[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
California
|
94-3158788
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
1825 S. Grant Street, Suite 250, San Mateo, CA
|
94402
|
(Address of principal executive offices)
|
(Zip Code)
|
Not Applicable
|
Large accelerated filer [ ]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
|
Smaller reporting company [X]
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Cash and cash equivalents
|
$
|
16,117
|
$
|
16,393
|
||||
Loans
|
||||||||
Secured by deeds of trust
|
||||||||
Principal
|
53,119
|
51,890
|
||||||
Advances
|
709
|
708
|
||||||
Accrued interest
|
282
|
222
|
||||||
Unsecured
|
112
|
112
|
||||||
Allowance for loan losses
|
(8,760
|
)
|
(8,790
|
)
|
||||
Net loans
|
45,462
|
44,142
|
||||||
Receivable from affiliate
|
|
—
|
33
|
|||||
Real estate held for sale, net
|
24,547
|
16,552
|
||||||
Real estate held as investment
|
151,512
|
162,563
|
||||||
Other assets, net
|
5,226
|
5,258
|
||||||
Total assets
|
$
|
242,864
|
$
|
244,941
|
Liabilities
|
||||||||
Accounts payable
|
1,353
|
980
|
||||||
Payable to affiliate
|
350
|
495
|
||||||
Mortgages payable
|
$
|
48,612
|
$
|
48,938
|
||||
Total liabilities
|
50,315
|
50,413
|
||||||
Capital
|
||||||||
Partners’ capital
|
||||||||
Limited partners’ capital, subject to redemption, net
|
192,533
|
194,236
|
||||||
General partners’ capital (deficit), net
|
(1,023
|
)
|
(1,024
|
)
|
||||
Total partners’ capital
|
191,510
|
193,212
|
||||||
Non-controlling interest
|
1,039
|
1,316
|
||||||
Total capital
|
192,549
|
194,528
|
||||||
Total liabilities and capital
|
$
|
242,864
|
$
|
244,941
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2014
|
2013
|
|||||||
Revenues, net
|
||||||||
Interest income
|
||||||||
Loans
|
$
|
668
|
$
|
342
|
||||
Imputed interest on formation loan
|
106
|
93
|
||||||
Other interest income
|
—
|
—
|
||||||
Total interest income
|
774
|
435
|
||||||
Interest expense
|
||||||||
Bank loan, secured
|
—
|
—
|
||||||
Mortgages
|
546
|
551
|
||||||
Amortization of discount on formation loan
|
106
|
93
|
||||||
Other interest expense
|
—
|
—
|
||||||
Total interest expense
|
652
|
644
|
||||||
Net interest income/(expense)
|
122
|
(209
|
)
|
|||||
Late fees
|
2
|
3
|
||||||
Other
|
145
|
—
|
||||||
Total revenues/(expense), net
|
269
|
(206
|
)
|
|||||
Provision for loan losses
|
|
(30
|
)
|
—
|
||||
Operating Expenses
|
||||||||
Mortgage servicing fees
|
126
|
153
|
||||||
Asset management fees
|
190
|
192
|
||||||
Costs from Redwood Mortgage Corp.
|
509
|
390
|
||||||
Professional services
|
108
|
450
|
||||||
REO
|
||||||||
Rental operations, net
|
(800
|
)
|
(968
|
)
|
||||
Holding costs
|
27
|
64
|
||||||
Loss/(gain) on disposal
|
(2
|
)
|
—
|
|||||
Other
|
11
|
4
|
||||||
Total operating expenses
|
169
|
285
|
||||||
Net income (loss)
|
$
|
130
|
$
|
(491
|
)
|
|||
Net income (loss)
|
||||||||
General partners (1%)
|
$
|
1
|
$
|
(5
|
)
|
|||
Limited partners (99%)
|
129
|
(486
|
)
|
|||||
$
|
130
|
$
|
(491
|
)
|
||||
Net income (loss) per $1,000 invested by limited
|
||||||||
partners for entire period
|
||||||||
Where income is reinvested
|
$
|
1
|
$
|
(2
|
)
|
|||
Where partner receives income in monthly distributions
|
$
|
1
|
$
|
(2
|
)
|
Limited Partners
|
||||||||||||||||
Capital
|
Unallocated Syndication Costs
|
Formation Loan
|
Capital, net
|
|||||||||||||
Balance, December 31, 2013
|
$
|
201,863
|
$
|
—
|
$
|
(7,627
|
)
|
$
|
194,236
|
|||||||
Net income (loss)
|
129
|
—
|
—
|
129
|
||||||||||||
Allocation of syndication costs
|
—
|
—
|
—
|
—
|
||||||||||||
Withdrawals
|
(1,875
|
)
|
—
|
—
|
(1,875
|
)
|
||||||||||
Early withdrawal penalties
|
—
|
—
|
43
|
43
|
||||||||||||
Balance, March 31, 2014
|
$
|
200,117
|
$
|
—
|
$
|
(7,584
|
)
|
$
|
192,533
|
General Partners
|
||||||||||||||||
Capital
|
Unallocated Syndication Costs
|
Capital, net
|
Total Partners’ Capital
|
|||||||||||||
Balance, December 31, 2013
|
$
|
(1,024
|
)
|
$
|
—
|
$
|
(1,024
|
)
|
$
|
193,212
|
||||||
Net income (loss)
|
1
|
—
|
1
|
130
|
||||||||||||
Allocation of syndication costs
|
—
|
—
|
—
|
—
|
||||||||||||
Withdrawals
|
—
|
—
|
—
|
(1,875
|
)
|
|||||||||||
Early withdrawal penalties
|
—
|
—
|
—
|
43
|
||||||||||||
Balance, March 31, 2014
|
$
|
(1,023
|
)
|
$
|
—
|
$
|
(1,023
|
)
|
$
|
191,510
|
2014
|
2013
|
|||||||
Cash flows from operating activities
|
||||||||
Net income (loss)
|
$
|
130
|
$
|
(491
|
)
|
|||
Adjustments to reconcile net income (loss) to
|
||||||||
net cash provided by (used in) operating activities
|
||||||||
Amortization of borrowings-related origination fees
|
24
|
20
|
||||||
Imputed interest on formation loan
|
(106
|
)
|
(93
|
)
|
||||
Amortization of discount on formation loan
|
106
|
93
|
||||||
Provision for loan losses
|
(30
|
)
|
—
|
|||||
REO – depreciation, rental properties
|
651
|
602
|
||||||
REO – depreciation, other properties
|
5
|
6
|
||||||
REO – loss/(gain) on disposal
|
(2
|
)
|
—
|
|||||
REO – impairment loss
|
—
|
—
|
||||||
Change in operating assets and liabilities
|
||||||||
Accrued interest
|
(60
|
)
|
10
|
|||||
Advances on loans
|
(1)
|
(52
|
)
|
|||||
Allowance for loan losses-recoveries, net of receivables
|
—
|
60
|
||||||
Receivable from affiliates
|
33
|
—
|
||||||
Other assets
|
9
|
(433
|
)
|
|||||
Accounts payable and accrued liabilities
|
372
|
(154
|
)
|
|||||
Payable to affiliate
|
(145
|
)
|
91
|
|||||
Net cash provided by (used in) operating activities
|
986
|
(341
|
)
|
|||||
Cash flows from investing activities
|
||||||||
Secured loans funded or acquired
|
(7,875
|
)
|
—
|
|||||
Principal collected on secured loans
|
6,646
|
562
|
||||||
Unsecured loans
|
—
|
8
|
||||||
Payments for development of REO
|
(651
|
)
|
(682
|
)
|
||||
Proceeds from disposition of REO
|
3,053
|
—
|
||||||
Net cash provided by (used in) investing activities
|
1,173
|
(112
|
)
|
|||||
Cash flows from financing activities
|
||||||||
Payments on mortgages
|
(326
|
)
|
(266
|
)
|
||||
Partners’ withdrawals
|
(1,875
|
)
|
(566
|
)
|
||||
Early withdrawal fees
|
43
|
—
|
||||||
Increase/(decrease) in non-controlling interest
|
(277
|
)
|
(12
|
)
|
||||
Net cash provided by (used in) financing activities
|
(2,435
|
)
|
(844
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
(276
|
)
|
(1,297
|
)
|
||||
Cash and cash equivalents, January 1
|
16,393
|
18,943
|
||||||
Cash and cash equivalents, March 31
|
$
|
16,117
|
$
|
17,646
|
||||
Cash paid for interest
|
$
|
546
|
$
|
551
|
|
-
|
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
-
|
Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
|
|
-
|
Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the company’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the company’s own data.
