What is the worst-case scenario?
The Partnership’s precautions for a depression include those put in place in the event of a recession. The Partnership’s business plan was totally revised after the huge one-day decline of the Stock Market twenty years ago in October 1987. The General Partner asked himself, “How would I want my assets deployed if there were to be another depression?” The answer was to be holding well underwritten First Trust Deeds. Over the next three years, with the consent of the Limited Partners Committee, the portfolio was converted to primarily First Trust Deeds. The Partnership rode through the significant decline in property values in the early 1990’s without any principal losses to the Partners and maintained average annual yields exceeding 8%. In a worst-case scenario, the Partnership would acquire the properties securing its loans, subject only to real property taxes (which can be adjusted down by application to the County Assessor). The Partnership has deliberately positioned itself in First
The Partnership’s precautions for a depression include those put in place in the event of a recession. The Partnership’s business plan was totally revised after the huge one-day decline of the Stock Market in October 1987. The General Partner asked himself, “How would I want my assets deployed if there were to be another depression?” The answer was to be holding well underwritten First Trust Deeds. Over the next three years, with the consent of the Limited Partners Committee, the portfolio was converted to primarily First Trust Deeds. The Partnership rode through the significant decline in property values in the early 1990’s without any principal losses to the Partners and maintained average annual yields exceeding 8%. Partners incurred no losses to principal in the 2008-10 Recession and Partners making no additions or withdrawals of capital realized returns of 8.10% and 6.57% for 2008 and 2009, respectively. Actual loan losses incurred during this period were charged against the Allow
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