Pyatt Boardmark Investor Presentation Fund II

Broadmark Real Estate Lending Fund II
(“Fund II”)
August 2015

InvestorPresentationInvestorPresentation
Background
Pyatt Broadmark Management, LLC (“PBM”) is the
manager of the Pyatt Broadmark Real Estate Lending
Fund (“Fund I”)
Fund I wrote its first loan in August 2010 and has a 5
year track record.
Fund I makes short-term, first lien mortgages against real
estate projects in the Pacific Northwest
Roughly $132.6M AUM as of July 1, 2015
11.76% annualized return since inception
2

Monthly Cash Distributions
3
Historical Cash Distributions through July for Fund I
Note: Return data as of July 31, 2015 Assumes reinvestment.

Fund II Summary
The PBM team manages a second nearly identical fund (“Fund
II”) based in Denver, CO.
Fund II also makes short-term, first lien mortgages against real
estate assets but is focused in the Mountain West (Colorado,
Utah, Wyoming) with Denver as the core market
The goals of Fund II are to:
minimize the risk of principal loss
provide investors with a high-yield debt investment
maintain near-term liquidity
Fund II was launched in May 2014 by the PBM team. PBM
operates Fund II as Broadmark Real Estate Management
(“BREM”) 4

Fund Advantage vs Individual Loans
Provides a high benefit to cost way to invest in loans
Investor avoids the hassle of qualifying loans on the front end
Consistent and proven management team monitors each
loan and addresses and cures defaults
Offers a diversified loan portfolio with well over 100 loans
Measurable performance with a 5 year history for Fund I
Fund offers either monthly interest paid by ACH or
automatic reinvestment
Audited financial statements and monthly reporting
5

Denver: RE Market
Rated the 5th healthiest real estate market for 2014 by Zillow
Home affordability for Denver at the end of in 2013 was 146
A median income is 146% of what is required to qualify for a home loan on
a median priced house
Comparatively, San Francisco & Los Angeles are 72 & 79 respectively
Colorado is a big oil producer but the economy is well diversified
Mining which includes oil & gas extraction and all supporting activities is
less than 2% of Colorado’s labor market.
Colorado’s unemployment rate is 4.2% (Nov. 2014)
“During the holidays we typically see slowing in the housing
market, but this year, homebuyers kept the market more active
than usual” - Aldo Svaldi, The Denver Post, Jan 7, 2015 6

Fund II - First 8 Months
Fund II was launched in May 2014 and outperformed Fund I
during its first 12 months in operation
7
Fund II: First 12 Months
Annualized Return 11.76%
Monthly Std Dev 0.20%
Fund I: First 12 Months
Annualized Return
10.96%
Monthly Std Dev 0.18%

Fund II - First 15 Months
With approximately $15M in AUM (July 1, 2015), BREM has proven
demand for loans in the Mountain West.
8

Loan Economics
9
Fund II Loan economics:
Avg. Life of Loan 8.9 months
Avg. Origination fee: 4.0 %
Avg. Interest rates 12.4 %
Annualized loan return target 18% to 20%
Out of 359 loans written across both funds, only three have been put into
foreclosure.
Of these foreclosures, two have been completed with no loss of principal.
The third, a strip center in Spokane, WA, is recently REO (real-estate owned).
PBM has engaged a commercial real estate brokerage firm to fill vacancies
and sell the property. Principle owed at the time of foreclosure was 64.3% of
appraised value.

Current Loan Portfolio: Snapshot
10
Current portfolio
33 loans
Face value of $17.5M
Appraised collateral of $32.8M
Repaid portfolio
13 repaid loans
Face value of $2.8M
Appraised collateral of $4.9M
Max Loan
to Value:
(65%)
Current
Portfolio Loan
to Value
Borrower
Equity
Fund II
47%
53%

Why does this opportunity exist?
11
Historically these types of loans were offered by regional banks
As a result of the real estate downturn, the remaining regional banks were left
with too much real estate on their balance sheet
Surviving regional banks have completely discontinued this type of lending
due to Dodd-Frank
Traditional lenders have become strictly cash flow lenders as opposed to asset
based lenders.
“ … Private builders have traditionally relied on small or regional banks for funding. But many of
those lenders stopped making loans for construction and development during the financial crisis
and have been slow to resume…”
Robbie Whelan and Dawn Wotapka, WSJ, July 15, 2013
“Community banks lost 6 per cent in market share between 2006 and mid-2010, during the
worst of the crisis. But, since the passage of Dodd-Frank in early 2010, the decline in market
share has doubled to more than 12 per cent.”
Financial Times, February 8, 2015

