nexxica

introducing Nexxica Series Three

a portfolio of 9 residential mortgage notes

12.3% 30%
9
ASSETS
CURRENT
CASH FLOW
MARKET VALUE
DISCOUNT
 nexxica NOTES IN PORTFOLIO NS3
$1.22M ACQUISITION PRICE 9
cash-on-cash yield
12.3 % 16.1 % 15.5 %
YEAR 1 YEAR 2 YEAR 3

This summary, which contains brief, selected information pertaining to the business and affairs of the Property, has been prepared by NEXXICA
to provide general information about the Property. This is not an offer to sell, or a solicitation of an off er to buy securities, as such an offer or solicitation
can only come through the offering’s Operating Agreement. This material cannot, and does not, replace the Operating Agreement, and the Operating Agreement
supersedes this material in all respects. This investment involves various degrees of risk, including the speculative market and financing risks associated
with fluctuations in the real estate market including tax status, liquidity, and fees, expenses, and other risk factors. Please refer to the “Risk Factors”
section of the Operating Agreement.”
 A $1.22M portfolio of first-position mortgage notes with
current cash flow, equity protection and reserves
NEXXICA SERIES 3 is a portfolio of 9 first-position residential mortgage notes
generating a current 12.3% cash-on-cash yield.

These 9 notes were acquired from a money center bank as part of a larger trade, at a
discount of approximately 30% to current market value.

Nexxica is micromanaging the portfolio to maximize cash flow and to refinance -or
liquidate- all assets for their collateral value during a three year hold.

The budget provides over $111K for reserves and servicing - set aside to protect the
collateral value of the portfolio. There is no management fee. The Investor receives all
interest income during the hold period and the Investor will recapture 100% of equity
invested before profit participation by the Manager.

This book is dedicated to explaining how these assets are managed and liquidated by
Nexxica and the company’s approach to underwriting.

12.3 % 16.1 % 15.5%

YEAR 1 YEAR 2 YEAR 3
Projected cash-on-cash return for the Nexxica Series Three portfolio
 NEXXICA DEAL
SERIES THREE PORTFOLIO
SUMMARY
KEY INVESTMENT MERITS

YEAR ONE cash-on-cash 12.3% projected

DEAL SIZE $1.22M
MARKET VALUE $1.73M
DISCOUNT TO COLLATERAL VALUE 30%
UNPAID BALANCE $2.42M
NUMBER OF ASSETS 9
HOLD PERIOD 3 YEARS
SERVICER/ESCROW FCI/FIDELITY
The Nexxica Series Three portfolio in comprised of 9 assets that together
are providing a current yield of 12.3% and have an approximately 30%
equity upside at the time of acquisition.

t
ǑF
.BOBHFS
/FYYJDB
$BQJUBM
XJMM
NBOBHF
UIF
QPSUGPMJP
PO
CFIBMG
PG

Investors during the hold period, and oversee the servicer (FCI).
t
%JTUSJCVUJPOT
GSPN
JOUFSFTU
QBZNFOUT
SFmOBODJOH
BOE
MJRVJEBUJPO
BSF

made monthly by FCI directly to the investment group, in accordance
with the Operating Agreement, net of reserves.

t
"MM
JOUFSFTU
JODPNF
JT
QBTTFE
UISPVHI
UP
UIF
*OWFTUPS
OFU
PG
UIF
EJTDMPTFE

SUMMARY

1
reserves and third party servicing costs. There is no management fee.

t
ǑF
*OWFTUPS
XJMM
SFDPWFS
BMM
JOWFTUFE
FRVJUZ
QSJPS
UP
BOZ
EJTUSJCVUJPOT

UP
UIF
.BOBHFS

This summary, which contains brief, selected information pertaining to the business and affairs of the Property, has been prepared by NEXXICA
nexxica to provide general information about the Property. This is not an offer to sell, or a solicitation of an offer to buy securities, as such an offer or solicitation
can only come through the offering’s Operating Agreement. This material cannot, and does not, replace the Operating Agreement, and the Operating Agreement
supersedes this material in all respects. This investment involves various degrees of risk, including the speculative market and financing risks associated
with fluctuations in the real estate market including tax status, liquidity, and fees, expenses, and other risk factors. Please refer to the “Risk Factors”
section of the Operating Agreement.
portfolio@nexxica.com
THE NEXXICA PORTFOLIO MODEL
OUR TEAM leverages their long-standing relationships with trading desks at large money
center banks to gain access to off-market pools of discounted mortgage notes.