|
Formation loan made
|
$
|
22,567
|
||
Unamortized discount on formation loan
|
(1,728
|
)
|
||
Formation loan made, net
|
20,839
|
|||
Repayments to date
|
(14,297
|
)
|
||
Early withdrawal penalties applied
|
(686
|
)
|
||
Formation loan, net
|
5,856
|
|||
Unamortized discount on formation loan
|
1,728
|
|||
Balance, March 31, 2014
|
$
|
7,584
|
2014
|
$
|
—
|
||
2015
|
1,893
|
|||
2016
|
1,665
|
|||
2017
|
1,322
|
|||
2018
|
1,150
|
|||
Thereafter
|
1,554
|
|||
Total
|
$
|
7,584
|
2014
|
2013
|
|||||||
Chargeable by RMC
|
$
|
189
|
$
|
230
|
||||
Waived by RMC
|
(63
|
)
|
(77
|
)
|
||||
Charged
|
$
|
126
|
$
|
153
|
2014
|
2013
|
|||||||
Principal, January 1
|
$
|
51,890
|
$
|
60,870
|
||||
Loans funded or acquired
|
7,875
|
—
|
||||||
Principal collected
|
(6,646
|
)
|
(562
|
)
|
||||
Loans assigned to affiliates
|
—
|
—
|
||||||
Foreclosures
|
—
|
—
|
||||||
Principal, March 31
|
$
|
53,119
|
$
|
60,308
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Number of secured loans
|
38
|
36
|
||||||
Secured loans – principal
|
$
|
53,119
|
$
|
51,890
|
||||
Secured loans – lowest interest rate (fixed)
|
4.00
|
%
|
4.00
|
%
|
||||
Secured loans – highest interest rate (fixed)
|
12.00
|
%
|
12.00
|
%
|
||||
Average secured loan – principal
|
$
|
1,398
|
$
|
1,441
|
||||
Average principal as percent of total principal
|
2.63
|
%
|
2.78
|
%
|
||||
Average principal as percent of partners’ capital
|
0.73
|
%
|
0.75
|
%
|
||||
Average principal as percent of total assets
|
0.58
|
%
|
0.59
|
%
|
||||
Largest secured loan – principal
|
$
|
16,312
|
$
|
16,312
|
||||
Largest principal as percent of total principal
|
30.71
|
%
|
31.44
|
%
|
||||
Largest principal as percent of partners’ capital
|
8.52
|
%
|
8.44
|
%
|
||||
Largest principal as percent of total assets
|
6.72
|
%
|
6.65
|
%
|
||||
Smallest secured loan – principal
|
$
|
69
|
$
|
79
|
||||
Smallest principal as percent of total principal
|
0.13
|
%
|
0.15
|
%
|
||||
Smallest principal as percent of partners’ capital
|
0.04
|
%
|
0.04
|
%
|
||||
Smallest principal as percent of total assets
|
0.03
|
%
|
0.03
|
%
|
||||
Number of counties where security is located (all California)
|
16
|
17
|
||||||
Largest percentage of principal in one county
|
36.62
|
%
|
41.68
|
%
|
||||
Number of secured loans in foreclosure status
|
2
|
2
|
||||||
Secured loans in foreclosure – principal
|
$
|
16,555
|
$
|
16,689
|
||||
Number of secured loans with an interest reserve
|
—
|
—
|
||||||
Interest reserves
|
$
|
—
|
$
|
—
|
March 31, 2014
|
December 31, 2013
|
|||||||||||||
Loans
|
Principal
|
Percent
|
Loans
|
Principal
|
Percent
|
|||||||||
First trust deeds
|
22
|
$
|
39,695
|
75
|
%
|
19
|
$
|
36,816
|
71
|
%
|
||||
Second trust deeds
|
15
|
13,136
|
24
|
16
|
14,784
|
28
|
||||||||
Third trust deeds
|
1
|
288
|
1
|
1
|
290
|
1
|
||||||||
Total secured loans
|
38
|
53,119
|
100
|
%
|
36
|
51,890
|
100
|
%
|
||||||
Liens due other lenders at loan closing
|
51,204
|
53,098
|
||||||||||||
Total debt
|
$
|
104,323
|
$
|
104,988
|
||||||||||
Appraised property value at loan closing
|
$
|
152,380
|
$
|
148,215
|
||||||||||
Percent of total debt to appraised
|
||||||||||||||
values (LTV) at loan closing(1)
|
68.46
|
%
|
70.83
|
%
|
|
(1)
|
Based on appraised values and liens due other lenders at loan closing. The loan to value computation does not take into account subsequent increases or decreases in security property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders by payments or interest accruals, if any. Property values likely have changed, particularly over the last four years, and the portfolio’s current loan to value ratio likely is higher than this historical ratio.
|
March 31, 2014
|
December 31, 2013
|
|||||||||||||
Loans
|
Principal
|
Percent
|
Loans
|
Principal
|
Percent
|
|||||||||
Single family
|
28
|
$
|
31,470
|
59
|
%
|
27
|
$
|
33,771
|
65
|
%
|
||||
Multi-family
|
1
|
1,000
|
2
|
1
|
1,000
|
2
|
||||||||
Commercial(2)
|
9
|
20,649
|
39
|
8
|
17,119
|
33
|
||||||||
Total secured loans
|
38
|
$
|
53,119
|
100
|
%
|
36
|
$
|
51,890
|
100
|
%
|
(2)
|
Includes one loan with a principal balance of approximately $531,000, secured by an improved land lot, with plans to be developed as a five-unit townhouse by the borrower.