Why does this opportunity exist?
12
Equity partners take a big bite out of profits
Outside equity partners demand to be paid first
Outside equity partners still require coupon payments
50% or more of the profits
Borrower type and circumstances
Small Banks may not be able to lend in the future:
“Dodd-Frank’s regulatory burdens are driving consolidation, and could result in lending markets less able to
serve core economic demands”
Marshall Lux, Boston Consulting Group, February 9, 2015
The outlook on construction activity and demand for our loans looks strong
“Overall, forecast results on a construction spending basis is that overall activity for non-residential buildings is
predicted to be up 7.7 percent in 2015 and 8.2 percent in 2016.”
Kermit Baker – American Institute of Architects, February 10, 2015

Diversifying away from volatility
As the Federal Reserve raises interest rates, financial
markets will likely become more volatile
Historically, real estate asset backed loans have had a
low correlation to stocks and bonds
This makes them a desirable investment with which
to diversify a portfolio and potentially provide
protection against shocks to the market
13

Investor Terms
Fund II raises capital through the issuance of membership
interests in a limited liability company
$100,000 minimum investment with the current capacity to
accept up to $2M per month
Investor return:
Investors receive 20% of origination fee income and 80% of interest
income, less direct fund expenses, e.g. taxes and audit. The balance
represents management fees and operating costs.
Monthly cash distributions paid directly to investor’s bank account
Redemption option after 1 year; then quarterly
14

Reporting and auditing
15
The Fund II is valued and reported to investors monthly
All sales through 25 year old FINRA broker-dealer
Fund audited by Bader Martin P.S., Seattle, WA, a large
regional CPA firm
2014 audit is available for review
Loan recording numbers available for independent
review
Loan files available for inspection in our office

Why Broadmark:
Seasoned team with proven management structure
No leverage
First position, senior secured loans only
Consistent Performance
Personal guarantees required of borrowers
Rigorous underwriting standards
Max Loan to Value: 65%
Regionally focused in the Mountain West
16

Underwriting Process
Our team adheres to a strict underwriting process
Documents necessary prior to underwriting
18
From Borrower
Credit Application
Operating Agreement
Business Financials
Business Tax Returns
Guarantor Financials
Guarantor Tax Returns
Collateral Confirmation:
Independent Appraisal Report
Preliminary Title Report
Purchase & Sale Agreement
Itemized Budget Review
Building Permit, Plans, Specs
Borrower’s Marketing Plan & Material
Tax Records & Property Info

Borrower Testimonials From Fund I
19
Economics
“PBM has financed numerous development, construction, and rehab loans for us. Their
ability to close a loan quickly combined with their prompt draw funding has allowed us to
make bargain purchases and take advantage of vendor and subcontractor discounts.”
Opportunity Cost
“I really appreciate all you did for us. Having our original construction loan mature before
we qualified for conventional financing could have cost us our business. You stepped up
and helped us. I would recommend you in the future without hesitation!”
Customer Service
“Pyatt Broadmark separates themselves by doing what they say they are going to do. I have
worked with other private lenders and they do not compare to the service and execution that
Pyatt Broadmark delivers. They will always have a first right of refusal on my future projects.”
“Being a young developer/builder I encounter a lot of challenges. Pyatt Broadmark has been a
valuable business partner to have through the process of guidelines, budgeting, and
management. I know that I can pick up the phone and call these guys at a drop of a hat and
they will always respond and assist me with whatever I need .”

Team Bios
Jeffrey Pyatt, Founder. Mr. Pyatt has served as Chairman, CEO, or President of several Northwest companies
over the last 22 years, in addition to leading in various capacities within the community.
Mr. Pyatt is an owner of Private Lenders Group, a private lending fund based in Bellevue, Washington. Mr. Pyatt
served as President and CEO of Pacific Financial Services Corporation from July 1994 through March 1999. Pacific
Financial was an asset-based lender located in Bellevue, Washington. Mr. Pyatt built Pacific from a start-up to being
a leader in its market, before orchestrating the successful sale of the company.
After receiving his undergraduate degree in accounting and a Master of Taxation degree from the University of
Denver, Mr. Pyatt joined the tax department of Moss Adams, a regional CPA firm in Seattle. After leaving public
accounting, Mr. Pyatt was involved in a number of acquisitions, dispositions and turn-around of companies in the
Northwest. These companies had revenues ranging from less than $1 million to more than $700 million, both
privately and publicly held.
He has also participated in the initial financing rounds of a number of telecommunications companies and currently
serves as a Director of 911 ETC, Inc.
Mr. Pyatt is active in the community, both civically and politically. He has served on the boards of three Boys and
Girls Clubs in King County since 1984 and other charitable boards. He is a past President of Park Hill Rotary of
Seattle and Eastside F.C. He currently serves on the board of directors of King County Sexual Assault Resource
Center and is a founding member of Lake Washington Velo.
20

