Capital Spotlight – We regularly publish the detailed criteria of our most unique real estate capital sources.
The Investor manages two private investment fund vehicles for both mezzanine debt and equity structures. The team is extraordinarily seasoned in the structured finance space and able to deliver creative collateral structures that work around intercreditor restrictions. Their ability to offer low check sizes starting at $2MM at efficient pricing across most property types is unique in the marketplace.
| Collateral Requirement / Capital Type | A combination of various collateral types including preferred equity, second mortgage, perfected pledge of equity, and, in some cases, they will consider joint venture equity. |
| Geography | Nationwide; with a preference for the top 100 MSAs (Metropolitan Statistical Areas); primary and secondary markets. Will consider tertiary markets with strong credit tenant profiles. |
| Property Types | Will consider all property types except land, auto dealerships, and other highly specialized property types. Preference for industrial and medical office. |
| Uses of Funds | Acquisition, recapitalization, capital expenditures, reserves, closing costs |
| Sponsorship | They like to see at least a bit of comparable track record. However, able to work with more entrepreneurial sponsors depending on the deal merits. Generally like to see 50% of the debt stack in sponsorship net worth. |
| Recourse | Non-recourse |
| Check Size | $2,000,000 – $15,000,000 |
| Loan to Value | Up to 90% loan to cost, on a last dollar basis. |
| Rate | 10% – 15% Calculated on an IRR basis |
| Fees | 0% – 1% |
| Payment Structure | Usually IO, paid on a current basis. However, they will often allow for partial accrual of the rate. |
| Duration | 3 – 10 years |
| Prepayment Structure | Targeting a 1.3X – 1.5X minimum multiple |
| Underwriting Requirements | Likes to see meaningful cash equity contribution from the sponsor (not including fees), but will consider imputed equity. Typically, does not invest behind private lenders and prefers institutional senior debt. Minimum DSCR 1.10X based on proforma. And ideally likes to see 1.0X on an as is basis. |
| Intercreditor Requirements | Very flexible and can go behind all major senior debt providers including agencies, banks, life companies, and lower cost debt funds. |
| Covenants | For preferred equity: typical kick out and for sale rights. |
| Deposits | Typically approximately $45,000, refundable, applied to out-of-pocket legal, diligence and other transaction costs incurred while documenting the transaction. Generally rely on senior debt standard reports such as appraisal and environmental. |
| Closing Time Frame | 21 – 45 days from signing of term sheet |
If this capital source is of interest, book a call to discuss a potential capital arrangement.