Governance
Governance & Oversight
Written for counterparties doing basic diligence on the company.
This page describes how Lanterna supervises the activities it holds and why operating businesses are kept separate from one another. Direction, capital and financial review sit with Lanterna. Execution sits with the operating entities, and routine operating decisions are made there.
Strategic Oversight
Lanterna decides which activities the company will be in and approves the plans the operating entities work under. Results are reviewed against those plans, and again when conditions change.
Requirements for documentation, insurance and reporting that apply across entities are set at this level; operating decisions are made at the entity.
Capital Allocation
Funding decisions are made centrally. Lanterna decides which commitments are made, in what order and on what conditions, and weighs a request from an operating entity against the other commitments before the company at the same time.
Approval may come in stages. Funds are held and accounted for by the entity that owns the activity. Development budgets, lending activity and property-level capital plans are reviewed on that basis and revisited as conditions change.
Financial Oversight
Each operating entity keeps its own books and records. Reporting comes up to Lanterna, and budgets are reviewed against actuals.
Outside accounting and tax professionals are engaged for the operating entities, with scope depending on the activity. Where a counterparty requires financial documentation for a specific transaction, it is provided directly and under confidentiality.
Risk Management
Insurance requirements are set at the entity level. Counsel is engaged on contracts where the exposure warrants it. Budgets and underwriting are built on conservative assumptions, with contingency held. A risk that cannot be managed on acceptable terms is a reason to decline the activity.
Development risk is mostly cost and schedule. On a loan it sits with the borrower's plan and the collateral. For a residential property it is condition, occupancy and liability. A downturn can affect all three at once, which is why exposure is reviewed at the holding-company level and not only inside each activity. Concentration is reviewed there too, across asset types, counterparty types and market conditions.
Professional Coordination
Outside professionals are engaged by the entity doing the work, with coordination at the holding-company level so that standards are consistent across activities.
Depending on the matter that means legal counsel, accountants and tax advisors, insurance professionals, lenders, title and escrow professionals, contractors and design professionals, property managers, valuation professionals and other specialized consultants. The company does not identify the firms it engages.
Entity-Level Separation
Separate entities are used for practical business reasons. Accounting is cleaner when a development project, a loan and a rental property are not run through one set of books. Keeping activities apart limits what a problem in one of them can reach. A lender or title company will often want a single-purpose borrower for a specific asset. Administration is simpler when insurance, contracts and records sit at the level of the activity they belong to.
Records, accounts and insurance are kept by entity, and documents are executed by the entity that is party to the matter.
The description above is how the company organizes itself. It is not a legal opinion. Nothing here should be read as a representation about the effect of any structure in a particular case, or as a promise about how assets would be treated in any particular circumstance.