Team Bios
Joseph Schocken, Founder. Mr. Schocken is the founder and president of Broadmark Capital, LLC and its predecessor,
Broadmark Capital Corporation. He is an honors graduate of the University of Washington and holds an MBA from Harvard
University. He holds Series 7, 24, 63 and 79 FINRA registrations.
With over 30 years as an investment banker, Mr. Schocken has extensive knowledge of the financial services industry and
established relationships with both strategic and institutional investors in the United States and internationally. He has guided
Broadmark's corporate finance practice through more than 75 private equity transactions with an aggregate value of well over
$1 billion. These projects have included private placements, debt offerings, mergers, asset purchases and public offerings in a
broad array of industries including technology, life science, broadcasting and travel.
Prior to forming Broadmark Capital in 1987, Mr. Schocken was a partner in several private investment banking firms,
including a small New York Stock Exchange member firm where he managed the corporate finance and real estate
departments.
Throughout his career as an investment banker, Mr. Schocken has also been an active private investor and has worked with a
number of exceptional entrepreneurs.
As an investor, board member and mentor, Mr. Schocken has played a pivotal role in the development of numerous
significant enterprises. Notable examples include Bennett Environmental (AMEX: BEL), Optiva (acquired by Phillips) and
Universal Access, Inc. (NASDAQ: UAXS), HipCricket, Inc., and Omeros Corporation (NASDAQ: OMER). In each case,
Mr. Schocken served as an influential advisor to management in the development of a capital formation strategy that
positioned the company for growth. Broadmark Asset Management Company, which he helped form, received both direct
investment and a $100-million allocation from CALPERS in 2000.
Mr. Schocken is a member of the National Advisory Board of the Democratic National Committee and an avid cyclist.
21

Team Bios
Adam Fountain, Managing Director. Mr. Fountain graduated with a B.A. in International Relations from Stanford
University in 2001. He holds Series 7, Series 63, Series 66 and Series 79 FINRA registrations. Mr. Fountain's responsibilities
at Broadmark include investor and client sourcing, and transaction management across all of Broadmark's focus areas
including life sciences, technology, new media, middle market, real estate, telecommunications and financial services. His
current interests include life science companies that have demonstrated proof of concept, particularly drugs with clinical data
and devices with at least animal data, and some mitigation of risk, e.g. shortened regulatory paths, 505(b)2, etc. Areas of
interest in technology include SaaS, new media, and any revenue generating high growth companies. Responsibilities also
include all activities related to Broadmark's merchant banking function: identifying and qualifying potential direct investments
and producing Broadmark white papers. In addition to these responsibilities, Mr. Fountain is a part owner of Pyatt
Broadmark Management, LLC and responsible for their investor relations and fund management. He also has a significant
support role for Broadmark relating to regulatory compliance.
Prior to joining Broadmark, Mr. Fountain was an Associate at L.E.K. Consulting in Los Angeles, CA from 2001 through
2003, an international strategic consulting firm headquartered in London. While at L.E.K., he worked primarily in the life
sciences practice. Key projects included developing a product marketing and distribution strategy for an established European
pharmaceutical company, formulating a product development and partnering strategy for a start-up biotechnology company,
and preparing for the likely adoption of a new product in the medical device industry.
Outside of Broadmark, Mr. Fountain was a co-founder of WINGS: The Washington Medical Technology Angel Network,
and formerly served as a Director. In addition to his role at WINGS, he has served on the Executive Committee for the
WBBA’s annual life science conference for several years. He is active in his church and resides north of Seattle with his wife,
Emily, and their son, Samuel, and daughter, Stella. He enjoys riding his bike, cooking, brewing, fantasy baseball, and
beekeeping.
22

Team Bios
Tom Gunnison, Vice President of Loan Origination. Mr. Gunnison was born and raised in Kansas City with his
two brothers and two sisters. He attended St. Louis University on an academic and athletic scholarship where he
graduated with honors with a degree in International Business and a minor in Spanish. Mr. Gunnison then attended
the School of Law at Washington University in St. Louis on an academic scholarship where he also graduated with
honors. Upon graduation, he moved to Denver, Colorado where he practiced law at The Hustead Law Firm, a
venerable litigation boutique. Among other areas of practice, The Hustead Law Firm specializes in commercial and
construction litigation, arbitration and mediation and creditors’ rights and bankruptcy. Mr. Gunnison comes to
Broadmark from Re/Solve Funding, a private real estate lender based in Colorado. At Re/Solve he was responsible
for loan originations and account maintenance. While with Re/Solve, he financed more than $6 million of
commercial loans. Mr. Gunnison brings a wealth of knowledge regarding the local Denver real estate market to
Broadmark.
Mr. Gunnison is actively involved in the legal and real estate communities in/around the Denver metro area. He
enjoys Kansas City Royals baseball, reading historical fiction, trail running, skiing, and all manner of outdoor
activities.
23

