6s Capital - State of the Business

14 May 2021

6s closed on a deal (O’Reilly as tenant), and borrowed ~1.25MM from a bank. Construction for this new project starts next week. Project duration is targeted for ~8 months.

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19 May 2021

6s closed on a deal (Wawa as tenant), repaid the loan, and sold the project to an investor, with an expected exit cap rate.

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02 June 2021

6s closed on a deal (Service King as tenant), and borrowed ~2.65MM from a bank. Construction for this new project starts next week. Project duration is targeted for ~8 months.

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15 July 2021

6s closed on a deal (O’Reilly as tenant), repaid the loan, and sold the project to an investor, with an expected exit cap rate.

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Now I know why O’Reilly Stock hit an all-time high today :smiley:

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30 July 2021

6s closed on a deal (O’Reilly as tenant), and borrowed ~1.78MM from a bank. Construction for this new project starts next week. Project duration is targeted for ~8 months.

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14 August 2021

6s closed on a deal (Service King as tenant), and borrowed ~4.2MM from a bank. Construction for this new project starts next week. Project duration is targeted for ~8 months.

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27 August 2021

6s closed on a deal (Wawa as tenant), repaid the loan, and sold the project to an investor, with an expected exit cap rate.

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29 September 2021

6s closed on a deal (Wawa as tenant), and borrowed ~4.5MM from a private lender. Construction for this new project starts next week. Project duration is targeted for ~18 months.

With the successful “circuit” test from last week for RWA001-A, previously unallocated transactions will now start being directed to the established credit facility.

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05 October 2021

6s closed on a deal (O’Reilly as tenant), repaid the loan, and sold the project to an investor, with an expected exit cap rate.

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22 October 2021

6s closed on a deal (O’Reilly as tenant), and borrowed ~1.69MM from a bank. Construction for this new project starts next week. Project duration is targeted for ~8 months.


With this closing now behind us, the NEXT upcoming transaction will be financed by 6s Capital Partners LLC, Series A.

Tentative closing is in ~2 weeks.

Note: DAI will >>> NOT <<< be used to initially finance the acquisition, equity will. That said, it is quite likely DAI —> USD will be moved to the Trust in advance to ensure the Trust is capitalized appropriately for the project.

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18 November 2021

6s closed on a deal (O’Reilly as tenant). Construction for this new project starts next week. Project duration is targeted for ~8 months. This closing was 100% financed by 6s Capital.

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So 6s has taken 1,422,608 of DAI. Presently, what collateral was presented to back the DAI? Is there someone that appraised the FMV of the asset(s) that is backing that DAI? Is that appraisal part of the approval required to withdraw DAI? What security interests or real estate filings exist in the real world that secure this 1,422,608 loan? What lien could a trustee foreclose on presently?

Thank you for the note.

This is not correct. This is a common misunderstanding.

At present >> zero << USDs of available credit have been utilized of the ~1.4MM USD in the RWA Senior Lending Trust account. Thus today, the RWA001-A vault is backed entirely by cash.

The recent loan closing to start this process was done 100% with the equity of 6s Capital Partners LLC, Series A (which enabled the underlying real-estate to be acquired by the borrower). Currently there is a senior secured lien (filed) on a commercial real estate property in Illinois in favor of 6s Capital Partners LLC, Series A to >> allow for << credit to be extended from the Trust in the future. This closing was done with a title company to ensure independence.

For any USD to be released by the Trustee from the Trust (for this transaction or any other), LendCo has to meet the definition of collateral in the Credit Agreement (which includes delivering an already completed independent appraisal, completed by a licensed appraiser, underwriting and all other applicable closing documents / binder). Note: the appraisal for this first project was completed 05 Oct 2021, well in advance of our closing to ensure 6s’ underwriting requirements were met.

Subject to the Trustee’s consent, all remaining LendCo-approved budget draws will be funded by the Trust (for this one specific project) up to but not excess of the budget approved by LendCo’s underwriting. As the underlying lien is already in place, the Security Agreement in concert with the project specific lien provide the foreclosure path. Today, there is no credit extended therefore nothing to foreclose on as today the Trust only has cash in it. That will change the moment that $1 of credit is extended to LendCo from the Trust. At that point in time, the Trust would have foreclosure rights. Today, 6s is in the exceptionally rare window where there is a lien in preparation for credit, but no credit has been extended (yet). Logically, all the requirements have been met to allow for that credit, less an official request from LendCo to the Trust.

The above said (and since 6s does not only want to do one deal at a time) should 6s close on another project before the draws are all deployed (on the first project), 6s will be relying on maintaining compliance to the ratios within the Credit Agreement (this is by design) across all projects on a portfolio basis. It is for this reason, this structure scales. The more projects that 6s wants to do in parallel, the more equity 6s needs in place to ensure compliance.

This process is a continuous iterative process driven by compliance and adherence to the Credit Agreement. Please see the RWA001 document roadmap for more information.

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Appreciate the quick reply on this.

Hopefully in the future the state of the business in terms of borrowing and senior secured deposits within trust will be available in the UI. I know this will require an on-chain transaction but it might be the cleanest way to deal with this vs. having to make a manual post each time a borrow is executed and collateral added. The idea system managers would have to go to multiple threads on forums to get this data - is unappealing to say the least.

Ideally this would be something that would come directly from the Trustee as then this is their stamp of approval of vault situation change and a report on collateral u.nder the Trust as senior secured status. Basically it would show the DAO directly via the standard UI the state of the vault from CR status, signed and sealed by the Trustee wallet via a on-chain transaction.

