As the Broncos and Panthers practiced and then battled it out at Super Bowl 50 over the past week, Texan hedge fund manager Kyle Bass was stepping up his conflict with United Development Funding IV (UDF), a public nontraded real estate investment trust also based in the Lone Star State.
Bass, who runs Hayman Capital, recently revealed that he is the anonymous short seller going after UDF. Also, he introduced a website (UDF Exposed) which claims the company operates a “Ponzi-like real estate scheme.”
United Development worked with now-bankrupt RCS Capital (RCAP) to bring in investors for this REIT and paid RCAP commissions for sales of UDF IV. (RCAP is in the process of spinning off the Cetera Financial Group of independent broker-dealers as part of its bankruptcy proceedings.)
On Friday, United Development Funding IV fought back and said in a statement that Bass was making “multiple false and misleading statements about our company and management team.”
According to CEO Hollis Greenlaw, its secured loans are “underwritten based on collateral value, and UDF IV has not had any realized losses in its portfolio.”
In addition, Greenlaw points out, Hayman Capital’s website says it “will profit if the stock price of UDF IV falls, and given this financial incentive we believe the hedge fund intends to continue disseminating misleading information.”