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The Sterling Financial Group is touting a solid 5.22 percent return in the first quarter on its latest fund offering.
Launched in February, the New Providence Income Fund (NPIF) has targeted a mix of commercial, residential and industrial loan assets over the past few months. NPIF has seen a monthly return of 3.03 percent in February and 2.13 percent in March.
David Kosoy, the chairman and CEO of the Stirling Financial Group, said the return for investors has "exceeded my expectations". While the firm is on track for a 20 percent annual return, he said in the end a quarterly return of three to four percent is more realistic.
He told Guardian Business that NPIF has acquired approximately $16 million in loans thus far, up from around $11 million in early March.
"The funds continue to benefit greatly from the current lack of liquidity in the market and the highly restrictive lending practices exhibited by the major financial institutions," Kosoy said. "We are very pleased with the quality and volume of opportunities we are currently working on, and we expect the number of loan applications to continue to increase and generate profits for the funds from the loans sector in the U.S., Canada, The Bahamas, the Turks and Caicos Islands, and the U.K."
The Sterling Financial Group CEO also revealed that it has obtained a bank line of credit "at a very favorable rate".
With a rate "south of 5 percent", the hefty line of credit will help NPIF and its clients acquire more loan assets this year.
Back in March, the fund had already made five commitments.
Kosoy told Guardian Business the fund lent $2 million to a U.S. industrial property in Miami, invested $1.25 million in a residential property in Fiji, and made a $2 million commitment towards a house back here in Albany.
The fourth move by the fund was a $2.5 million loan towards a house on an island in The Bahamas. The fifth concerned a $3 million commitment to a local resort property.
Kosoy noted the fund also has access to $50 million in warehouse loans that can be moved over at any time.
NPIF is a Cayman Island domiciled regulated fund. It sets a minimum investment at $100,000. Previous funds, Kosoy noted, required a $500,000 to $1 million commitment.
"Now a lot of people feel comfortable putting in a lower amount to start, and then top up," he told Guardian Business. "You have to be accepted as an investor. If you're accepted, in the first of every month you can add a minimum of $25,000."
The NPIF is the third fund created by the Bahamas-based financial services provider.
Sterling Financial Group is seeing an increase in its loan activity over the past several month evidenced by its recent $2 million in financing for an Albany homeowner, with the head of the firm saying its versatility as a lender made it an attractive partner to provide funding for high profile borrowers.
"It's often about responsiveness, flexibility and the service we can offer our borrowers," Chairman and CEO of Sterling Financial Group David Kosoy said. "As a private lender, we can both act quicker and we can customize our loans to the needs of our often high-net-worth (HNW) borrowers.
"We don't compete with the traditional banks on interest rates, however, our customers often value our ability to enable faster closing, and we are frankly often able to be more innovative than is possible for the rigid structures of the traditional banks."
The loan was made for construction purposes from a private borrower, Guardian Business can confirm, to aid in the development of one of the homes in the multi-million South Ocean development.
Sterling is considered an "export business" according to Kosoy, where all of its funding is brought to various businesses from international investors. He added that a majority of the lending is done outside of The Bahamas, but loan underwriting and servicing is conducted in its Nassau office.
"For our Bahamian based loans, there was a period of very slow response for approvals from regulators during the last six months," Kosoy said. "This was a direct result of the election season. We seem to be back on track on that front now."
An increase in loan applications has also occurred for the group, with the slow recovery of the United States real estate market signaling more confidence from investors. Kosoy mentioned that the demand has increased for loans to high-net-worth persons who may require extra liquidity, as traditional banks have pull backed from that area.
The Sterling Financial Group recently launched its third mortgage fund, the New Providence Income Fund, which has already seen a 5.22 percent return in the first quarter. Kosoy said it's already "showing well above market returns" and is receiving an outstanding response in the market. It's a Cayman Island-domiciled regulated fund and it sets a minimum investment of $100,000.
Kosoy said his firm is determined to keep the momentum going despite the challenges, and is looking forward to remaining a consistent player in this field of business.
"As a growing business, attracting and maintaining talented professionals is a continued challenge," he said. "We have a great team located in Nassau. As an international business, we are competing against other private and alternative lenders that are typically located in major onshore financial centers, and we must ensure we have a team that can compete on the world stage."
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."
The New Providence Income Fund (NPIF) is reporting a 19.27 percent return for the year after targeting an effective mix of commercial, residential and industrial loan assets.
