| Question: |
Why are you investing in real estate in a down real estate market? |
| Answer: |
If you turn on TV today, you would think that the real estate market has totally collapsed. In our view, there is no better time in history than now to buy real estate as perception and the markets drive down the economy, as commercial banking dries up and there is less money to lend to consumers.
We are positioned to acquire real estate from a number of sectors, including banks, developers, real estate investors and individuals, as well as from businesses which need to sell their real estate holdings in order to improve their financial position.
We believe we can create significant value by investing in real estate while available opportunities exceed demand and prices are depressed. As John D. Rockefeller once said, “The way to make money is to buy when blood is running in the streets.” |
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| Question: |
Who runs the day-to-day operations? |
| Answer: |
BBC is currently managed by its Chairman, John Bravata, and Vice Chairman, RJ Trabulsy. Additionally, an Executive Committee meets weekly for strategic planning and to evaluate progress toward achieving our goals. A separate Project Review Board, consisting of eight of our executives and professional advisors, evaluates and approves or rejects proposed real estate-related investments. |
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| Question: |
Are the vacation properties in the portfolio available for use by investors? |
| Answer: |
Yes. Our investors are welcome to use any of our vacation properties when they are available. We only require payment of a small cleaning and service fee, rather than the full rental rate. Since our investors are ultimately the owners of BBC (and thus the properties in our portfolio), we gladly provide this as an extra service. As a result, through this service, our investors can not only visit properties in our portfolio, they can actually use and enjoy some of them. |
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| Question: |
Are investors able to view their account statements on-line? |
| Answer: |
Yes. Each investor is given the opportunity to enroll in our web access service. Once enrolled, an investor will be able to view his or her account statement through a secured area on our web site. If you lose the code, just call customer service and a new code will be issued. |
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| Question: |
Is the principal amount of investor funds guaranteed? |
| Answer: |
No. BBC is not a bank and the funds are not insured or guaranteed by the FDIC, SIPC or any other type of insurance. Our investors have a priority claim over the common shareholders to the assets of the fund, including our real estate portfolio, the rental income, tax credits and brownfield redevelopment credits, certificates of deposit and cash, all of which serve as the base for the return of investor funds. |
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| Question: |
Is the fixed dividend guaranteed? |
| Answer: |
No. Many investors refer to BBC’s 8% cumulative preferred distribution as “interest”. It is actually a fixed distribution amount which has priority over any distributions to the founders and other common shareholders. The amount of each distribution to each investor must be paid in full before any distribution may be paid to a founder or other common shareholder. In the corporate context, it is essentially the same concept as the fixed dividend paid on preferred stock.
For example, for preferred stock, Investment Dictionary states that it is a “class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights … [T]he best way to think of preferred stock is as a financial instrument that has characteristics of both debt (fixed dividends) and equity (potential appreciation).”
According to Investopedia, “[t]here are certainly pros and cons when looking at preferred shares. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and they have a fixed dividend (paid before common stockholders), but investors must weigh these positives against the negatives, including giving up their voting rights and less potential for appreciation." |
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| Question: |
Do your Class D Shares have rights similar to preferred stock? |
| Answer: |
Yes. Unlike common stock, preferred stock usually has several rights attached to it. For example:
- The core right is that of preference in the payment of dividends and upon liquidation of the company. Before a dividend can be declared on the common shares, any dividend obligation to the preferred shares must be satisfied.
- The dividend rights are often cumulative, such that if the dividend is not paid it accumulates from year to year.
- Preferred stock has a claim on liquidation proceeds. This claim is senior to that of common stock, which has only a residual claim.
- Almost all preferred shares have a negotiated fixed dividend amount. The dividend is usually specified as a percentage of the par value or as a fixed amount.
- Most preferred shares provide no voting rights associated with them.
- Usually, preferred shares contain protective provisions which prevent the authorization and issuance of any new class of preferred shares having priority over the preferred shares.
Each of these rights and features are addressed in our Articles of Organization and Operating Agreement. |
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| Question: |
Can investors get their money out? |
| Answer: |
Our Articles of Organization and Operating Agreement give investors redemption rights to withdraw from the investment. Redemption requests are usually processed and paid within 60 days. |
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| Question: |
I hear that your Chairman, John Bravata, is also an author and has a book coming out soon. Is that true? |
| Answer: |
Yes. His book is entitled Stealing of Wealth in American: What Financial Institutions and the Government Don’t Want You to Know About Investing. It should be out in your local bookstores in early 2009. |
