Learn More About Trust Deed Partnerships

What is a Trust Deed Partnership?

A Trust Deed Partnership (TDP) is a pool of loans secured by real property.   As TDP manager, The Granger Company carefully evaluates the underlying real estate assets, and the borrowers' ability to pay interest and principal due on the loans.  The firm also purchases TDP membership units for its own account, therefore aligning its interests with those of the other investors.

Return and distributions

The investment's profits are derived from the amount of interest collected on the loans in the TDP.   A typical annual return is 10% or more, depending on the interest rates paid by the borrowers.  Investors are paid monthly and are responsible for paying income tax on these distributions.

Ideal investors

TDP investors are high-net-worth individuals who are interested in investing in real estate loans.  They should have an investment horizon of 3-5 years, and they must be residents of California.

Minimum investment

The minimum investment in a TDP is $20,000.  Membership units have limited transfer rights, and investors must meet income and/or net worth criteria to invest.

Investment term and dissolution

A TDP requires an investment horizon of 3-5 years, and is dissolved when the notes held by the TDP are fully paid.

Investment advantages

• The Granger Company invests in each TDP, therefore aligning its interests with those of the other TDP investors.
• Highly qualified management is built into the TDP.  The Granger Company has been involved in acquiring, operating, and developing real estate since the 1980's.  Within the last 10 years, the company has formed Partnerships with total capitalization of over $40,000,000.  

Investment risks

As with any investment, there are a variety of risks with which investors need to be comfortable.  Among other things, these could include economic, borrower bankruptcy and interest rate risks.  In addition to consulting his or her own counsel, accountant and financial advisors, a prospective investor should review the TDP offering memorandum carefully and evaluate the merits and risks of the opportunity before investing.

How do TDP's differ from Mortgage REITs?

Like TDP's, mortgage REITs loan money for mortgages to owners of real estate, and revenues are generated from the interest they earn on these loans.  Mortgage REITs sometimes also invest in or purchase existing mortgages or mortgage-backed securities.

Because mortgage REITs are much larger in total dollar size than TDP's issued by The Granger Company, REIT owners/managers don't have large stakes in their own investments.  The Granger Company invests in its own TDP's, and therefore shares the same risks and rewards as its other investors.  Additionally, the total investment of a TDP is capped at a specific dollar amount, which keeps the fund and its investments a manageable size and the quality of investments very high.

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