NEXXICA IS A BOUTIQUE INVESTMENT FIRM. We acquire residential mortgage

r SOURCING WE IDENTIFY individual notes that
have a 10 - 15% current yield and notes that we deeply understand and we micromanage those assets to
positive borrower profiles. achieve a 15% or greater cash-on-cash yield. Our focus is on acquiring small
portfolios of well underwritten assets that have current cashflow. We guide
the portfolio to liquidation over 36 months, and we make our profit after the
r SCREEN NEXT, WE UNDERWRITE each note
using both in-house and 3rd party
investor receives his principal in return .

resources. Each Nexxica note has been aggressively underwritten and vetted by an
analyst who has purchased hundreds of similar notes. Underwriting includes
r ACQUIRE NEXXICA ACQUIRES selected assets
at approximately 30% discount to
physical inspection, review of borrower conversation logs, MERS tracking
and 3rd party valuation. Page 10 provides a detailed look at our underwriting
their collateral value. process.

r MICROMANAGE BY FOCUSING on small portfolios,

Nexxica is able to maintain a
Nexxica’s managers have previously acquired, managed and taken to
disposition mortgage notes with approximately $250M of collateral value.
relationship with the borrower and
control the exit strategy. REFINANCE
UNDERWRITE ACQUIRE PORTFOLIO MICROMANAGE EXIT
LIQUIDATE
36 MONTHS (projected)

EACH NOTE in the Nexxica Series 3 portfolio was acquired because it passed a
specific underwriting screen:

1. We acquired the note at 27- 35% discount to market.

2. The asset underlying the note is located in a submarket where we validated

its current value.

3. Our review of the Conversation Logs and Pay Strings provide a clear
understanding of the borrower’s ability to pay and refinance.
nexxica
portfolio@nexxica.com
PROFORMA
nexxica

NCI
FINA ALS

3
All operating expenses and
liquidation expenses are direct

CASH FLOW PROJECTIONS PROJECTED

HOLD PERIOD 36months pass-through from 3rd party,
unaffiliated providers. There is no
asset management fee.

Year 1 Year 2 Year 3 The income projections assume

For the Years Ending 11-Nov 12-Nov 13-Nov there is a 3% cost to the sale price to exit
a note by refinancing. It is also assumed
that there is 12% cost to the sale price
Interest income 165,169 127,722 28,594 to foreclose and liquidate a note. It is
ReĮ/liquidaƟon income - 130,776 59,034 generally assumed that refinancing is the
Income before expenses 165,169 258,498 87,628 preferred exit strategy for each asset.

The proforma assumes no HPA (Home

OperaƟng Expenses: Price Appreciation) although it is possible
Note servicing 9,720 9,720 3,240 the value of individual assets will
Travel and site visit - 10,000 7,000 appreciate during the hold period which
AccounƟng - 10,000 5,000 would positively affect returns.
Total expenses 9,720 29,720 15,240 The proforma assumes that the Manager
and the Investor will benefit on a 60/40
Income before reserves 155,449 228,778 72,388 split from the sale, refinance or liquidation
(“the exit”) of an asset however all cash
flow is dedicated to the return of Investor
Reserves 4,955 32,000 14,230
equity prior to any distribution to the
Manager, as described in the Operating
Net Cash Flow Available for Owners 150,494 196,778 58,159 Agreement.
Annualized Cash on Cash pay rate 12.3% 16.1% 15.5%
to Investors as a % of Equity
Return of Principle during period - 848,696 375,940
PORTFOLIO LIQUIDATION SCHEDULE refinance
liquidation
Projected Hold Period 12 quarters (3 years)
NOTE ID# Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12
689
486
498
177
686
510
641
027
015
LOOKING DEEPER INTO THE NEXXICA MODEL
Small portfolios of cash flowing assets - acquired at a discount
Through our long-term relationships with large portfolio buyers, Nexxica Capital has the ability
to select individual assets out of their portfolio acquisitions that fit our investment criteria of
having cash flow and high collateral value. In turn, Nexxica investors receive the benefits of
the bulk discount that large portfolio acquisitions achieve- along with individualized asset
underwriting that reduces risk and provides steady returns.

