We're bringing Alpha School to the South Bay and I'd love to tell you why. Come learn more at our Information Night: RSVP → luma.com/rl5kdtlw?tk=T0djES 📅 Tuesday, March 3rd 📍 207 N Harbor Dr, Redondo Beach 🕐 5-7pm Alpha South Bay LA is a K-8 school opening shortly that reimagines education. Students learn core academics through guide-supported personalized software instruction in 2-3 hours a day, then spend the rest building real-world skills like entrepreneurship and creative problem-solving. Alpha's test results put it as the top performing school in the country! If you're a South Bay parent who's ever thought "there has to be a better way" — come talk to us. #AlphaSchool #SouthBayFamilies #RedondoBeach #ManhattanBeach #HermosaBeach #ElSegundo #PalosVerdes #FutureOfEducation

Here is a deal you all may find interesting. In December, Pier purchased a portfolio of $21.7MM of subprime auto loans for 57.7% of par (~$12.5MM). Using conservative default rate and recovery expectations in our DCF model, we priced this using a 20% discount rate. How did we get there? First, some portfolio stats: Loans: 1,797 Avg Balance: $12,545 Avg Orig Bal: $17,470 Avg Term: 48 mo Avg Seasoning: 14 mo Avg APR: 23% Approximately 6.9% of the portfolio is greater than 30 days past due. Estimated duration of 10 months. The collateral consists of standard car makes and models: Chevy, Ford, Kia, Nissan, Dodge, etc., with an average model year of 2014 and ~115k miles. Seller: The seller was a buy here pay here originator in Ohio, whose desire was to pay of their lender due to the difficult origination limitations set on it and other onerous terms, such as personal guarantees. The seller services their loan portfolio and maintains close relationships with their customers, frequently handling maintenance or refinancing into new vehicles. The seller has been in business for 35 years and we received performance history going back almost two decades. The seller will retain servicing, which means the borrowers will see no change in their day to day loan situation. Performance: Cumulative loss curves the last decade have ranged from approximately 35% to 45%, averaging about 40% with 2022 as an outlier that is trending toward 47%. Approximately 15.6% of our portfolio was from 2022. Recovery rates have varied historically, but they have been as low as 15% recently with this originator. Industry recovery rates have coming down, though 15% is at the low end of what we typically see in auto, especially since unsecured consumer defaults can generate as much as 8-12% in a bad debt sale. Pricing: Given this information, we used cumulative default curves that average about 46%, and recovery expectations at 15%. We feel both of these numbers are conservative. Then, the cash flows from each modeled loan were discounted at 20%. Delinquent loans are marked down significantly based on our separate delinquency markdown curve. All of this resulted in that 57.7% bid and purchase price. Diligence: Upon acceptance of the bid, we proceeded with a 3-week diligence process. We hired a third party subprime auto firm who we have worked with separately and know to be extremely thorough. We also conducted on site diligence and a compliance/regulatory review. The sellers proved to be very professional, which is not always the case in this asset class. Co-invest: Finally, we syndicated out 25% of the deal to a few of our LP's with our main fund holding the bulk of it. Projections: In the end, we believe a 20% gross IRR over a 10-month average duration to be very realistic, with potential for it to come in at 22-23% if defaults stay low or recoveries are a bit higher than modeled. The monthly performance will have some real volatility to it as these types of portfolios do, but with diversification through this amount of volume, we don't expect performance straying due to small sample size. In a downside stress case we model a 9% gross IRR.