ASR Debt Shares II, LLC (“ASR Debt”) has organized a lending pool that is raising funds to make loans secured by performing debts acquired and rehabilitated from third-party vendors. ASR Debt interests are being offered through a Reg D, Rule 506(c) Private Placement Memorandum (PPM) to Accredited Investors only.
ASR Debt has identified an attractive lending opportunity by making secured loans to Elevation Capital Partners, LLC (ECP), a private investment firm. The principals at ECP have over 20 years’ experience in the debt settlement industry by purchasing non-performing consumer debts obtaining work-out and payment plans with the borrowers. ASR Debt is making loans to ECP and, in turn, ECP pays ASR Debt interest and then principal at 36 months or earlier. ASR Debt then pays its members, which is expected to return an 8% annual rate to investors, with distributions paid monthly!
Understanding the Opportunity of Investing in Debt
Household Consumer Debt in the US is currently at an all-time high of $21.5 trillion. Consumer Debt consists of personal debt that results from individuals purchasing goods or services for personal or household consumption. Credit card debt, student loans, auto loans, mortgages, and payday loans are all examples of Consumer Debt.
Performing debt is generally between a creditor and debtor that is actually being paid on. The debt owed is renegotiated and compromised at less than the amount outstanding (usually between 50% to 70%) if the payment can be settled immediately. Debtors are motivated to settle their debt quickly in order to avoid or restore poor credit ratings.
Debt settlement companies are companies renegotiating, settling, or changing the terms of a person’s debt to a creditor or debt collector. It is customary in the debt settlement industry for companies or individuals who are acquiring large amounts of debt to utilize a third-party Debt Settlement Company to verify current market pricing, potential liquidity, and the debt’s collectability. Such due diligence is used to validate and determine the viability of the debt as an asset that will have a sizable return on investment. It is also a standard in the industry that outsourced collection agencies are used to do the actual collection of the debt. Federal and state regulations oversee these companies.
The investment is secured by performing debts that ECP has acquired and reached payment plans with the borrowers. The debts are held in a trust that ASR Debt and ECP co-manage. ASR Debt files documents to place itself in a first lien position. In the event of loan default, the trust terms restrict distributions to ECP in order to prioritize the debts due to ASR Debt. Additionally, ECP backs the principal and preferred distributions through corporate promissory notes.
ASR Alternative Investments, LP (ASR), has provided financial professionals with alternative investment and retirement solutions for their clients since 2005. ASR prides itself on its long-standing record of transparency with its investors. Their proactive approach to investing while integrating third-party oversight to the products they offer continues to solidify the company’s integrity.
We often hear the constant mantra of “diversification” from financial professionals and the business press. Most investors, however, (as well as their advisors) consider diversification within their portfolio to be a variety of holdings in different traditional financial instruments whose returns and risks are still in some way tied to the financial markets and the overall health of the domestic or global economy. Whether invested in stocks, bonds, variable annuities, or real estate, most investors have taken huge hits to their portfolios at some time or the other – even if they thought they were adequately diversified. Many investors have found that, in one way or another, all of their investments were linked to the condition of the economy through interest rates, the stock market, or even through the health and viability of well known Wall Street investment banks.
In these uncertain times, many investors have simply turned to holding cash or other classic “safe” investments such as CD’s, money market accounts, or U.S. Government securities. While these investment options also aren’t truly diversified from market conditions, they do at least offer a modicum of safety. Of course, the downside is that they usually offer paltry rates of return. While these types of safe investments are occasionally advertised with rates as high as 3% or 4%, this is all too often an introductory rate that will eventually decrease once the initial honeymoon period is over. It is more common to find rates in the 1% to 2% range, or even lower for U.S. Treasuries. Thus, the price of “playing it safe” is a low rate of return that may not even keep pace with inflation.
An individual accredited investor, a financing entity or other business entity that provides capital to ASR Debt Shares II, LLC provider for the purpose of purchasing consumer debt as an investment. Also sometimes referred to as a “funder.”
A person can be deemed as an accredited investor in two ways:
- earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence).
A company whose primary business activity involves purchasing consumer debt policies. Elevation Capital Partners, a boutique private equity group whose key people have been in the debt settlement space for 20+ years.