Mortgage REIT Investment Opportunity

  • Newport Realty Trust (“NRT”) generates monthly income on invested capital by providing short-term financing for the purchase of real estate properties in major California metropolitan areas of the United States
  • NRT is a popular option for income investors looking to achieve high returns by owning a diversified loan portfolio with low volatility
  • Investors’ capital is preserved and secured by first liens on the underlying real assets, with a focus on residential and small commercial properties
  • Owning NRT shares in an IRA account allows investors to maximize their investment by receiving dividends in a tax-deferred manner
  • NRT is a Real Estate Investment Trust (“REIT”) structured as a C-Corp, where no taxes are withheld from U.S. investors
  • Foreign investors in NRT receive benefits of the relevant dual tax treaties

Property Geographic Area Details

Western States

Investment Type

Mortgage Fund

Target Return

10% to 12% Annually

Minimum Investment

$50,000

Lien Position

Only 1st Liens

Average LTV for All Loans

48%

Average Loan Term

11 months

Property Types and Loan Types

Collateral Types

  • Residential Property
  • Commercial Property

Property Types

  • Residential Investment
  • Residential Land
  • Commercial Land
  • Multifamily
  • Retail
  • Office
  • Industrial
  • Mixed-Use
  • Cannabis

Loan Types

  • Purchase
  • Refinance
  • Equity Cash Out
  • Fix & Flip
  • Rehab Value Add
  • Ground-Up Construction

Investor Types

  • Individual Accredited
  • Ultra High Net Worth Investor
  • Family Office
  • Hedge Fund
  • Pension Fund
  • Foundation
  • Endowment
  • Insurance Company

Preferred Return

6%

Leverage

Levered

Recapitalization

All Loans Held in Portfolio

Commitment Term

12 months

Redemption Notice Period

90 days

Distributions Paid

Monthly

Inception Date

January 1, 2015

Assets Under Management

$130,000,000

Fund Term

Open-End

Performance Split

6% preferred return then 80% to investors and 20% to manager

Securities Exemption

Regulation D 506(c)

IRA Investment Option

Yes

Mortgage REIT

Yes

Our Advantage:

  • The Newport Realty Trust team has invested in over 2000 properties as an active short-term equity investor in California and has underwritten more than US$4 billion in loans
  • The Newport Realty Trust structure includes a licensed Real Estate Broker, performing in-house loan origination, underwriting, and servicing
  • We only lend on properties with the ability to manage as equity investors if needed to minimize the investment risk
  • We launched the first real estate debt fund in September 2012

Lending Parameters (Product Types for Residential/Commercial):

  • Loan Size: Up to $5 million
  • Loan Type: First lien loans; opportunistic second lien financing where we control the first lien
  • Geography: Primarily California
  • Loan Term: 6-18 months
  • Loan to Value: 60%-70%
  • Interest Rates: Competitive; vary based on quality of borrower, collateral & LTV
  • Other Requirements: Personal Guarantees; All borrowers must certify that the property used as collateral is an investment property, and not for personal use

Highlights:

  • Experienced Management Team: Average of over 20 years experience in the real estate business
  • Niche Market Position: Local sharpshooter in California commercial and residential real estate market
  • In-House Expertise: Loans are placed on NRT’s balance sheet, are not securitized, and are serviced in-house
  • Established Track Record: Consistent outperformance since inception in 2012
  • Stringent Underwriting Standards: Rigorous underwriting standards has resulted in zero loan losses since inception
  • Strong Origination Pipeline: Strong proprietary deal flow and repeat borrower base; ability to close within ~48 hours
  • Favorable Alignment of Interest: NRT Principals own >10% of NRT shares

Brand and Technology Overview

    • NRT has superior IT capabilities which allow the Company to build and implement proprietary and industry-specific in-house systems:
      • Custom built, direct-to-borrower platforms, provide prospects access to an easy loan application, quick underwriting, and reliable funding commitments
      • The platforms also improve borrowers’ experience by foregoing the delays often experienced with brokers and non-direct lenders thus generating a loyal and repeat customer base for NRT
    • NRT manages its loan portfolio via a proprietary system, also developed in-house, that results in more efficient underwriting and servicing processes
    • NRT markets itself to commercial and residential borrowers under the following brands:
  • Newport Commercial Capital:
        • Focus on commercial properties: industrial, multifamily (5+ units), retail, office, and land
        • Geographic focus: CA & other select Western States
        • 60% – 70% LTV
        • Focus on loans up to $5.0 million
        • Tiered loyalty program generating repeat borrowers
        • www.newportcommercialcapital.com
  • Arch Loans:
      • Focus on non-owner occupied, residential value-add properties; 1 to 4 unit residential condominiums
      • Geographic focus: CA & other select Western States
      • 60% – 70% LTV
      • Focus on loans up to $2.5 million
      • Tiered loyalty program generating repeat borrowers
      • www.archloans.com

NRT Advantage vs. Individual Loans or Bonds

  • Offers investor a diversified loan portfolio with 103 active loans outstanding (Data as of 12/31/2019)
  • Investor avoids the hassle of qualifying individual loans on the front end
  • Consistent and proven management team monitors and services each loan
  • Audited financial statements and monthly reporting
  • Allows investor an alternative asset class that does not correlate with either stocks or bonds, especially when financial markets become volatile

Loan Underwriting Process

    • Our team adheres to a strict underwriting process
    • Documents necessary prior to underwriting
  • From Borrower:
        • Credit Application
        • Operating Agreement
        • Business Financials
        • Business Tax Returns
        • Guarantor Financials
        • Guarantor Tax Returns
  • Collateral Confirmations:
      • Independent Appraisal Report
      • Preliminary Title Report
      • Purchase & Sale Agreement
      • Itemized Budget Review
      • Building Permit, Plans, Specs
      • Borrower’s Marketing Plan & Material
      • Tax Records & Property Info