|
March 31, 2014
|
December 31, 2013
|
|||||||||
Unpaid Principal Balance
|
Percent
|
Unpaid Principal Balance
|
Percent
|
|||||||
San Francisco Bay Area(1)
|
||||||||||
San Francisco
|
$
|
19,450
|
36.62
|
%
|
$
|
21,627
|
41.68
|
%
|
||
Contra Costa
|
16,646
|
31.34
|
16,647
|
32.08
|
||||||
San Mateo
|
6,188
|
11.65
|
1,765
|
3.40
|
||||||
Santa Clara
|
3,137
|
5.91
|
3,208
|
6.18
|
||||||
Alameda
|
1,254
|
2.36
|
1,260
|
2.43
|
||||||
Napa
|
405
|
0.76
|
406
|
0.78
|
||||||
Marin
|
180
|
0.34
|
180
|
0.35
|
||||||
47,260
|
88.98
|
45,093
|
86.90
|
|||||||
Other Northern California
|
||||||||||
Sacramento
|
243
|
0.46
|
249
|
0.48
|
||||||
Calaveras
|
178
|
0.34
|
182
|
0.35
|
||||||
Monterey
|
177
|
0.33
|
178
|
0.34
|
||||||
San Benito
|
97
|
0.18
|
97
|
0.19
|
||||||
Butte
|
69
|
0.13
|
79
|
0.15
|
||||||
764
|
1.44
|
785
|
1.51
|
|||||||
Total Northern California
|
48,024
|
90.42
|
45,878
|
88.41
|
||||||
Los Angeles & Coastal
|
||||||||||
Los Angeles
|
2,809
|
5.29
|
2,511
|
4.84
|
||||||
Orange
|
1,821
|
3.43
|
1,354
|
2.61
|
||||||
Ventura
|
349
|
0.66
|
350
|
0.67
|
||||||
San Diego
|
—
|
—
|
1,680
|
3.24
|
||||||
4,979
|
9.38
|
5,895
|
11.36
|
|||||||
Other Southern California
|
||||||||||
Kern
|
116
|
0.20
|
117
|
0.23
|
||||||
Total Southern California
|
5,095
|
9.58
|
6,012
|
11.59
|
||||||
Total Secured Loans
|
$
|
53,119
|
100
|
%
|
$
|
51,890
|
100
|
%
|
(1)
|
Includes Silicon Valley
|
Scheduled maturities at March 31, 2014
|
Loans
|
Principal
|
Percent
|
||||
2014
|
3
|
$
|
5,541
|
10
|
%
|
||
2015
|
13
|
18,037
|
34
|
||||
2016
|
5
|
5,051
|
10
|
||||
2017
|
4
|
1,385
|
3
|
||||
2018
|
2
|
583
|
1
|
||||
2019
|
6
|
4,828
|
9
|
||||
Total future maturities
|
33
|
35,425
|
67
|
||||
Matured at March 31, 2014
|
5
|
17,694
|
33
|
||||
Total secured loans
|
38
|
$
|
53,119
|
100
|
%
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Number of loans(2)(3)
|
5
|
5
|
||||||
Principal
|
$
|
17,694
|
$
|
17,694
|
||||
Advances
|
683
|
683
|
||||||
Accrued interest
|
65
|
63
|
||||||
Loan balance
|
$
|
18,442
|
$
|
18,440
|
||||
Percent of principal
|
33
|
%
|
34
|
%
|
|
(2)
|
The secured loans past maturity include five loans as of March 31, 2014 and December 31, 2013, respectively, also included in the secured loans in non-accrual status.
|
|
(3)
|
The secured loans past maturity include five loans as of March 31, 2014 and December 31, 2013, respectively, also included in the secured loans delinquency.
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Past due
|
||||||||
30-89 days
|
$
|
394
|
$
|
665
|
||||
90-179 days
|
405
|
17,197
|
||||||
180 or more days
|
17,264
|
474
|
||||||
Total past due
|
18,063
|
18,336
|
||||||
Current
|
35,056
|
33,554
|
||||||
Total secured loans
|
$
|
53,119
|
$
|
51,890
|
March 31, 2014
|
December 31, 2013
|
|||||||||||||||
Active
|
Principal
|
Active
|
Principal
|
|||||||||||||
Balance, January 1
|
5 | $ | 3,947 | 5 | $ | 6,085 | ||||||||||
New modifications
|
— | — | 1 | 325 | ||||||||||||
Paid off/Foreclosed
|
(1 | ) | (325 | ) | (1 | ) | (2,140 | ) | ||||||||
Expired/Voided
|
— | — | — | — | ||||||||||||
Principal Collected
|
— | (87 | ) | — | (323 | ) | ||||||||||
Ending Balance
|
4 | $ | 3,535 | 5 | $ | 3,947 |
March 31, 2014
|
December 31, 2013
|
|||||||||
Active
|
Principal
|
Active
|
Principal
|
|||||||
Balance, January 1
|
3
|
$
|
1,097
|
4
|
$
|
1,126
|
||||
New agreements
|
—
|
—
|
2
|
847
|
||||||
Paid off/Foreclosed
|
—
|
—
|
(1
|
)
|
(417
|
)
|
||||
Expired/Voided
|
—
|
—
|
(2
|
)
|
(449
|
)
|
||||
Principal collected
|
—
|
(10
|
)
|
—
|
(10
|
)
|
||||
Balance, end of period
|
3
|
$
|
1,087
|
3
|
$
|
1,097
|
March 31, 2014
|
December 31, 2013
|
|||||||||||||||
Active
|
Principal
|
Active
|
Principal
|
|||||||||||||
Balance, January 1
|
5 | $ | 4,228 | 6 | $ | 8,042 | ||||||||||
New agreements
|
— | — | 2 | 990 | ||||||||||||
Paid off/Foreclosed
|
(1 | ) | (325 | ) | (3 | ) | (4,507 | ) | ||||||||
Principal collected
|
— | (75 | ) | — | (297 | ) | ||||||||||
Balance, end of period
|
4 | $ | 3,828 | 5 | $ | 4,228 | ||||||||||
Provision for loan losses
|
$ | — | $ | — |
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Secured loans in nonaccrual status
|
||||||||
Number of loans
|
8
|
8
|
||||||
Principal
|
$
|
18,350
|
$
|
18,361
|
||||
Advances
|
688
|
688
|
||||||
Accrued interest
|
65
|
63
|
||||||
Loan balance
|
$
|
19,103
|
$
|
19,112
|
||||
Foregone interest
|
$
|
246
|
$
|
887
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Principal
|
$ | 21,092 | $ | 21,499 | ||||
Recorded investment(4)
|
$ | 21,846 | $ | 22,249 | ||||
Impaired loans without allowance
|
$ | 3,753 | $ | 4,149 | ||||
Impaired loans with allowance
|
$ | 18,093 | $ | 18,100 | ||||
Allowance for loan losses, impaired loans
|
$ | 8,760 | $ | 8,740 |
|
(4)
|
Recorded investment is the sum of principal, advances, and interest accrued for financial reporting purposes.
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Average recorded investment
|
$ | 22,048 | $ | 36,652 | ||||
Interest income recognized
|
$ | 46 | $ | 156 | ||||
Interest income received in cash
|
$ | 35 | $ | 378 |
2014
|
2013
|
|||||||
Balance, January 1
|
$
|
8,790
|
$
|
19,815
|
||||
Provision for loan losses
|
(30
|
)
|
—
|
|||||
Charge-offs, net
|
||||||||
Charge-offs
|
—
|
—
|
||||||
Recoveries
|
—
|
60
|
||||||
Charge-offs, net
|
—
|
60
|
||||||
Balance, March 31
|
$
|
8,760
|
$
|
19,875
|
||||
Ratio of charge-offs, net during the period to average
|
||||||||
secured loans outstanding during the period
|
0.00
|
%
|
0.10
|
%
|
March 31, 2014
|
December 31, 2013
|
|||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||
Allowance for loan losses
|
||||||||||||
Secured loans by property type
|
||||||||||||
Single family
|
$
|
8,760
|
59
|
%
|
$
|
8,790
|
65
|
%
|
||||
Multi-family
|
—
|
2
|
—
|
2
|
||||||||
Commercial
|
—
|
39
|
—
|
33
|
||||||||
Total allowance for loan losses
|
$
|
8,760
|
100
|
%
|
$
|
8,790
|
100
|
%
|
March 31,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Balance, beginning of period
|
$
|
16,552
|
$
|
—
|
||||
Acquisitions
|
—
|
3,895
|
||||||
Dispositions
|
(2,524
|
)
|
(7,745
|
)
|
||||
Improvements/betterments
|
459
|
11
|
||||||
Designated (to)from REO held as investment
|
10,108
|
20,594
|
||||||
Change in net book value
|
—
|
(160
|
)
|
|||||
Depreciation
|
(48
|
)
|
(43
|
)
|
||||
Balance, end of period
|
$
|
24,547
|
$
|
16,552
|
||||
Property type
|
||||||||
Rental
|
$
|
14,839
|
10,541
|
|||||
Development
|
—
|
6,011
|
||||||
Other
|
9,708
|
—
|
||||||
Total REO, held for sale
|
$
|
24,547
|
$
|
16,552
|
||||
Number of properties, end of period
|
6
|
3
|
-
|
One property consisting of two condominium units located in San Francisco County. One of the units is in contract for sale.
