Dear 33 Holdings Investors,
As you know, the situation with the novel coronavirus (COVID-19) is rapidly changing. We are reminded every time we check our e-mail or news feeds.
33 Holdings’s leadership team is being proactive and taking measured action to gather data and feedback from a variety of sources to prepare the company for changes in consumer habits that no doubt are on the horizon, including a sharp decline in travel and heightened volatility and uncertainty.
We built 33 Holdings’s culture and business model on a foundation of change, understanding that change creates both challenges and opportunities, and that our business thrives by quickly adapting and seeking advantages for our customers.
Because of this, we purposefully do not attach ourselves to a specific strategy, asset class or decision, as new information often causes that decision to become irrelevant.
In Q1 2019, 33 Holdings leadership set a strategy, which was announced during our 2020 Investor Kick Off event, to do the following:
- Buy value add assets via distressed (or) ground up construction projects.
- Refinance assets post-stabilization to ensure the least expensive capital available is in place
- Maintain our low portfolio leverage post-stabilization.
- Raise significant amounts of capital into our investment funds and into our managed accounts projects.
- Deploy those funds in a highly selective manner, favoring projects where we have some form of strategic market advantage, such as free land donated from a city, etc.
- Hold cash in our funds and prepare for a 2021 buying opportunity
This strategy has turned out to be a wise one, as 33 Holdings was already positioned to manage the economic turbulence brought on by the Covid-19 situation.
Fundamentally, our approach will continue to follow these steps – being very selective and strategic regarding assets we invest into, focusing on stability, cash flow, low financing costs, and other defensive steps to ensure, first and foremost, we protect client capital.
33 Holdings has weathered storms before. Having built our business during the wake of the 2008 financial crisis, we always knew some version of a correction would be in our future. This is why we do not force distributions out of a fund or asset until leverage is significantly paid down and cash reserves are high. This is also why we invest in many types of assets, properties that the general public will need and use regardless of market conditions, properties that have a floor in their downside during challenging times.
This is why many of you invested with us – to ensure a portion of your portfolio is not heavily correlated with stocks and bonds. Alternative investments make even more sense now.
We also know how to dance in the rain. Because we built 33 Holdings during the worst financial crisis since The Great Depression, 33 Holdings has the inherent knowledge and deep relationships necessary to take advantage of distressed assets, loans in default, companies forced to liquidate, all the elements and situations that arise in this type of environment. We’ve seen it before. It is how we generated gross annualized returns since our inception well in excess of 40% per year. It is knowledge that is engrained in the fabric of 33 Holdings and when and if we see opportunities again, we will communicate quickly and directly with all of you to give you access to dance with us.
Our commitment to you going forward is to increase the frequency of communication, share the straight talk that drew you to 33 Holdings in the first place, and also share the wins we continue to see happen in our Company and in our Funds, so that you can understand exactly where you stand with your 33 Holdings relationship.
This communication may come to you in writing and during web events in lieu of large gatherings to protect customers from unnecessary risk like what is happening today. However, rest assured, your 33 Holdings team is still 100 percent accessible and accountable to you and is ready to talk, anytime you need to.
Thank you for your continued support.
33 Holdings Team
