SVB Collapse: Our Reaction and Response

Dear Hearthfire Community,

First, I want to assure you that recent turmoil in the banking sector and broader financial markets have not impacted Hearthfire, our investors, or any of our investments.

We can say that with confidence because we have been hard at work. As soon as news broke about Silicon Valley, Signature and Silvergate Banks, our seasoned team of crisis-hardened financial, investment, real estate and self-storage professionals jumped into action. To sum up –

  • We contacted every lender and deposit bank we work with, directly asking the following three questions:
    • Are you aware of any impacts or risks related to SVB or any affiliated entity with your institution?
    • Has your firm conducted a financial and operations analysis to identify any indirect impacts to critical business systems that could impact any business we do with you?
    • Does your institution plan to issue a formal communication of assurance to borrowers and depositors? If so, when may we expect it?
  • The responses we received all confirmed that their operations are sound and funds are safe.

At Hearthfire, we have a bias for action when markets are sending alarming signals and a tendency to overreact. That’s because markets have never been more complicated or confusing. Today, it’s too easy for investors to be fooled by investment structures and jargon-filled language designed to obscure risk and bolster investment companies’ bottom lines.

We see our relationship with investors differently with an unwavering commitment to these principles:

  • The preservation of principal: As investors in every deal we build, the interests of our investors and ourselves are always aligned. Every investment we make is methodically stress-tested to project performance outcomes in a variety of adverse scenarios. As a result, we’re the first to lose if an investment goes south. That has never happened.
  • Being responsible with debt: We borrow only enough to finance our business at market rates. And we only do business with financial institutions that have strong balance sheets and do not engage in risky derivatives or other behaviors that could jeopardize operating capital or access to deposits and reserves.
  • Building deal structures that are simple and straightforward: Hearthfire believes in your right to understand your investments, so we never conceal risks with  convoluted language or exotic capital structures. What you get is what you see.

We want you and your money to be safe. You have a lot of different options to choose from when investing. It’s important to us to know you’re being protected.

Be safe and well out there.

 

Sergio Altomare

Co-Founder & CEO

P.S. If you are considering shifting or expanding your investment portfolio, consider the Hearthfire Income Portfolio as a safe and responsible option in self-storage, the most recession-resistant asset class we know of. You can learn more about it at http://hfire.co/HIP.