As a boutique investment firm, we are able to micromanage each portfolio to maximize cash
flow and principal recovery during its holding period. We are confident in our approach such
that we defer our returns until the Investor has recaptured his equity investment.
For more information on Nexxica Series 3 portfolio and to review the deal
tape: 310-359-0779 or portfolio@nexxica.com
INSIDE THE DISTRESSED NOTE MARKET
There’s evidence to suggest the non-performing note market will be active through 2014. As
large portfolios are brought to market by money center banks, Nexxica looks to acquire and DOWNSIDE PROTECTION
harvest the smaller packages of sub-performing notes from within those portfolios. Here’s - NEXXICA SERIES THREE -
how capital is deployed in the market, and the typical yield expectations of investors. A managed portfolio of
sub-performing notes can offer a
10-13% current yield while
providing significant
downside protection.
FOUR TYPES OF NOTES IN THE DISCOUNT MARKET

Typical Cash-on-Cash
Asset Class Discount Yield Characteristics Comments
With a 1% default rate, this high quality paper will be
PERFORMING 5% 6-7% cash flow held on the books by money center banks such as
no upside Bank of America, Chase, JP Morgan and regionals such
as City National Bank.

Held by income funds seeking 9% returns, these type

RE-PERFORMING 15% 8-9% cash flow of notes are widely available, but offer limited
limited upside downside protection.

While this type of note offers outstanding

SUB-PERFORMING 25% 10-13% cash flow &
upside
equity protection and cashflow there is a
limited supply in the market and it is difficult to
(OUR TARGET) source and acquire.

The industry’s best known product, non-performing

NON-PERFORMING 35% n/a no cash flow notes are widely available, generate large yields and
high upside offer fast turn on capital. However, they provide no
current yield, are high-touch and high-maintenance
assets where the yield is taxed as ordinary income.

This summary, which contains brief, selected information pertaining to the business and affairs of the Property, has been prepared by
NEXXICA to provide general information about the Property. This is not an offer to sell, or a solicitation of an off er to buy securities, as
such an offer or solicitation can only come through the offering’s Operating Agreement. This material cannot, and does not, replace the
Operating Agreement, and the Operating Agreement supersedes this material in all respects. This investment involves various degrees
of risk, including the speculative market and financing risks associated with fluctuations in the real estate market including tax status,
liquidity, and fees, expenses, and other risk factors. Please refer to the “Risk Factors” section of the Operating Agreement.”

nexxica
UNDERWRITING: METHOD
In every portfolio we acquire or target for acquisition – we commit our own capital. It stands to reason,
as principles, over time, we have identified the crucial difference between notes that offer downside
protection and those that don’t.

There’s no more simple truth in the commodity One part of the business that is an established
notes business: you don’t know the“value” of a process is cash distribution. During the holding
note or asset until you know period of a note, the servicer
how the underwriting was collects and distributes interest
performed. Nothing is more
assignment title payments and maintains the file.
important to us because Once the note refinances, then
as managers we have
comm log deed of trust the note is paid in full, principle
performed due diligence on is returned to the investor and
over 5,000 notes, have acquired many hundreds proceeds are distributed. In the event of default,
and we know the rigors and discipline that are the servicing company files the foreclosure and
needed: first, verify the asset value through ensures legal filings are done in compliance.
multiple sources, and second, make sure you These are mechanical processes that are easy
have a clear path for the assignment of title. to manage.With our familiarity of the servicer’s
strengths and weaknesses, we oversee the
The central idea of our business and certainly servicer to make sure there are no gaps in
what must be the most important lesson of the service.
current mortgage crises: residential mortage
notes is a commodity business. There is a large If you talk to investors who have succeeded
and efficient infrastructure to aquire, manage, with acquiring notes, they’ll tell you, the key is
service, foreclose and sell these assets. Similar to acquiring assets at significant discount to true
the purchase of other commodities, the key risk market value. What truly distinguishes our assets
is in pricing, or underwriting. The other functions is the depth of our underwriting process. Here’s
of the business are mechanical (for example, how we do it:
ERWRITIN

