Rockspring Capital’s Jim McAlister talks with Bisnow’s Catie Dixon on the company’s recent 200 percent return from a non-performing note…
Many investors today get nervous thinking about land acquisitions. But maybe they’d change their minds if they got wind of this deal: Rockspring Capital nabbed a 200% return a mere 30 days after acquiring a note secured by land. (That’s a very different 30-day return policy than most people are used to.)
Rockspring CEO Jim McAlister tells us his firm acquired a non-performing note secured by a six-acre land parcel in the Med Center. 30 days later, it received a payoff resulting in more than a 200% net internal rate of return, one of the highestin the firm’s 40-year history. Jim says banks don’t like holding non-performing loans, especially when secured by non-income producing land assets. That means investors (especially ones like Rockspring who can move quickly with cash) can buy notes like this one at good discounts.
There’s treasure somewhere on this map. Jim says the situation is a win-win for Rockspring. Once it buys a discounted note, it’ll either receive a payoff and a solid return for its investors, or (even better) it’ll foreclose and own the site outright. Rockspring’s target: Direct land or “special situation” investments. Jim says he needs enough of a discount to get solid returns if the borrower pays it off but a site worth owning if it forecloses. Rockspring prefers to turn sites around within two years.
Click here to see Bisnow’s video of JIm discussing an interesting dynamic in Houston’s land market today!
To view the Real Estate Bisnow Houston story, click here.