Loan Servicing Process

  1. New Loan Recorded
  2. Client Set-Up
  3. Monthly Invoicing
  4. Cash Application
  5. Past Due Procedures
  6. Delinquency Procedures
  7. Default Procedures
  8. Payoff  Procedures

Background:

  • In the aftermath of the housing and financial crisis, fewer banks are operating due to a much more restrictive lending environment in the United States, creating a gap in the credit market for short-term real estate loans
  • Our team recognized the opportunity to leverage its deep expertise in the California real estate market and bridge the gap by providing liquidity to borrowers
  • Loans are issued to real estate investors and operators who seek to fund the acquisition, renovation, rehabilitation, or improvement of real estate properties or temporarily finance the development of such properties prior to obtaining traditional financing

Company History:

  • Newport Private Group (“NPG”) is a privately held conglomerate focusing on real estate, healthcare, transportation and logistics, and hotels/hospitality
    • 2008 – NPG commences distressed real estate acquisition strategy to acquire foreclosed properties
    • 2011 – NPG invests in hundreds of foreclosed properties between 2008 – 2012; generated ~108% IRR to investors
    • 2012 – After significant success, NPG formed NPI Debt Fund I (the “Fund”)
    • 2014 – NRT was formed for tax purposes (real estate investment trust) and acquired the Fund
    • 2015 – NRT formed NPI Debt Fund II to primarily focus on commercial properties
  • As of 2020, more than 2000 loans originated since 2012
  • Newport Private Investments, Inc. (“NPI”) serves as the external manager for NRT

OUR TEAM – Newport Realty Trust Management

Panos K. Kiayias
Chairman of the Board
Executive Offices
New York

Panos is a founding partner of Newport Realty Trust and the Chairman of the Board. Mr. Kiayias is also the founder and Executive Chairman of Newport Private Group. Mr. Kiayias has over 20 years of experience in the financial industry with more than $120 billion of completed
transactions. He has worked in New York in investment banking and principal investing for firms such as Goldman Sachs and The Blackstone Group. Mr. Kiayias has also been with JP Morgan and KPMG’s M&A practice in the EMEA and Asia regions, where he worked with numerous public and private companies in various sectors, advising corporations in their mergers and acquisitions, divestitures as well as other strategic Transactions.

Prior to working in the financial services industry, Mr. Kiayias served in the military as an Officer in the Special Forces. Mr. Kiayias received an AB in Economics and Finance from Cornell University where he was an undergraduate Fulbright Scholar and a recipient of the Stelios Haji-Ioannou Scholarship graduating with Summa Cum Laude in three years. Mr. Kiayias also holds an MBA with honors from Columbia Business School where he graduated with concentrations in Finance and Management. Mr. Kiayias sits on the boards of a number of companies both within the consolidated Group structure and outside. He is a member of the Foreign Policy Association and a supporter of Lincoln Center for the Performing Arts. He is also a member and supporter of the Asia Society. Mr. Kiayias was a guest lecturer at Columbia
Business School in New York City and has served as an entrepreneur-in-residence at Cornell University’s School of Hotel Administration.

T. J. Coveyou
President and Director
Executive Offices
Newport Beach

T.J. is a founding partner of Newport Realty Trust and the co-founder of Newport Private Group where he currently serves as President and CEO. With over 20 years of real estate experience in a variety of capacities, Mr. Coveyou devotes a substantial amount of his time to overseeing the acquisition, management, and disposition of real estate assets. In this role, Mr. Coveyou has been responsible for the underwriting of a large number of properties in California and also for the management of private portfolios and funds. Mr. Coveyou obtained his MBA in Strategic Management from Temple University and graduated Cum Laude with a Bachelor of Science from the U.S. Merchant Marine Academy, where he was appointed as the Regimental Commander. He has served as a Third Mate in the Merchant Marine and a  Lieutenant in the U.S. Navy and has worked in more than 20 countries across different continents. Mr. Coveyou sits on the boards of a number of companies within the consolidated Newport Private Group structure. He is a member of the Orange County Association of Realtors, the California Association of Realtors, and the National Association of Realtors. He is also a licensed California Real Estate Broker.

Michael Jin
Director
Offices
Palo Alto and Beijing

Michael is a founding partner of Newport Realty Trust, responsible for business development in the West Coast and Greater China region. With over two decades of experience in business and entrepreneurship, Michael has held a variety of management positions in the high-tech industry across many sectors, such as strategy and business development, finance, and budgeting, as well as general operations. Michael has been with TEEC Angel Fund, as one of the founding partners in the most influential Chinese Angel investor group in Silicon Valley, with close to 100 portfolio companies under management in the past four years of operation. Michael has co-founded three high tech startups (Simple Silicon/iWatt/International Green Chip) in Silicon Valley and China, with the latest exit of iWatt at $345 million to Dialog Semiconductor in July 2013.

Michael obtained his PhD/MSc degrees in Electrical Engineering from Stanford University and graduated with BEng/MEng degrees in Biomedical Engineering from Tsinghua University. He is on co-authorship of over 40 international journal and conference publications, and with over 30 US/China patents. Michael sits on the boards of a number of high tech companies in Silicon Valley and China and serves as Board Director of Tsinghua Entrepreneur and Executive Club (TEEC), Tsinghua Alumni Foundation of North America (TAFNA), and US-China Association of High-level Professionals (UCAHP), all in Silicon Valley.

Newport Commercial Capital

949-514-8311

Office Locations

567 San Nicolas Drive, Suite 230, Newport Beach, California, 92660
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