4
in nearly 500 foreclosures performed by our
recently hired operations manager, 100% were UND

G
successful.)

nexxica portfolio@nexxica.com
UNDERWRITING: PROCESS
VERIFY ASSET VALUE
with NEXXICA CAPITAL
ERWRITIN

4
UND b We don’t rely on the BPO or appraisal, or any single source to determine
G

value. Here’s how Nexxica analyzes an asset prior to acquisition:

1
In our first screen, we look at Zillow, Redfin, MLS,
PUBLIC Realtor.com. This helps us get a baseline under-
SOURCES standing of the market and the asset.

2
Next, we find a prominent Real Estate Agent in the
local market that understands the nuances of that
LOCAL location. Several hours of conversation may take
AGENT place between us and the local agent. In many
markets we have pre-existing relationships.

3
A member from the Nexxica team will make a
SITE physical inspection of the property and build the
VISIT case file with a first-hand evaluation of the asset
and the market. In many cases the site inspection
will include the Real Estate Agent.

4
Even if Archbay, Wells Fargo and Wachovia has
TITLE previously owned the note (a common scenario)
NOTATION there can still be issues with title. The key to
finding any glitches is a full review of the conver-
sation logs with the Owner - this is the heartbeat
of every note and tells a complete story.

5
MERS was established as a clearinghouse and
MERS computer registry to track ownership changes in
mortgages. Sort of a CarFax for mortgage title. If
there is any issue with title transfer and history, it
will show up in here.

6
In most cases, Nexxica acquires small portfolios
3RD PARTY alongside a larger 3rd Party - who is buying a
REVIEW substantially larger portfolio from an institution. In
essence, we cherry pick the notes with cash flow
nexxica and certain credit characteristics, and we benefit
from the 3rd party collateral review of our partner.
OUR TEAM
The Nexxica management team, along with operations personnel have worked on more than $1B of capital
real estate acquisitions over the previous 5 years, including significant transactions in 2009 and 2010.

Oren D. Klaff - Director Gabriel Salcedo- Vice President of Capital Markets Scott Behrle - Marketing
As Director of Capital Markets, Mr. Klaff is re- Gabriel has been working in the capital markets As a registered representative Scott Behrle has
sponsible for managing the firm’s capital raising for eight years in the areas of financial analysis, raised private equity from high net worth indi-
platform which includes both retail and wholesale client advisory, real estate investment banking viduals for 1031 exchanges and the syndication
distribution. Mr. Klaff oversees business develop- and principal investments. He began his career of commercial real estate offerings. Scott has
ment and product development and is respon- with Blackpoint Capital, a boutique investment also raised institutional capital for Geyser Hold-
sible for the firms flagship product, Velocity™. banking firm acting as a distributor for debt and ings a large real estate sponsor. Scott holds his
Mr. Klaff also sits on the investment committee equity capital. In 2007, he relocated from the series 7 and 63 FINRA registrations, as well as a
at Geyser Holdings where he has been a principal United States to Asia, and has since called Hong real estate license. Scott’s broad background
since 2006. During its growth he was responsible Kong his home. Gabriel’s expertise is in simplifying and book industry contacts enable him to make
for sales, marketing, branding, product develop- complex investment models into a clear, concise key introductions to Nexxica Capital, and he has
ment, and business development. In the previous and standardized proforma, underwriting and trusted relationships with significant wealth in
five years in the securities markets, Mr. Klaff has sources and uses statement. Gabriel speaks the high net worth segment and family office
supervised and assisted in the placement of over fluent English, Chinese, Japanese and Spanish. He market segment.
$400 million of investor capital. Prior to joining holds a bachelor’s degree from the University of
Geyser Holdings, Mr. Klaff was a venture analyst Hawaii and an MBA from Rutgers University.
and partner at several mid-sized investment
funds. He is the author of the widely anticipated
McGraw-Hill publication, Pitch, releasing in spring
2011.

nexxica
nexxica