|
-
|
Nine units in a condominium complex located in Sutter County. The nine units are in contract for sale.
|
-
|
Eight unit condominium complex located in Solano County.
|
-
|
38 unit apartment complex located in San Joaquin County. The property is in contract for sale.
|
-
|
Sold two tenant-in-common units located in San Francisco County. The units sold for approximately their carrying value after taking into account a previously recorded valuation reserve.
|
-
|
Sold a six unit apartment building located in Solano County. This property sold for approximately its carrying value.
|
NBV
|
Accumulated Depreciation
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Balance, January 1
|
$
|
162,563
|
$
|
181,333
|
$
|
8,275
|
$
|
5,926
|
||||||||
Acquisitions
|
—
|
—
|
—
|
—
|
||||||||||||
Dispositions
|
(526
|
)
|
—
|
(7
|
)
|
—
|
||||||||||
Improvements/betterments
|
192
|
682
|
—
|
—
|
||||||||||||
Designated (to)from REO held for sale
|
(10,108
|
)
|
—
|
(133
|
)
|
—
|
||||||||||
Changes in net book values (NBV)
|
—
|
—
|
—
|
—
|
||||||||||||
Depreciation
|
(609
|
)
|
(608
|
)
|
609
|
608
|
||||||||||
Balance, March 31
|
$
|
151,512
|
$
|
181,407
|
$
|
8,744
|
$
|
6,534
|
-
|
One property consisting of two condominium units located in San Francisco County. One of the units is in contract for sale.
|
-
|
Nine units in a condominium complex located in Sutter County. The nine units are in contract for sale.
|
-
|
Eight unit condominium complex located in Solano County.
|
-
|
38 unit apartment complex located in San Joaquin County. The property is in contract for sale.
|
-
|
Sold two tenant-in-common units located in San Francisco County. The units sold for approximately their carrying value after taking into account a previously recorded valuation reserve.
|
-
|
Sold a six unit apartment building located in Solano County. This property sold for approximately its carrying value.
|
-
|
Sold an eight unit apartment building located in San Joaquin County. This property sold for approximately its carrying value.
|
March 31, 2014
|
December 31, 2013
|
|||||||||
Properties
|
NBV
|
Properties
|
NBV
|
|||||||
Property classification
|
||||||||||
Rental
|
15
|
$
|
136,456
|
19
|
$
|
141,812
|
||||
Development
|
4
|
15,056
|
5
|
20,751
|
||||||
Total REO, held as investment, net
|
19
|
$
|
151,512
|
24
|
$
|
162,563
|
-
|
At December 31, 2013, a property under construction consisting of two condominium units in San Francisco County, with a carrying value of $5,776,000 and cost to complete of approximately $300,000. During the three months ended March 31, 2014 the construction was completed and the property was designated to REO held for sale.
|
-
|
At December 31, 2013, a property located in Los Angeles County, zoned and entitled as commercial, which was being developed and re-entitled to residential. During the three months ended March 31, 2014, the property was re-entitled to multi-family.
|
-
|
Approximately 14 acres located in Stanislaus County zoned commercial.
|
-
|
Approximately 13 acres located in Marin County, zoned for residential development.
|
-
|
A partially completed home subdivision located in Fresno County. The property has rental operations of five single-family residences.
|
March 31, 2014
|
December 31, 2013
|
|||||||||||||||||||||||||||||||
Rental
|
Non-Rental
|
Rental
|
Non-Rental
|
|||||||||||||||||||||||||||||
No.
|
NBV
|
No.
|
NBV
|
No.
|
NBV
|
No.
|
NBV
|
|||||||||||||||||||||||||
San Francisco Bay Area
|
||||||||||||||||||||||||||||||||
Contra Costa
|
4 | $ | 13,967 | — | $ | — | 4 | $ | 13,985 | — | $ | — | ||||||||||||||||||||
Alameda
|
3 | 8,484 | — | — | 3 | 8,515 | — | — | ||||||||||||||||||||||||
San Francisco
|
3 | 3,899 | — | — | 3 | 3,915 | 1 | 5,776 | ||||||||||||||||||||||||
Napa
|
1 | 1,485 | — | — | 1 | 1,491 | — | — | ||||||||||||||||||||||||
Marin
|
— | — | 1 | 1,210 | — | — | 1 | 1,209 | ||||||||||||||||||||||||
Solano
|
— | — | — | — | 1 | 1,149 | — | — | ||||||||||||||||||||||||
Total San Francisco Bay Area
|
11 | 27,835 | 1 | 1,210 | 12 | 29,055 | 2 | 6,985 | ||||||||||||||||||||||||
Other Northern California
|
||||||||||||||||||||||||||||||||
Sacramento
|
1 | 40,040 | — | — | 1 | 40,165 | — | — | ||||||||||||||||||||||||
Amador
|
1 | 1,543 | — | — | 1 | 1,551 | — | — | ||||||||||||||||||||||||
Stanislaus
|
— | — | 1 | 2,789 | — | — | 1 | 2,790 | ||||||||||||||||||||||||
Fresno
|
— | — | 1 | 1,607 | — | — | 1 | 1,612 | ||||||||||||||||||||||||
San Joaquin
|
— | — | — | — | 2 | 3,235 | — | — | ||||||||||||||||||||||||
Sutter
|
— | — | — | — | 1 | 475 | — | — | ||||||||||||||||||||||||
Total Other Northern California
|
2 | 41,583 | 2 | 4,396 | 5 | 45,426 | 2 | 4,402 | ||||||||||||||||||||||||
Total Northern California
|
13 | 69,418 | 3 | 5,606 | 17 | 74,481 | 4 | 11,387 | ||||||||||||||||||||||||
Los Angeles
|
2 | 67,038 | 1 | 9,450 | 2 | 67,331 | 1 | 9,364 | ||||||||||||||||||||||||
Total REO Held as investment
|
15 | $ | 136,456 | 4 | $ | 15,056 | 19 | $ | 141,812 | 5 | $ | 20,751 |
March 31, 2014
|
December 31, 2013
|
|||||||||||||||||||||||
Property type (non-rental)
|
Units
|
Properties
|
NBV
|
Units
|
Properties
|
NBV
|
||||||||||||||||||
Residential - Single family
|
— | — | $ | — | 2 | 2 | $ | 7,388 | ||||||||||||||||
Commercial(1)
|
— | 4 | 15,056 | — | 3 | 13,363 | ||||||||||||||||||
Total REO, held as investment, net
|
— | 4 | $ | 15,056 | 2 | 5 | $ | 20,751 |
March 31, 2014
|
December 31, 2013
|
|||||||||||||||||||||||
Property type (rental)
|
Units
|
Properties
|
NBV
|
Units
|
Properties
|
NBV
|
||||||||||||||||||
Residential
|
||||||||||||||||||||||||
Single family
|
1 | 1 | $ | 1,485 | 1 | 1 | $ | 1,491 | ||||||||||||||||
Apartments
|
— | — | — | 8 | 1 | 527 | ||||||||||||||||||
Condominiums(2)
|
174 | 2 | 60,916 | 220 | 4 | 65,014 | ||||||||||||||||||
Fractured Condominiums(3)
|
431 | 9 | 70,842 | 440 | 10 | 71,589 | ||||||||||||||||||
Total Residential
|