Launched in February 2012, Sterling Financial Group's latest offering has also appointed Mike Harris, a well-known Canadian consultant and former politician, to NPIF's board of directors.
The fund's annual report recorded a 1.01 percent return for the month of December. Fund investors are being paid out an interim dividend of around 12.27 percent per annum compounded return, which is supplemental to the seven percent per annum preferred return paid out as quarterly dividend.
The report noted that annualized returns are based on an investor that had contributed capital into the fund at inception and reinvested all dividend distribution payments.
"In December, we had another strong month closing out the year well above the target rate of return for the fund. In 2013, we expect to continue to grow the fund as we see an excellent pipeline of loan opportunities," said David Kosoy, chairman and CEO of Sterling Financial Group.
Kosoy also acknowledged the appointment of Harris to the board of directors.
Harris is perhaps best known for serving as premier of Ontario for two consecutive terms, beginning in 1995 until 2002. He later established Steane Consulting Limited and advised a number of Canadian firms.
He holds various public board directorships in Canada, including Chartwell Seniors Housing REIT, Canaccord Financial, Element Financial, FirstService Corporation and Route1.
Kosoy said that NPIF has benefited from a general lack of liquidity in the market and the "highly restrictive lending practices exhibited by lending institutions".
"We are very pleased with the quality and volume of opportunities we are currently working on, and we expect the number of loan applications to continue to increase and generate profits for the funds from the loans sector in the U.S., Canada, The Bahamas, the Turks and Caicos Islands and the UK."
Sterling Financial Group, located in Nassau, is the fund's promoter, loan underwriter and loan servicer. The group supports NPIF's operational, risk management and regulatory requirements.
The New Providence Income Fund (NPIF), launched earlier this year, has recorded a 10.53 percent return for investors in the first two quarters of this year.
Sterling Financial Group further announced that the third fund created by the Bahamas-based financial services provider is targeting an annual return of up to 15 percent. Thus far, NPIF appears to be on track.
Executives at the fund said it's latest acquisition, confirmed this week, is a $2 million second mortgage on a private lake-front residence in Canada.
NPIF has been aggressively targeting residential and commercial loan opportunities internationally since the launch.
"The fund continues to perform very well and yield strong returns to our investors month over month," the report stated. "The current lack of liquidity in the credit markets and the restrictive lending practices by major financial institutions continue to bode well for the future growth of the fund. These factors allow the fund to grow its high quality of both commercial and residential loans."
The average loan to value for the loans, the report continued, is currently just under 25 percent. For the recently $2 million loan in Canada, the loan to value ratio is 53 percent.
Executives at the fund claim investors are now in a "flight to quality" in the search for safe assets. With a "robust pipeline" of loan opportunities for the rest of the year, fund managers now have at least six loans under its portfolio.
Thus far, the loans have been spread out across the globe, from Fiji, to the U.S., to Canada and The Bahamas.
David Kosoy, the chairman and CEO of Sterling Financial Group, noted that the fund also has access to $50 million in warehouse loans that can be moved over at any time.
The new fund is targeting at least $500 million in investments. NPIF has tried to provide added flexibility for investors by setting a minimum investment of $100,000. Previous funds, Kosoy noted, required a $500,000 to $1 million commitment.
"Now a lot of people feel a lot more comfortable putting a lower amount to start, the top up. 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," the CEO said.
A project rising on the western end of Paradise Island is turning traditional real estate sales wisdom on its head -- building multi-million houses on spec during a challenging economy in a location no car can reach. Now, with early signs of success, there's every indication that the microcosm of a community for the very wealthy -- accessible only by private boat -- will create a new intelligence about how to appeal to those with discretionary income and fine taste -- wowing them not just with the expected luxuries and amenities but with an atypical setting so compelling it creates instant value and desire.
By NEIL HARTNELL
Tribune Business Editor
A BAHAMIAN financial services provider yesterday said it was targeting between $500 million to $1 billion in asset-backed real estate securities investments for its newly-launched mutual fund, and seeking to expand its staff by up to 50 per cent.
David Kosoy, chairman and chief executive of the Sterling Financial Group, said the New Providence Income Fund had already generated a "tremendous, unbelievable" response from potential institutional and retail investors, aided by the "past record" and returns generated by the company's two existing investment funds.
Pointing to his 40 years of real estate development and financing exper ...
Nassau, Bahamas -- A project rising on the western end of Paradise Island is turning traditional real estate sales wisdom on its head -- building multi-million houses on spec during a challenging economy in a location no car can reach.