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Tuesday, October 14, 2008

Freehold Licensing Ltd.

I had an interesting company pass my way that we have begun to work with that I think has some real application to our current financial and liquidity crisis.

Freehold Licensing Ltd. ( of Texas is helping their clients create long-term revenue streams by creating for-profit transfer fee rights in property owned by their clients.

The company says:
Freehold Licensing enters the world of Real Estate Transfer Fee Rights as the creator of a unique business process and the leading experts at advising property owners how to restructure property rights by easily and efficiently creating a long-term income stream.

The process was originally developed in response to a common problem faced by virtually every real estate developer: How To Add Improvements Without Unfairly Burdening The Initial Buyer?

The result is a fully collateralized income stream that continues to grow year after year. The existence of Transfer Fee Rights benefits both current and future buyers and sellers alike. This approach to structuring real estate transactions is well suited for many different types of owners of large portfolios of real estate such as builders, developers, REIT's, bank REO departments and more, as well as work-out professionals and bankruptcy trustees seeking to maximize the value of estates with large real property holdings.

After looking at the process, these revenue streams seem to be ideally suited for banks to utilize as additional assets that can help shore up lagging balance sheets. Furthermore, it appears that recent SEC and FASB guidance ( provides a pretty clear standard opinion on the valuation of non-market assets such as these rights. (Although the company has plans to create a securitized product option that would likely have a market.)

Given that the world governments are being forced to take extraordinary actions to protect our world economy from what appears to be an indirect run on the banks by rapidly deflating balance sheets due at least in part to disfunctional actions of the mortgage backed securities markets it would appear that it is in all our best interests to locate every alternative available for our banking system to "re-flate" their balance sheets and this appears to be a very viable option.

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