Equity Partnership
After initially emphasizing individual and bulk asset sales, under the leadership of Richard Hopper, Senior Asset Marketing Specialist at the National Sales Center and originator of the MIF and National Land funds, the Resolution Trust Corporation pioneered the use of equity partnerships to help liquidate real estate and financial assets inherited from insolvent thrift institutions. While a number of different structures were used, all of the equity partnerships involved a private sector partner acquiring a partial interest in a pool of assets, controlling the management and sale of the assets in the pool, and making distributions to the RTC based on the RTC's retained interest.
The equity partnerships allowed the RTC to participate in any gains from the portfolios. Prior to introducing the equity partnership program, the RTC had engaged in outright individual and bulk sales of its asset portfolios. The pricing on certain types of assets often proved to be disappointing because the purchasers discounted heavily for unknowns regarding the assets, and to reflect uncertainty at the time regarding the real estate market. By retaining an interest in asset portfolios, the RTC was able to participate in the extremely strong returns being realized by portfolio investors. Additionally, the equity partnerships enabled the RTC to benefit by the management and liquidation efforts of their private sector partners, and the structure helped assure an alignment of incentives superior to that which typically exists in a principal/contractor relationship.
The following is a summary description of RTC Equity Partnership Programs:
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