Team Bios
Joanne Van Sickle, Controller. Ms. Van Sickle has served as Controller for Private Lenders Group since 2005.
Ms. Van Sickle began her career in 1983 as a CPA in the auditing department of Touche Ross.
Between 1991 and 2004, she maintained a private accounting practice, working with small companies, mainly in the
construction, real estate, and retail industries.
She continues to act as the part time administrator for The Glaser Foundation, a local private foundation with $15
million in assets, a position she has held since 1991. The foundation makes up to 100 grants each year to local
charitable organizations providing direct line services, primarily to children and the elderly in the Pacific Northwest.
Ms. Van Sickle has lived in Bellevue since 1985 with her husband and three sons. Her two older sons are now
serving in the US Navy.
24

Risk Factors & Disclaimers
Prospective investors should be aware that an investment in Fund II is speculative and involves a high degree of
risk. Identified risks include a dependence on senior management, the quality and quantity of potential loans
available given the Fund’s stated investment criteria, real estate valuations and market dynamics, borrower risks,
interest rate risk, regulatory risk. Additional risks and uncertainties not presently known to Broadmark Real Estate
Management (“BREM”), manager of Fund II, or which BREM currently deem immaterial, may also have an adverse
effect on the performance or success of Fund II. In particular, the Fund’s performance may be affected by changes
in market or economic conditions and in legal, regulatory and tax requirements. Loans in Fund II are considered
Level III assets, meaning there is no active secondary market and no observable pricing mechanism. Fund II does
not anticipate a secondary market for these loans developing. Thus, pricing of loans is at par unless the loan is
impaired. An immediate 10% write down against all capital accounts is taken on any loan in default. Income is
distributed or reinvested monthly.
This material has been prepared as a matter of general information. It is not intended to be a complete description
of any security or Fund mentioned and is not an offer to buy or offer to sell any security. All facts and statistics are
from sources believed reliable, but are not guaranteed as to accuracy. Some of the information in this document may
contain projections or other forward-looking statements regarding future events or the future financial performance
of the Fund II. We wish to caution you that these statements are only estimates and that actual events or results may
differ materially. Broadmark Capital, LLC has been engaged by BREM, manager of Fund II, to assist in raising
capital for Fund II. Broadmark will receive a cash commission upon success. For further detail, please see the
complete set of closing documents.
Broadmark Capital, LLC – August 2015 25

Risk Factors & Disclaimers, cont.
The Broadmark Real Estate Lending Fund II (“Fund II”) units may be sold only to “accredited investors,” which
for natural persons are investors who meet certain minimum annual income or net worth thresholds; the units are
being offered in reliance on an exemption from the registration requirements of the Securities Act and are not
required to comply with specific disclosure requirements that apply to registration under the Securities Act; the
Securities and Exchange Commission has not passed upon the merits of or given its approval to the units, the terms
of the offering, or the accuracy or completeness of any offering materials; the units are subject to legal restrictions
on transfer and resale and investors should not assume they will be able to resell their units; investing in units
involves risk, and investors should be able to bear the loss of their investment; the units offered are not subject to
the protections of the Investment Company Act; the performance data presented here represents past performance;
past performance does not guarantee future results; current performance may be lower or higher than the
performance data presented; Fund II is not required by law to follow any standard methodology when calculating
and representing performance data; the performance data may not be directly comparable to the performance of
other funds or investment products; performance Fund II or any other Fund presented here are net of fees, assumes
reinvestment and is current as of July 31, 2015.
Broadmark Capital, LLC – August 2015
26

Sample Loan Profile
27
Colorado Springs, CO - Loan 2015-023
In June 2015 BRELF II wrote a $941,914 construction loan for phases 3 and 4 of a
townhome project, each phase to include 4 units. The completed value of phases 3 and 4
is $1,520,000, giving Fund II a loan to value ratio (LTV) of 62%. Fund II also provided
the financing for phases 1 and 2 of this project. Phase 1 has been sold out, and capital
has been returned to the Fund. Phase 2 construction is complete, and is expected to be
sold out by the end of July. The average price of the units is $189,000. The project meets
an increasing demand for homes at this price point. This area of Colorado Springs is near
interstate access and approximately 7 miles from the downtown corridor where most
employers are located. There are also good public schools, parks, retail and grocery
stores. The cost to rent has been increasing, and is now higher than a typical mortgage
payment on one of these townhomes. Other options for home ownership in this
neighborhood at this price are older homes that have not been updated, making this
project attractive to buyers looking for a nice new home in a convenient location at an
affordable price.

Contact Info
28
Adam J. Fountain
Broadmark Capital, LLC
1800 One Union Square
600 University Street
Seattle, WA 98101
(206) 623-1200, x120
afountain@broadmark.com

Pyatt Boardmark Investor Presentation Fund II

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Pyatt Boardmark Investor Presentation Fund II