During the GFC, Forza Capital established a special purpose vehicle to acquire the senior mortgage of a distressed property asset. The mortgage was secured against a substantial land holding and was purchased for 40% of the face value of the debt.
There was a second mortgage over the property held by the neighbouring landowner who had a strategic interest in the site. Believing they were unlikely to destroy any value they had in their second mortgage, negotiations were commenced and the neighbouring landowner ultimately purchased the property.
A strategic debt investment opportunity was identified with a very attractive risk/return profile for the investor.
As a result of this process, the asset was on-sold at a substantial premium to the mortgage value and the transaction was concluded in 92 days returning the sole investor an annualised 34% return on their money for a first mortgage security.