606 | 12 | 133,243 | 669 | 16 | 138,621 | ||||||||||||||||||
Commercial
|
— | 3 | 3,213 | — | 3 | 3,191 | ||||||||||||||||||
Total REO, held as investment, net
|
606 | 15 | $ | 136,456 | 669 | 19 | $ | 141,812 |
2014
|
2013
|
|||||||
Rental income
|
$
|
2,676
|
$
|
2,791
|
||||
Operating expenses, rentals
|
||||||||
Administration and payroll
|
342
|
346
|
||||||
Homeowner association fees
|
208
|
201
|
||||||
Professional services
|
28
|
—
|
||||||
Utilities and maintenance
|
290
|
275
|
||||||
Advertising and promotions
|
29
|
31
|
||||||
Property taxes
|
328
|
275
|
||||||
Other
|
48
|
47
|
||||||
Total operating expenses, rentals
|
1,273
|
1,175
|
||||||
Net operating income
|
1,403
|
1,616
|
||||||
Depreciation
|
603
|
602
|
||||||
Receiver fees
|
—
|
46
|
||||||
Rental operations, net
|
800
|
968
|
||||||
Interest on mortgages
|
437
|
551
|
||||||
Rental operation, net, less related mortgage interest
|
$
|
363
|
$
|
417
|
2014
|
2013
|
|||||||
Principal, January 1
|
$
|
48,938
|
$
|
47,293
|
||||
New mortgages taken
|
—
|
—
|
||||||
Principal repaid
|
(326
|
)
|
(266
|
)
|
||||
Principal, March 31
|
$
|
48,612
|
$
|
47,027
|
March 31,
|
December 31,
|
|||||||
Lender – summary of terms
|
2014
|
2013
|
||||||
NorthMarq Capital – Secured by a condominium complex,
|
$
|
18,055
|
$
|
18,170
|
||||
located in Los Angeles County, matures July 1, 2015,
|
||||||||
interest rate (2.90%) varies monthly (LIBOR plus 2.73%),
|
||||||||
monthly payment(1)(2) $119,758
|
||||||||
East West Bank – Secured by a fractured condominium project
|
13,340
|
13,391
|
||||||
located in Sacramento County, matures June 1, 2017,
|
||||||||
interest rate varies monthly (greater of Prime plus 1% or 5.50%),
|
||||||||
monthly payment(2) $78,283
|
||||||||
Business Partners – Secured by a commercial property located
|
6,622
|
6,721
|
||||||
in San Francisco County, matures May 1, 2015,
|
||||||||
interest rate varies monthly (greater of 5-year Treasuries
|
||||||||
plus 2.33% or 6.53%),
|
||||||||
monthly payment(1)(2) $79,155
|
||||||||
Chase Bank – Secured by a condominium complex
|
5,011
|
5,036
|
||||||
located in Contra Costa County, matures September 1, 2042,
|
||||||||
interest rate variable (fixed until September 1, 2017 at 3.52%),
|
||||||||
monthly payment $23,228
|
||||||||
CapitalSource – Secured by a condominium complex,
|
4,922
|
4,952
|
||||||
located in Los Angeles County, matures July 1, 2023,
|
||||||||
interest rate variable (fixed until June 1, 2016 at 3.95%),
|
||||||||
monthly payment(1)(2) $42,258
|
||||||||
Wells Fargo Bank – Secured by a condominium unit located in
|
348
|
351
|
||||||
San Francisco County, matures October 1, 2032,
|
||||||||
interest rate (2.88%) varies annually (LIBOR plus 2.75%),
|
||||||||
monthly payment $2,014
|
||||||||
Wells Fargo Bank – Secured by a condominium unit located in
|
314
|
317
|
||||||
San Francisco County, matures September 15, 2032,
|
||||||||
interest rate (4.03%) varies annually (bank rate plus 3.10%),
|
||||||||
monthly payment $2,110
|
||||||||
Total mortgages payable
|
$
|
48,612
|
$
|
48,938
|
2014
|
$
|
1,154
|
||
2015
|
24,698
|
|||
2016
|
713
|
|||
2017
|
13,230
|
|||
2018
|
519
|
|||
Thereafter
|
8,298
|
|||
Total
|
$
|
48,612
|
|
NOTE 7 – FAIR VALUE
|
·
|
Loans designated impaired (i.e. that are collateral dependent)
|
·
|
REO held for sale
|
·
|
REO held as investment
|
·
|
Loans designated impaired which were acquired through foreclosure or deed in lieu of foreclosure during the year
|
·
|
Loans designated impaired which were acquired through foreclosure or deed in lieu of foreclosure and sold during the year
|
Fair Value Measurement at Report Date Using
|
||||||||||||||||
Quoted Prices
|
Significant
|
|||||||||||||||
in Active
|
Other
|
Significant
|
||||||||||||||
Markets for
|
Observable
|
Unobservable
|
Total
|
|||||||||||||
Identical Assets
|
Inputs
|
Inputs
|
as of
|
|||||||||||||
Item
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
03/31/14
|
||||||||||||
Impaired loans with allowance, net(1)
|
$
|
—
|
$
|
9,333
|
$
|
—
|
$
|
9,333
|
||||||||
REO held for sale
|
$
|
—
|
$
|
24,547
|
$
|
—
|
$
|
24,547
|
||||||||
REO held as investment(2)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Impaired loans with allowance, net
|
||||||||||||||||
foreclosed upon during 2014(1)(3)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||
Impaired loans with allowance, net
|
||||||||||||||||
foreclosed and sold during 2014(1)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
(1)
|
Sum of principal, advances, interest accrued, less the related specific allowance for financial reporting purposes.
|
(2)
|
Only includes properties with a valuation change during the year.
|
(3)
|
Excludes any properties included in the REO lines above.
|
|
NOTE 7 – FAIR VALUE (continued)
|
Fair Value Measurement at Report Date Using
|
||||||||||||||||
Quoted Prices
|
Significant
|
|||||||||||||||
in Active
|
Other
|
Significant
|
||||||||||||||
Markets for
|
Observable
|
Unobservable
|
Total
|
|||||||||||||
Identical Assets
|
Inputs
|
Inputs
|
as of
|
|||||||||||||
Item
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
12/31/13
|
||||||||||||
Impaired loans with allowance, net(1)
|
$
|
—
|
$
|
9,360
|
$
|
—
|
$
|
9,360
|
||||||||
REO held for sale
|
$
|
—
|
$
|
16,552
|
$
|
—
|
$
|
16,552
|
||||||||
REO held as investment(2)
|
$
|
—
|
$
|
4,868
|
$
|
1,551
|
$
|
6,419
|
||||||||
Impaired loans with allowance, net
|
||||||||||||||||
foreclosed upon during 2013(1)(3)
|
$
|
—
|
$
|
2,662
|
$
|
—
|
$
|
2,662
|
||||||||
Impaired loans with allowance, net
|
||||||||||||||||
foreclosed and sold during 2013(1)
|
$
|
—
|
$
|
3,895
|
$
|
—
|
$
|
3,895
|
(1)
|
Sum of principal, advances, interest accrued, less the related specific allowance for financial reporting purposes.
|
(2)
|
Only includes properties with a valuation change during the year.
|
(3)
|
Excludes any properties included in the REO lines above.
