes this conflict of interest inherent in the Management Agreement, stating in the Company’s 10-K that: (i) the Management Agreement was negotiated by related parties, and as such the terms of the Management Agreement were not subject to “arm's-length bargaining”; (ii) the Owens Manager “will face conflicts of interest arising from [the Company’s] fee structure”; and (iii) with respect to the Company’s personnel, they “will face conflicts of interest concerning the allocation of its personnel's time” due to the Management Agreement.

Even worse, the Owens Manager does not have the industry expertise to account for its above-market fees. The Company specifically states in the same 10-K that “our Manager's lack of experience with certain real estate markets could impact its ability to make prudent investments on [the Company’s] behalf.” Further, the Company concludes that it may have to rely on more advisors than just the Owens Manager in circumstances where the Owens Manager cannot reliably make prudent investment decisions: “In those circumstances, OFG [the Owens Manager] intends to rely on independent real estate advisors and local legal counsel to assist them in making prudent investment decisions. You will not have an opportunity to evaluate the qualifications of such advisors, and no assurance can be given that they will render prudent advice to OFG.”

Perhaps it should not be surprising that Management entered into such a lopsided Agreement that favors an entity other than the Company, considering Management’s relative lack of skin in the game. In fact, the Company’s Compensation Committee, which currently consists of Messrs. James M. Kessler, Dennis G. Schmal and Gary C. Wallace, who made the decision regarding the egregious manager compensation, has a collective beneficial ownership in the Company of only 0.3% according to the Company’s last proxy statement filed with the SEC.

Management Should Immediately Pursue a Complete Liquidation of the Company and Return the Proceeds to Shareholders

Unfortunately, the Company seems determined to engage in further lending. During the quarterly earnings call in May 2017, Mr. Draper discussed Management’s plan to deploy more capital into loans, despite describing the environment for lending as “challenging”. Not surprisingly, making more loans would increase loan balances which would result in millions of dollars in new fees for the Owens Manager and its insider owners, Messrs. Owens and Draper, at the expense of the Company’s shareholders. We view the approval of such action as a breach of the Board’s fiduciary duty to the Company’s shareholders.

This is a continuation of behavior that has occurred at the Company since at least 2009, and is the reason why the owners of the Owens Manager have received over $28 million in fees from 2010 to 2016, despite the Company’s operating loss of approximately $7.2 million over the same time period. After more than eight years of poor returns, instead of continuing to bet on unprofitable and risky loans, the Company should recognize reality and return its underperforming capital to its long-suffering shareholders. The Company should liquidate and thereby close the value gap between the Company’s current market price of $16.38 and the estimated $23.50 liquidation value. Quite simply, it is time for the Board to do their job and maximize shareholder value!

Sincerely,

/s/ Gary I. Furukawa

Gary I. Furukawa

Founder and Senior Partner

Freestone Capital Management

EX-99.2 3 e616239_ex99-2.htm JOINT FILING AGREEMENT

Exhibit 99.2

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including additional amendments thereto) with respect to the shares of Common Stock, par value $0.01 per share, of Owens Realty Mortgage, Inc. This Joint Filing Agreement shall be filed as an Exhibit to such Statement.

Dated: June 5, 2017

FREESTONE OPPORTUNITY PARTNERS LP

By:	Freestone Capital Management, LLC

By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel

FREESTONE OPPORTUNITY QUALIFIED PARTNERS LP

By:	Freestone Capital Management, LLC

By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel

Freestone Investments LLC

By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel

Freestone Capital Management, LLC

By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel

Freestone Capital Holdings, LLC

By:	/s/ Scott W. Akins
	Name:	Scott W. Akins
	Title:	General Counsel


	By:	/s/ Scott W. Akins
		Scott W. Akins, as attorney-in-fact for Erik Morgan and Gary I. Furukawa

EX-99.3 4 e616239_ex99-3.htm POWERS OF ATTORNEY

POWER OF ATTORNEY

Know all by these presents, that the undersigned hereby constitutes and appoints Scott W. Akins, the undersigned’s true and lawful attorney-in-fact to take any and all action in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of Owens Realty Mortgage, Inc. (the “Company”) directly or indirectly beneficially owned by Freestone Capital Management, LLC or any of its affiliates (collectively, the “Group”). Such action shall include, but not be limited to:

1. executing for and on behalf of the undersigned any Schedule 13D, and amendments thereto, filed by the Group that are required to be filed under Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules thereunder in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of the Company;

2. executing for and on behalf of the undersigned all Forms 3, 4 and 5 required to be filed under Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of the Company;

3. executing for and on behalf of the undersigned all Joint Filing Agreements or similar documents pursuant to which the undersigned shall agree to be a member of the Group; and

4. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority.

The undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact’s substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorney-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with Section 13(d), Section 16 or Section 14 of the Exchange Act.

This Power of Attorney shall remain in full force and effect until the undersigned is no longer a member of the Group unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 5^th day of June 2017.

/s/ GARY I. FURUKAWA

GARY I. FURUKAWA

POWER OF ATTORNEY

5. executing for and on behalf of the undersigned any Schedule 13D, and amendments thereto, filed by the Group that are required to be filed under Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules thereunder in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of the Company;

6. executing for and on behalf of the undersigned all Forms 3, 4 and 5 required to be filed under Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of the Company;

7. executing for and on behalf of the undersigned all Joint Filing Agreements or similar documents pursuant to which the undersigned shall agree to be a member of the Group; and

8. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 5^th day of June 2017.

/s/ ERIK MORGAN

ERIK MORGAN

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