From: Joel G. Block
Sent: Friday, February 7, 2014 10:08 AM
To: All Investors
Subject: Bullseye Capital Fund - 2013 Wrap Up and Summary
As we look to 2014, we at the Bullseye Capital Fund (www.bullseyecapfund.com) are excited about the prospects. We've accomplished a lot in 2013 and look forward to even more positive developments this year. Over the last year, we stayed true to our mission, which is to take careful aim at investment opportunities using a two pronged approach which includes adding value to the properties we acquire, and implementing an arbitrage approach to increase revenues. Combining these strategies together is what makes our fund unique. In this way, the Fund can generate good profits while managing risk.
When we talk about adding value, we mean acquiring distressed or undervalued properties, fixing them up or building from scratch, and selling it afterwards for a profit. This is a great strategy in itself and is widely used by entrepreneurs, but it doesn't provide any cash flow while the property is being improved, which can often take months or years. To address this aspect of the real estate cycle, we have added a complementary program where we lock up a property for a steep discount and resell it to another investor for a good mark up. Often times we can find a buyer and secure our profits before we spend a nickel on the property. This arbitrage program can generate great cash flow, and the transactions often happen in just days or weeks, creating the income needed to generate returns for our investors.
Last year, we began using the arbitrage program to pay the Fund's expenses. This year will expect to take full advantage of it so that the regularity of payments to our investors can be predicted and accomplished. We further expect the first exit from one of our value-add projects to occur in late summer. With the profits from these transactions, we plan to pay down the preferred allocations that have been accumulating.
Starting a fund like ours takes work, and nothing happens overnight. But over the course of 2013, we brought many new investors into the fund, we brought in some very talented and experienced real estate professionals to implement our strategy, and we started putting out two pronged approach to work. For example, we have bought and sold a number of houses using our arbitrage program, and we are in the process of developing our first multifamily projects in Austin Texas, with more multifamily development not far behind. Our Fund uses a preferred payout strategy which means that our investors get paid before the Managers share in any profits. We believe that's the fairest way to deal with investors and their capital. The investors have to get paid before we do with a minimum annual return which is cumulative year over year. Although we have been accumulating this minimum return to our investors in 2013 as we got the fund up and running and in order to maximize future payouts, we expect to provide our investors with their accumulated returns beginning in the 3rd quarter of this year. To this end we are implementing an "ex-dividend" strategy which will reward investors who have been with us the longest, because we believe that is the fair and right thing to do.
The tax paperwork for the Fund will likely be delivered to each investor by the end of March though if we can complete it sooner we certainly will forward it as soon as possible.
Finally, I take personal responsibly for not communicating enough with you, our investors in 2013. And to this end, we have built a web site so that you can regularly see what we are doing and how our investment projects are progressing. Each week, your directors receive a report on our projects. We are summarizing the information from those reports and publishing it on the web site for your review. Please go to www.bullseyecapfund.com and look at the Current Investments - Member's Only section to see the work we are doing. At the present time, no password is required. I know you will appreciate having access to this regularly updated material.
We value your confidence in us, and want to continue earning your trust. We intend to be the best stewards of your capital that we can, and we look forward to helping you create the wealth you deserve in 2014.
Joel G. Block
5737 Kanan Road, Suite 269
Agoura Hills, CA 91301