|
(a)
|
Secured loans (Level 2) – The recorded amount of the performing loans (i.e. the loan balance) is deemed to approximate the fair value. The company prices its loans uniquely and generally pricing does not react to other than significant changes in the prevailing interest rate indices. Each loan is reviewed for its delinquency, protective equity (LTV) adjusted for the most recent valuation of the underlying collateral, remaining term to maturity, borrower’s payment history and other factors. Also considered is the limited resale market for the loans. Most companies or individuals making similar loans as the company intend to hold the loans until maturity as the average contractual term of the loans (and the historical experience of the time the loan is outstanding due to pre-payments) is shorter than conventional mortgages. Further, for substantially all loans, there are no prepayment-penalties to be collected and any potential loan buyers would be hesitant to risk paying above par. Due to these factors sales of the loans are infrequent and an active market does not exist.
|
(b)
|
Secured loans (Level 2) – designated impaired are deemed collateral dependent, and the fair value of the loan is the lesser of the fair value of the collateral or the enforceable amount owing under the note. The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions Level 2 inputs.
|
|
NOTE 7 – FAIR VALUE (continued)
|
|
NOTE 7 – FAIR VALUE (continued)
|
(c)
|
Unsecured loans (Level 3). Unsecured loans are valued at their principal less any discount or loss reserves established by management after taking into account the borrower’s creditworthiness and ability to repay the loan.
|
(d)
|
Real estate owned (REO), net (Level 2). Real estate acquired in full or partial settlement of loan obligations, generally through foreclosure, is recorded at acquisition at the lower of the recorded investment in the loan, plus any senior indebtedness, or at the property’s fair value less estimated costs to sell, as applicable. The fair value estimates are derived as above in secured loans for similar property types. In rare instances where no market comps are available, the fair value of the property will be computed using internal analytics that are expected to be indicative of the value that would be ascribed by a buyer/investor.
|
(e)
|
Mortgages payable (Level 2). The partnership has mortgages payable (see Note 6 Borrowings for details). The interest rates are deemed to be at market rates for the type and location of the securing property, the length of the mortgage, and the other terms and conditions are deemed to be customary. All of the partnership’s mortgages are deemed to be at fair value as they are either, with variable interest rates which have adjusted within the past twelve months, or were refinanced/extended within the past twelve months with terms and conditions deemed customary for the collateral property.
|
Changes during the three months ended
March 31, 2014 versus 2013
|
||||||
Dollars
|
Percent
|
|||||
Revenue, net
|
||||||
Interest income
|
||||||
Loans
|
$
|
326
|
95
|
%
|
||
Imputed interest on formation loan
|
13
|
14
|
||||
Other interest income
|
—
|
—
|
||||
Total interest income
|
339
|
78
|
||||
Interest expense
|
||||||
Bank loan, secured
|
—
|
—
|
||||
Mortgages payable
|
(5
|
)
|
(1
|
)
|
||
Amortization of discount on formation loan
|
13
|
14
|
||||
Other interest expense
|
—
|
—
|
||||
Total interest expense
|
8
|
1
|
||||
Net interest income/(expense)
|
331
|
158
|
||||
Late fees
|
(1
|
)
|
(40
|
)
|
||
Other
|
145
|
100
|
||||
Total revenues, net
|
$
|
475
|
230
|
|||
Provision for loan losses/(recoveries), net
|
(30
|
)
|
100
|
|||
Operating expenses
|
||||||
Mortgage servicing fees
|
(27
|
)
|
(18
|
)
|
||
Asset management fees
|
(2
|
)
|
(1
|
)
|
||
Costs from RMC
|
119
|
30
|
||||
Professional services
|
(342
|
)
|
(76
|
)
|
||
REO
|
||||||
Rental operations, net
|
168
|
17
|
||||
Holding costs
|
(37
|
)
|
(58
|
)
|
||
Loss/(gain) on disposal
|
(2
|
)
|
100
|
|||
Impairment loss
|
—
|
—
|
||||
Other
|
7
|
169
|
||||
Total operating expenses, net
|
(116
|
)
|
(41
|
)
|
||
Net income (loss)
|
$
|
621
|
126
|
%
|
Transactions
|
Ongoing
|
Legacy
|
Total
|
|||||||||
Principal, January 1, 2014
|
$
|
27,402
|
$
|
24,488
|
$
|
51,890
|
||||||
Loans funded or acquired
|
7,875
|
—
|
7,875
|
|||||||||
Principal collected
|
(6,010
|
)
|
(636
|
)
|
(6,646
|
)
|
||||||
Loans sold to affiliates
|
—
|
—
|
—
|
|||||||||
Foreclosures
|
—
|
—
|
—
|
|||||||||
Other-loans charged off
|
—
|
—
|
—
|
|||||||||
Principal, March 31, 2014
|
$
|
29,267
|
$
|
23,852
|
$
|
53,119
|
||||||
Portfolio characteristics
|
||||||||||||
Number of secured loans
|
18
|
20
|
38
|
|||||||||
Average secured loan-principal
|
1,626
|
1,193
|
1,398
|
|||||||||
Largest secured loan-principal
|
10,500
|
16,312
|
16,312
|
|||||||||
Smallest secured loan-principal
|
300
|
69
|
69
|
|||||||||
Number of counties
|
6
|
15
|
16
|
|||||||||
Average interest rate
|
7.58
|
%
|
5.82
|
%
|
6.79
|
%
|
||||||
Number of loans with workout agreements
|
—
|
3
|
3
|
|||||||||
Aggregate workout principal balance
|
—
|
1,087
|
1,087
|
|||||||||
Number of loans with active modifications
|
—
|
4
|
4
|
|||||||||
Aggregate modifications principal balance
|
—
|
3,535
|
3,535
|
Loans
|
Principal
|
Percent
|
||||||||||
Geographic distribution
|
||||||||||||
Ongoing
|
||||||||||||
San Francisco Bay Area
|
11
|
$
|
25.142
|
86
|
%
|
|||||||
Other Northern California
|
—
|
—
|
—
|
|||||||||
Los Angeles & Southern Coastal
|
7
|
4,125
|
14
|
|||||||||
Other Southern California
|
—
|
—
|
—
|
|||||||||
Total ongoing loans
|
18
|
$
|
29,267
|
100
|
%
|
|||||||
Legacy
|
||||||||||||
San Francisco Bay Area
|
11
|
$
|
22,117
|
92
|
%
|
|||||||
Other Northern California
|
5
|
765
|
3
|
|||||||||
Los Angeles & Southern Coastal
|
3
|
854
|
4
|
|||||||||
Other Southern California
|
1
|
116
|
1
|
|||||||||
Total legacy loans
|
20
|
$
|
23,852
|
100
|
%
|
|||||||
Total
|
||||||||||||
San Francisco Bay Area
|
22
|
47,259
|
89
|
%
|
||||||||
Other Northern California
|
5
|
765
|
1
|
|||||||||
Los Angeles & Southern Coastal
|
10
|
4,979
|
9
|
|||||||||
Other Southern California
