Cornerstone Funds Investment in Residential Mortgage Portfolio

Dublin, Ohio – Cornerstone M.I., LLC, a wholly owned affiliate of Cornerstone Capital Partners Corporation, funded a new participating investment in a portfolio of home equity line of credit mortgage loans. The portfolio is comprised of nearly three thousand individual HELOC loans in the United States with a portfolio value of $245 million.

The well publicized problems in the US housing market have created sizable challenges and opportunities alike for investors navigating the new realities of home values and home financing.

“We expect an extended run of opportunities such as this, and Cornerstone should be well positioned to make further investments related to mortgages,” said Andrew Kraus, Managing Director of Cornerstone.

Cornerstone made its investment in U.S. residential housing assets not only because of the economics of the transaction, but also because of the partners involved and the deal structure. Any time Cornerstone makes equity investments and joint venture investments, the risk analytics and transaction economics are viewed in light of the project sponsors and Cornerstone’s investment partners. In this case, Cornerstone’s collaboration and joint investment in this project with experienced, highly regarded partners made its decision to proceed a much easier one.

“For success in this type of investment, a good plan is important, but having the right team is essential. We might be reluctant to venture in this direction if we did not feel we were working with very good players,” commented Mr. Kraus.

Proper alignment of partner interests and compensation commensurate with risk sharing were also important parts of transaction evaluation. This transaction utilized a senior – subordinate capital structure with varying cash flows to participants based on return hurdles. Such an arrangement fit easily based on Cornerstone’s experience with real estate in general and structured finance in particular.

Cornerstone Capital Corporation provided advisory and analysis support for the transaction.

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