Quarterly Update - 2012 Q2

April 2012

Dear Rubicon Mortgage Fund Investor: 

The Management at Rubicon Mortgage Fund, LLC (“The Fund”) is pleased to announce that the Fund yielded 8.5% return for the first quarter 2012 (this figure assumes investors compounded their returns monthly).  Management remains confident that the Fund will continue to have success similar to its past seventeen quarters.

The Fund currently has 22 loans in its portfolio, of which 21 are performing. The Fund is also holding three REO properties.  During the first quarter of 2012 the Fund made 4 new loans totaling approximately $1,650,000. The overall portfolio of the Fund appears stronger than ever - over 98% of the Fund’s loans are now secured by First Trust Deeds.

Loan and REO Status Updates:

Moss Landing:

In November of 2009, the Fund purchased a Promissory Note at a significant discount on real property located in Moss Landing, California.  The Fund paid $320,000 for a 70% interest in a $1,000,000 Note secured by a 1st Deed of Trust. The Note is secured by 20 acres of industrial property, and an additional 50 acres of agricultural land, which combined produce $17,000.00 of monthly income.

For the first time since June 2010 the loan is out of default. The borrower brought the property taxes current and also made a payment of $100,000 bringing the loan current; since the NOD was filed Rubicon has collected over $260,000 in fees and interest. There is still uncertainty in the property itself concerning permits, environmental and other risk factors but given the steep discounted purchase and the successful collections the overall investment has been a good one to date. There is still room for more upside but given the overall risk of the deal only time will tell.

Emigrant Gap (REO):
The Emigrant Gap loans totaled $300,000 in principal that was collateralized by seven separate parcels of land.  The Fund has taken ownership of all seven parcels via foreclosure and has successfully sold five parcels. One of the two remaining parcels is currently in contract and if it closes as scheduled the Fund will have received most of its principal back with one parcel remaining to be sold. Unfortunately, our escrow has been delayed due to a bankruptcy on a neighboring parcel, but we are still in contract. This statue has not changed since our last update.

Calpine Lodge (REO):
The Calpine Lodge was a 1st Deed of Trust loan secured by a 7,200 square foot bar and restaurant, apartment and an additional 12 room motel located in Calpine, CA.  The Fund had made a “seller carry back” loan for $515,000.  As you may recall, the property was significantly renovated after being sold to our buyer in early 2011 (as a result of flood due to a broken water pipe).  Unfortunately, after almost a year of poor performance Rubicon has foreclosed again on the property albeit this time the Fund holds a newly remodeled lodge as collateral.  We have begun conversations with a potential buyer and it seems probable that a sale will occur.

Other news:

The Fund’s investor base grew significantly during the first quarter of 2012; we signed up 10 new investors and 8 current investors added to their existing accounts for a total of $1.4M of additional capital.  As the Fund continues to grow, its pool of loans increase thereby creating more diversification and liquidity for all of our investors.

We want to thank all our investors for choosing Rubicon and as always we really appreciate introductions to new investors for there is no better recommendation than from our existing members. 

We are also excited to announce that Rubicon is now linked with Facebook! If you happen to find us on your Facebook page, please check us out and “like” our page.

Please note that our best sources of referrals come from our current stable of investors.  Please feel free to give our contact information to any interested colleagues, and as always, contact us directly with any questions.

Sincerely,

Rubicon Management