I would hazard given everything you are doing this is probably a backburner thing but it would be something really important. Basically what MakerDAO (and as LendCo btw) want is to have the Trust verifying the 1.4M is sitting in cash and the collateral status. We would have to talk to Protocol Engineering about how to engineer the on-chain reporting UI/data via the Trust, but once that is done then any displays can wrap the UI around it.

I think this is cleaner for you and your time offloading the on-chain reporting requirements to the Trust manager and then RWA/RWF CU basically just acting as Q/A.

@MakerMan Sir, I believe what you described/requested above is already handled by the Trustee—please see this magnificent explanation by @g_dip

6s Capital controls the Maker Vault where they may draw Dai up to their debt ceiling. This Dai legally flows through the Cayman entities and throughout the structure, but technically the Dai is sent to a smart contract called the Secure Conduit (MIP21 ) where it can only be sent to a target address approved by MKR voters (on-chain).”

Sir, I don’t believe you actually read what I wrote.

@omahalawyer had to ask for this information and Matt had to spend time explaining. I think most of us understand the trustee makes sure all of this is done according to contract. My point was it would be nice when these RWA vault state changes happen for the trustee to confirm via a on-chain trustee signed transaction with the actual new vault status info including:

  • collateral secured valuation
  • state of the borrow, etc (in 6s case it is sitting in cash waiting to meet collateral if I understand his post correctly) giving the system a CR value and vault state.

We (meaning MakerDAO and CUs etc.) are not going to want to go fishing through separate forum threads for changes to collateral states for all RWA players and vaults we plan to onboard.

My entire post point was that this information flow should:

  1. Originate from the Trustee.
  2. be on-chain to be easy to hook UI displays into.
    to
  3. Save MakerDAO from having to fish around for it and
  4. RWA borrowers from having to ‘explain’.

Though I do appreciate @mrabino1 6s posts with color on these.

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Matt, thanks for the quick response. Below are some more questions. Maybe to some of them they could have been asked earlier, but this is a good time to ask now that the structure has been implemented and we’re not talking in “what is supposed to happen” but at the same time the value lent is not out of Maker reach. My motivation in asking them is (1) to understand where there is transparency or opaqueness, (2) use parts as potential building blocks for structures to work for below 25 million loans, given this structure was approved by the community. They are not asked in the context of trying to punch holes - I want this to work and for you to be successful - and so do not feel compelled to put down your drink of choice and punch out an immediate response. Silence for a couple days will not be interpreted as anything.

How and who was the 1,400,000 DAI requested and obtained, if not through a borrow request under the credit agreement by 6S? If not a borrow request, why would 1,400,000 be obtained before there was a borrow request?

The 3% stability fee started accruing the moment the 1,400,000 DAI was obtained from the contract?

The Trust owes that stability fee? Is 6s obligated on a corresponding loan with the Trust to pay interest from the time the stability fee began, or as an origination fee must pay the Trust what has already accrued as a Stability Fee?

Does any portion of the interest owed to the Trust, or the accruing stability fee, need to be paid before the loan maturity in 2024?

As to the smart contract, with the RWA001 token locked 15 million can be obtained by the Trust without the Trust proving anything further to Maker, right?

At this point, Maker’s asset is its beneficiary interest in the Cayman company, which is the owner and beneficiary of the Delaware Trust? So, prior to the Trust obtaining any collateral, Maker’s interest is in the $ in the Trust’s account? Is that amount publicly available anywhere and/or does the Cayman company report that regularly to Maker? Should that beneficiary interest be reported as part of Maker’s balance sheet, valued now as the cash in the Trust’s account and later as the value of collateral?

If 6s makes a borrow request, can the Trustee refuse to make it on the basis of the Trustee wants more collateral? I ask that as I read the credit agreement and it says the Trust shall lend funds to 6s on the borrow request date, and that 6s shall provide/assign whatever security it got from its subsidiary to back the loan, but I didn’t see anything that makes 6s get certain collateral from the subsidiary.

When 6s makes a borrow request, in what way will the collateral documentation provided to the Trustee such as mortgages be available to Maker, at least after the fact?

What is the Trustee charging for fees, and when did/does that start? Have fees already been paid to the Trustee, and I assume that was by the Trust? Will those fees be passed on to 6s as borrower? Does the Trustee have to give notice to the Cayman company or Maker before it pays itself from the Trust?

Thanks.

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Thank you for the reply

These are all great questions. I believe all of them have been answered in the past already at least once on a recorded session or in the forums.

That said, we (the community) need to find a decent compromise between curiosity and learning (which is awesome and everyone should completely support) and the time needed to construct a reply (which is not insignificant!).

The questions posed above are not out of line nor are they “bad”. They have however already been answered at least once.

Specific for @omahalawyer , to ensure you get these questions answered, let’s get on a call to discuss. I am happy to go through it with you.

As the time to run a LendCo (and grow it!) now has to be balanced with community engagement, we need to find something that works for everyone. There will for sure always be another party that has additional questions, and I want to ensure that they are answered.

In general, to help address going concern question / curious parties, I am going to be setting up bi-weekly office hours with google meet to address questions like these.

Thank you.

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I appreciate the offer. I will reach out.

Matt, My questions are not for personal curiosity, but admittedly I am asking you and my questions are phrased in the context that you are a member of the Maker community and not just a borrower. I would hesitate to ask these questions directly to a borrower outside of the Real World core structure if that was not the case.

I am not intentionally asking you to repeat yourself, and respectfully and in my defense don’t see how that could be correct as to my questions that have the 1,400,000 DAI generation, cash in the Trust account, and Trustee fees paid/accruing as foundation.

Perhaps a meeting at the Cayman company’s HQ? :smiley:

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