Quarterly Update - 2012 Q2

July 2012

Dear Rubicon Mortgage Fund Investor: 

The Management at Rubicon Mortgage Fund, LLC (“The Fund”) is pleased to announce that the Fund yielded 8.156% return for the first two quarters of 2012 (this figure assumes investors compounded their returns monthly).  Management remains confident that the Fund will continue to have success similar to its past eighteen quarters.

The Fund currently has 26 loans in its portfolio, of which 25 are performing. The Fund is also holding three REO properties.  During the second quarter of 2012 the Fund made 6 new loans totaling approximately $1,500,000. The overall portfolio of the Fund remains strong with over 99% of the Fund’s loans is now secured by First Trust Deeds.

Loan and REO Status Updates:

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 six parcels; yes we sold one last month for $120,000. The only remaining parcel is currently listed for sale and the fund has already recouped all but roughly $42,000 from the first six sales and should we sell the last property at market price we will have recovered our funds.

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.  Management has decided to further renovate the motel and apartments units for the purpose of maximizing its sale price as well as making the property more desirable to lease.  

Other news:

The Fund’s investor base continues to grow; we signed up 12 new investors and 15 current investors added to their existing accounts for a total of $2.3M of additional capital.  This continued growth has allowed the fund to expand its pool of loans increase thereby creating more diversification and liquidity for all of our investors.

Interest rates:

Because interest rates have been pushed so low it has had a slight effect on our loan rates and fees. With so much cash on the sidelines and investors seeking yield especially on secured assets we have had to lower our quotes and fees to remain competitive in the marketplace. Also, given the financial instability in the world we want to continue to attract good borrowers and property. So we expect this to affect our yield slightly so our target return of 8.5% this year may need to be adjusted to 8.25%. Again capital preservation is our main concern.

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