Hi Partners,

Thank you for your continued support as we close out the fund’s inaugural quarter. We have been busy in the first quarter, acquiring 3 Non-Performing Loans and 1 Performing Loan. We invite your questions or feedback and look forward to having a great Q2 and beyond.

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Performance and Distributions

• The fund had a net return of 8.29% in the first quarter of 2024
• We will be making a 3% distribution in late April to reflect the strong performance to date

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Net P/L Performance by Month Breakdown

Jan  2024
   -1.21%

Feb  2024
   2.85%

Mar  2024
   6.59%

YTD
   8.29%

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Current Strategy and Highlights

• The notes acquired this quarter are the first note purchases from banks we have done since Q1 2020. Due to regulatory pressures and interest rate levels, banks have a higher willingness to transact than they have over the last few years.

• We are ramping up our efforts to source non-performing notes from banks given the shift in credit committee attitudes towards selling laggards.

• We acquired two non-performing loans from bank counterparties; both with expected returns in excess of 20% and loan-to-value ratios below 25%. One seller is a familiar longtime debt capital partner and the other a first time counterparty. The latter bank was impressed by our execution and has shown an appetite for selling more paper.

• We continue to look for credit opportunities on the secondary market that provide a healthy risk-adjusted return. If you know any creditors looking to sell notes please reach out.

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Pipeline and Market Thoughts

• We are currently under contract on a new deal with a bank lender which we expect to close in May. This is the largest deal out of the fund to date with a purchase price slightly over $4mm.The collateral is a mostly occupied shopping center in the Northeast on a key retail corridor.

• We have a strong pipeline of retail, multifamily, and industrial collateral types with creditors ranging from sellers and judgment lien holders to banks and debt funds.

• The interest rate environment has been a boon for flow on the secondary. Relative to the last few years when bad loans were virtually guaranteed to be refinanced by a greater fool lender (or the collateral sold to a greater fool buyer), the high level of rates today makes that deus ex machina outcome unlikely.

• We believe this will continue to create opportunities in our space going forward, especially if rates stay elevated for a few years.

• On the performing and origination side we are seeing an uptick in loan and deal quality from our traditional real estate investor borrowers, so we have stepped up to start doing more originating going into Q2.

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Yours truly,
Ricardo, Kyle, and Joe

500 Post Road East, Westport CT 06880
Invest@ConstLending.com
203-423-3534