|
1
|
116
|
1
|
|||||||||
Total
|
38
|
$
|
53,119
|
100
|
%
|
|||||||
Lien position
|
||||||||||||
Ongoing
|
||||||||||||
First trust deeds
|
13
|
$
|
21,320
|
73
|
%
|
|||||||
Second trust deeds
|
5
|
7,947
|
27
|
|||||||||
Third trust deeds
|
—
|
—
|
—
|
|||||||||
Total ongoing loans
|
18
|
$
|
29,267
|
100
|
%
|
|||||||
Legacy
|
||||||||||||
First trust deeds
|
9
|
$
|
18,375
|
77
|
%
|
|||||||
Second trust deeds
|
10
|
5,189
|
22
|
|||||||||
Third trust deeds
|
1
|
288
|
1
|
|||||||||
Total legacy loans
|
20
|
$
|
23,852
|
100
|
%
|
|||||||
Total
|
||||||||||||
First trust deeds
|
22
|
$
|
39,695
|
75
|
%
|
|||||||
Second trust deeds
|
15
|
13,136
|
24
|
|||||||||
Third trust deeds
|
1
|
288
|
1
|
|||||||||
Total loans
|
38
|
$
|
53,119
|
100
|
%
|
Ongoing
|
Legacy
|
Total
|
||||||||||
Scheduled maturities
|
||||||||||||
2014
|
$
|
5,400
|
$
|
141
|
$
|
5,541
|
||||||
2015
|
16,740
|
1,297
|
18,037
|
|||||||||
2016
|
1,950
|
3,101
|
5,051
|
|||||||||
2017
|
—
|
1,385
|
1,385
|
|||||||||
2018
|
349
|
234
|
583
|
|||||||||
Thereafter
|
4,828
|
—
|
4,828
|
|||||||||
Total future maturities
|
29,267
|
6,158
|
35,425
|
|||||||||
Matured at March 31, 2014
|
—
|
17,694
|
17,694
|
|||||||||
Total secured loans
|
$
|
29,267
|
$
|
23,852
|
$
|
53,119
|
||||||
Matured loans
|
||||||||||||
Number of loans
|
—
|
5
|
5
|
|||||||||
Principal
|
$
|
—
|
$
|
17,694
|
$
|
17,694
|
||||||
Advances
|
—
|
683
|
683
|
|||||||||
Accrued interest
|
—
|
65
|
65
|
|||||||||
Loan balance
|
$
|
—
|
$
|
18,442
|
$
|
18,442
|
||||||
Percent of principal
|
—
|
%
|
74
|
%
|
33
|
%
|
||||||
Delinquency
|
||||||||||||
Past due
|
||||||||||||
30-89 days
|
$
|
394
|
$
|
—
|
$
|
394
|
||||||
90-179 days
|
—
|
405
|
405
|
|||||||||
180 or more days
|
—
|
17,264
|
17,264
|
|||||||||
Total past due
|
394
|
17,669
|
18,063
|
|||||||||
Current
|
28,872
|
6,184
|
35,056
|
|||||||||
Total secured loans
|
$
|
29,266
|
$
|
23,853
|
$
|
53,119
|
||||||
Secured loans in nonaccrual status
|
||||||||||||
Number of loans
|
—
|
8
|
8
|
|||||||||
Principal
|
$
|
—
|
$
|
18,350
|
$
|
18,350
|
||||||
Advances
|
—
|
688
|
688
|
|||||||||
Accrued interest
|
—
|
65
|
65
|
|||||||||
Loan balance
|
$
|
—
|
$
|
19,103
|
$
|
19,103
|
||||||
Loans designated impaired
|
||||||||||||
Principal
|
$
|
—
|
21,092
|
$
|
21,092
|
|||||||
Recorded investment(1)
|
$
|
—
|
21,846
|
$
|
21,846
|
|||||||
Impaired loans without allowance
|
$
|
—
|
3,753
|
$
|
3,753
|
|||||||
Impaired loans with allowance
|
$
|
—
|
18,093
|
$
|
18,093
|
|||||||
Allowance for loan losses
|
||||||||||||
Provision/(Recovery) for loan losses, 2014
|
$
|
—
|
$
|
(30
|
)
|
$
|
(30
|
)
|
||||
Allowance for loan losses
|
$
|
—
|
$
|
8,760
|
$
|
8,760
|
|
(1)
|
Recorded investment is the sum of principal, advances, and interest accrued for financial reporting purposes.
|
Average
|
Stated
|
|||||||||||||||
Secured
|
Effective
|
Average
|
||||||||||||||
Loan
|
Interest
|
Yield
|
Yield
|
|||||||||||||
Year
|
Balance
|
Income
|
Rate
|
Rate
|
||||||||||||
Ongoing
|
||||||||||||||||
2014
|
$ | 26,048 | $ | 481 | 7.39 | % | 7.58 | % | ||||||||
2013
|
$ | 10,500 | $ | 105 | 4.00 | % | 4.00 | % | ||||||||
Legacy
|
||||||||||||||||
2014
|
$ | 24,540 | $ | 187 | 3.05 | % | 5.82 | % | ||||||||
2013
|
$ | 50,735 | $ | 237 | 1.87 | % | 7.37 | % | ||||||||
Total
|
||||||||||||||||
2014
|
$ | 50,588 | $ | 668 | 5.29 | % | 6.79 | % | ||||||||
2013
|
$ | 61,235 | $ | 342 | 2.23 | % | 6.79 | % |
2014
|
2013
|
|||||||
Rental income
|
$
|
2,675
|
$
|
2,791
|
||||
Operating expenses, rentals
|
||||||||
Administration and payroll
|
342
|
346
|
||||||
Homeowner association fees
|
208
|
201
|
||||||
Professional services
|
27
|
—
|
||||||
Utilities and maintenance
|
290
|
275
|
||||||
Advertising and promotions
|
29
|
31
|
||||||
Property taxes
|
328
|
275
|
||||||
Other
|
48
|
47
|
||||||
Total operating expenses, rentals
|
1,272
|
1,175
|
||||||
Net operating income
|
1,403
|
1,616
|
||||||
Depreciation
|
603
|
602
|
||||||
Receiver fees
|
—
|
46
|
||||||
Rental operations, net
|
800
|
968
|
||||||
Interest on mortgages
|
437
|
551
|
||||||
Rental operations, net, less related mortgage interest
|
$
|
363
|
$
|
417
|
Rental
|
||||||||||||||||||||||||||||
Operations,
|
||||||||||||||||||||||||||||
net, less
|
||||||||||||||||||||||||||||
Net
|
Related
|
|||||||||||||||||||||||||||
Rental
|
Operating
|
Operating
|
Receiver
|
Mortgage
|
Mortgage
|
|||||||||||||||||||||||
Income
|
Expenses
|
Income
|
Depreciation
|
Fees
|
Interest
|
Interest
|
||||||||||||||||||||||
Property type
|
||||||||||||||||||||||||||||
Residential
|
||||||||||||||||||||||||||||
Single family
|
$ | 13 | $ | 7 | $ | 6 | $ | 6 | $ | — | $ | — | $ | — | ||||||||||||||
Condominiums and
|
||||||||||||||||||||||||||||
apartments
|
1,007 | 404 | 603 | 263 | — | 189 | 152 | |||||||||||||||||||||
Fractured condominiums
|
1,614 | 753 | 861 | 326 | — | 248 | 287 | |||||||||||||||||||||
Total residential
|
2,634 | 1,164 | 1,470 | 595 | — | 437 | 439 | |||||||||||||||||||||
Commercial
|
41 | 108 | (67 | ) | 8 | — | (76 | ) | ||||||||||||||||||||
Total
|
$ | 2,675 | $ | 1,272 | $ | 1,403 | $ | 603 | $ | — | $ | 437 | $ | 363 |
Rental
|
||||||||||||||||||||||||||||
Operations,
|
||||||||||||||||||||||||||||
net, less
|
||||||||||||||||||||||||||||
Net
|
Related
|
|||||||||||||||||||||||||||
Rental
|
Operating
|
Operating
|
Receiver
|
Mortgage
|
Mortgage
|
|||||||||||||||||||||||
Income
|
Expenses
|
Income
|
Depreciation
|
Fees
|
Interest
|
Interest
|
||||||||||||||||||||||
2014 results
|
$ | 2,675 | $ | 1,272 | $ | 1,403 | $ | 603 | $ | — | $ | 437 | $ | 363 | ||||||||||||||
2013 results
|
2,791 | 1,175 | 1,616 | 602 | 46 | 551 | 417 | |||||||||||||||||||||
Change
|
$ | (116 | ) | $ | 97 | $ | (213 | ) | $ | 1 | $ | (46 | ) | $ | (114 | ) | $ | (54 | ) | |||||||||
Explanation of change
|
||||||||||||||||||||||||||||
REO sold or assigned
|
||||||||||||||||||||||||||||
held for sale
|
$ | (350 | ) | $ | (117 | ) | $ | (233 | ) | $ | (57 | ) | $ | — | $ | (158 | ) | $ | (18 | ) | ||||||||
Rents to market rates and
|
||||||||||||||||||||||||||||
Increased occupancy
|
234 | 43 | 191 | — | — | — | 191 | |||||||||||||||||||||
Refunds / Adjustments
|
