Dear Valued Investor,
As an important part of the Colonial Impact Fund II (the “Fund”) family, we are pleased to share with you the quarterly investor newsletter from Q4, 2020. The Fund has completed its 23rd full quarter of operations. Operating in a profitable and well-managed way continues to be our highest priority.
Since its inception, the Fund has strived to acquire single family real estate, performing and non-performing notes secured primarily by single family residential properties valued under $125,000 located throughout the United States. By completing these acquisitions consistent with our philosophy and process, the Fund was able to maintain its assets under management to just over $6.69MM at the end of Q4, represented by the total unpaid principal balance of loans held plus the value of the real estate owned by the Fund.
The Fund’s disposition model (which is to sell individual assets to the downstream retail buyer network) delivered continued results. The buyers in this network purchased 70 assets this past quarter, which in part contributed to the Fund’s 2.72% quarterly return, and which also created a “return since inception” of 10.81% (both annualized figures).
In an effort to keep the Fund diversified, the Fund’s assets are spread throughout more than 25 states, reducing the overall exposure to any one market. Additionally, the average acquisition price per asset in Q4 was approximately $73K thereby minimizing capital exposure to any one particular asset. Because the Fund can purchase assets at attractive discounts, the “investment to value” (ITV) ratio stays at levels that the Fund desires. The Fund was able to continue minimal acquisition activity with the purchase of 7 assets.
As a result of the market conditions brought on by the covid-19 pandemic, the Fund will begin winding down. We will continue monitoring loss reserves, adjusting asset valuations, see an increase of borrower defaults and otherwise continued slowing of overall income to the Fund. All of this, and other factors, will have significant and ongoing implications to the Funds operations, performance and investor distributions.
We are assessing operations and taking the steps we deem prudent and important, in our best assessment of the order of their importance to safeguard, preserve and protect your investment to the best of our ability. The Fund is no longer accepting new investor capital or new redemption requests from existing investors.
We have engaged Verivest (formerly known as Redwood Real Estate Administration) to administer the day-to-day accounting, statement production and process investor capital. Through this third-party administration company, there is additional transparency and accounting support, amongst other services provided to the Fund and its investors. All of our strategic vendors remain operational although we may experience delays in communications and other deliverables as they work through their contingent operational backup plans. You will be able to see your statements, account balances and tax documents on the Verivest portal.
These unprecedented market conditions will require a significant amount of patience from all stakeholders, including borrowers, vendors, investors and managers. Our entire management team continues to be fully operational and will be providing ongoing periodic updates.
Thank you for your continued interest, trust and confidence. Stay well and safe.
Ryan Parson, MBA, CFP®, ChFC
Neither this document nor its contents are an offer to sell or distribute securities in any jurisdiction.