The fund lends to Hawthorne Land at a maximum of 65% of the projected aggregate sales price of the ranchettes for a relevant property. That is widely considered to be a low loan-to-value (LTV), which is important for reducing risk. Each loan is at 10%, interest only.
For each note that Hawthorne Interests buys and holds, the fund lends to it at a maximum amount whereby the monthly payment to the fund will be at least 10% less than the incoming monthly payment to Hawthorne Interests. This means that if the fund had to foreclose on a loan, it would become the owner of a note that provides more monthly income than the original loan. Each loan is at 10%, amortized.
All of this is covered in Section II of the Private Placement Memorandum (PPM) and on Schedule 1 of the Credit Agreement.