— | 90 | (90 | ) | — | — | — | (90 | ) | |||||||||||||||||||
Completed deferred
|
||||||||||||||||||||||||||||
maintenance
|
— | — | — | — | — | — | — | |||||||||||||||||||||
Deferred maintenance
|
— | 41 | (41 | ) | — | — | — | (41 | ) | |||||||||||||||||||
Receiver contract complete
|
— | — | — | — | (46 | ) | — | 46 | ||||||||||||||||||||
Depreciation catchup adjust
|
— | — | — | 36 | — | — | (36 | ) | ||||||||||||||||||||
New mortgages
|
— | — | — | — | — | 53 | (53 | ) | ||||||||||||||||||||
Other
|
— | 40 | (40 | ) | 22 | — | (9 | ) | (53 | ) | ||||||||||||||||||
Change
|
$ | (116 | ) | $ | 97 | $ | (213 | ) | $ | 1 | $ | (46 | ) | $ | (114 | ) | $ | (54 | ) |
|
- Rental income – In the first quarter of 2014, vacancy rates decreased compared to the first quarter of 2013 due to the continued stabilization of rental properties post acquisition. In addition, 70% of rental properties are located in areas such as San Francisco Bay Area, Los Angeles, and Southern Coastal California, where rental rates continue to increase due to favorable market conditions.
|
|
- Operating expenses – The first quarter of 2014 experienced higher operating costs in conjunction with the increase in occupancy rates and rental income as mentioned above. In the first quarter of 2013 property tax expense was reduced due to refunds received based on the reassessment of rental properties post-acquisition.
|
|
- Receiver fees – residential – decreased due to the receiver’s assignment being completed during 2013.
|
|
- Mortgage Interest – increased due to a new mortgage being obtained in the third quarter of 2013.
|
Contractual Obligation
|
Total
|
Less than 1 Year
|
1-3 Years
|
3-5 Years
|
||||||||||||
Mortgages payable
|
$
|
48,612
|
$
|
1,548
|
$
|
25,201
|
$
|
21,863
|
||||||||
Construction contracts
|
100
|
100
|
—
|
—
|
||||||||||||
Construction loans
|
—
|
—
|
—
|
—
|
||||||||||||
Rehabilitation loans
|
—
|
—
|
—
|
—
|
||||||||||||
Total
|
$
|
48,712
|
$
|
1,648
|
$
|
25,201
|
$
|
21,863
|
REDWOOD MORTGAGE INVESTORS VIII
|
||||
(Registrant)
|
||||
Date: May 15, 2014
|
By:
|
Redwood Mortgage Corp., General Partner
|
||
By:
|
/s/ Michael R. Burwell
|
|||
Name:
|
Michael R. Burwell
|
|||
Title:
|
President, Secretary and Treasurer
|
|||
(On behalf of the registrant, and in the capacity of principal financial officer), Director
|
||||
Date: May 15, 2014
|
By:
|
Gymno LLC, General Partner
|
||
By:
|
/s/ Michael R. Burwell
|
|||
Name:
|
Michael R. Burwell
|
|||
Title:
|
Manager
|
|||
Date: May 15, 2014
|
By:
|
Michael R. Burwell, General Partner
|
||
By:
|
/s/ Michael R. Burwell
|
|||
Name:
|
Michael R. Burwell
|
|||
Title:
|
General Partner
|
|||
|
I, Michael R. Burwell, certify that:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Redwood Mortgage Investors VIII, a California Limited Partnership (the “Registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and have:
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
I, Michael R. Burwell, certify that:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Redwood Mortgage Investors VIII, a California Limited Partnership (the “Registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and have:
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
I, Michael R. Burwell, certify that:
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Redwood Mortgage Investors VIII, a California Limited Partnership (the “Registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the Registrant and have:
|
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the partnership at the dates and for the periods indicated.
|
|
/s/ Michael R. Burwell
|
|
___________________________
|
|
Michael R. Burwell, President,
|
|
(principal executive officer and principal financial officer)
|
|
Redwood Mortgage Corp.,
|
|
General Partner
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the partnership at the dates and for the periods indicated.
|
|
/s/ Michael R. Burwell
|
|
_____________________________
|
|
Michael R. Burwell,
|
|
Manager of Gymno LLC,
|
|
General Partner
|
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the partnership at the dates and for the periods indicated.
|
|
/s/ Michael R. Burwell
|
|
_____________________________
|
|
Michael R. Burwell, General Partner
|
Note 4 - Loans (Details) - Impaired Loans - Average Balances and Interest Income (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2014
|
Dec. 31, 2013
|
|
Impaired Loans - Average Balances and Interest Income [Abstract] | ||
Average recorded investment | $ 22,048 | $ 36,652 |
Interest income recognized | 46 | 156 |
Interest income received in cash | $ 35 | $ 378 |
Note 5 - Real Estate Owned (REO) (Details) - Earnings/(Loss) from Rental Operations of the Real Estate Owned, Held as Investment (USD $)
|
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2014
|
Mar. 31, 2013
|
Dec. 31, 2013
|
|
Operating expenses, rentals | |||
Professional services | $ 108,000 | $ 450,000 | |
Other | 11,000 | 4,000 | |
Total operating expenses, rentals | 169,000 | 285,000 | |
Depreciation | (48,000) | (43,000) | |
Interest on mortgages | 546,000 | 551,000 | |
REO Held as Investment [Member] | REO Held as Investment [Member]
|
|||
Operating expenses, rentals | |||
Other | 48,000 | 47,000 | |
Total operating expenses, rentals | 1,273,000 | 1,175,000 | |
REO Held as Investment [Member]
|
|||
Note 5 - Real Estate Owned (REO) (Details) - Earnings/(Loss) from Rental Operations of the Real Estate Owned, Held as Investment [Line Items] | |||
Rental income | 2,676,000 | 2,791,000 | |
Operating expenses, rentals | |||
Administration and payroll | 342,000 | 346,000 | |
Homeowner association fees | 208,000 | 201,000 | |
Professional services | 28,000 | ||
Utilities and maintenance | 290,000 | 275,000 | |
Advertising and promotions | 29,000 | 31,000 | |
Property taxes | 328,000 | 275,000 | |
Net operating income | 1,403,000 | 1,616,000 | |
Depreciation | 603,000 | 602,000 | |
Receiver fees | 46,000 | ||
Rental operations, net | 800,000 | 968,000 | |
Interest on mortgages | 437,000 | 551,000 | |
Rental operation, net, less related mortgage interest | $ 363,000 | $ 417,000 |
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