New Fund Acquires $11M In Loan Assets

New Fund Acquires $11M In Loan Assets Friday, March 2, 2012 Portfolio of New Providence Income Fund quickly grows to include mix of five international and local properties. A new fund by Sterling Financial Group has acquired nearly $11 million in loans after launching earlier this week. The New Providence Income Fund, the third created by the Bahamas-based financial services provider, has made five commitments to a mix of commercial and residential properties. David Kosoy, the chairman and CEO of Sterling Financial Group, inspected an industrial property in Miami yesterday before the final sign off. He told Guardian Business the fund is lending $2 million to the U.S. property. Kosoy also reported a $1.25 million investment in a residential property in Fiji and a $2 million commitment towards a house back here in Albany. The fourth move by the fund is a $2.5 million loan towards a house on an island in The Bahamas. The fifth and final loan concerns a local resort property for $3 million, bringing the fund’s total loan portfolio up to $10.75 million. Kosoy noted the fund also has access to $50 million in warehouse loans that can be moved over at any time. “We just started the fund and I’m only taking little bits of money right now,” he said. “I want to make sure we have good assets. The goal would be at least $25 million to $50 million within six months.” The Sterling chief expects that first-quarter returns for investors should be “in the teens”. History may indeed be on its side. According to the firm, Sterling has not realized a single loss of invested principal on any loan with its mortgage funds. For the year ending November 30, the last two funds offered returns of 11.31 percent and 12.34 percent respectively. This new fund is targeting $500 million to $1 million in real estate investments. The New Providence Income Fund, a Cayman Island domiciled and regulated fund, differs from previous Sterling offers. While providing more flexibility for investors, it also sets the minimum investment at $100,000. Previous funds, Kosoy noted, required a $500,000 to $1 million commitment. He told Guardian Business the aim is to attract a wider cross-section of interest. “Now a lot of people feel a lot more comfortable putting in a lower amount to start, and then top up,” he explained. “You have to be accepted as an investor. If you’re accepted, at the first of every month you can add a minimum of $25,000.” Limitations may be placed on the contributions, however, as the fund is intent on not having cash sitting around and not earning. Calling the reception to the new fund “excellent”, he expects up to 50 investors by the six-month mark. In terms of coming up with the capital, some financing may be available through the banks, many of which work with Sterling and its affiliated funds on a regular basis, he said. For someone with $500,000 sitting in a bank account, or less, this new fund attempts to provide a decent return at low risk. He pointed out the leaders of the fund are more than executives. They are also investors. This vested interest, along with capital that is spread out among a variety of properties, makes New Providence Income Fund a rare breed, Kosoy said. “The lending industry is very good for us because the banks have been non-competitive. Liquidity is very high but nobody is lending,” he added. “So there is a lot of cash on the sidelines but nobody knows how to deal with it. The private investors, quite truthfully, don’t have the means or contacts from an intellectual capital point of view to do it. We have the expertise, the capital, and the people who believe in this.” By Jeffrey Todd The Nassau GuardianPublished: March 2, 2012