Capital Spotlight – Highlighting featured capital investors. We regularly publish the detailed criteria of our most unique real estate capital sources.
The investor is a private investment manager with discretionary capital sourced from the Israeli Capital Markets. Their mandate is to provide mezzanine, preferred equity or whole note financing for all types of multifamily related asset classes. For a great deal they provide up to 87% last-dollar leverage, however most deals are capping out at 80% for existing assets, and 75% loan-to-cost for construction deals.
|Capital Type||Subordinated debt for multifamily asset classes|
|Geography||Heavily focused on the Sunbelt and East Coast in good primary and secondary markets. Selective on deals in the Midwest and upper Plains. Will consider: AL, AK, AZ, AR, CO, CT, DC, DE, FL, GA, HI, KY, LA, ME, MD, MA, MS, MT, NV, NH, NJ, NM, NY, NC, OK, OR, PA, RI, SC, TN, TX, UT, VT, VA, WA, WV|
|Property Types||All types of multifamily related asset classes including manufactured housing communities, build to rent and independent senior living|
|Uses of Funds||Flexible; will fund acquisitions, recapitalizations, and construction with appropriate interest reserves and reasonable sponsor fees|
|Construction||Will fund capital expenditures for existing assets and ground up construction if the project is fully entitled|
|Mixed Use||Will consider mixed-use, as long as the proportion of commercial space qualifies for an agency debt take out refinancing|
|Sponsorship||Looking to fund sponsors with good, relevant experience. Will not consider any reputational or background issues. Sponsors and GP should demonstrate a net worth equal to the debt stack of the deal including liquidity of around 10% of the debt stack|
|Check Size||$4M to $10M|
|Loan to Value||Will consider loan to cost up to 87%. As of April 2023, most deals funded are 75% to 80% loan to cost or loan to value on an as-is basis. Will consider up to 75% loan to cost for development projects|
|Sponsorship Equity Contribution||Will consider imputed equity, but prefer to see substantial “skin in the game” and alignment of interests with the sponsorship|
|Targeted Return||SOFR-based pricing resulting in 14.5% to 16% targeted returns|
|Origination Fees||1% to 2%|
|Payment Structure||8% to 9% current payment; balance accrues to maturity|
|Duration||2 to 3 years plus extensions with a 25 basis point fee per extension|
|Prepayment Structure||Mezzanine Capital: 15 to 18 month minimum yield. Preferred Equity: 24-month minimum return|
|Underwriting Requirements||Combined DSCR of no more than 1.0x and debt yield of 7% or greater|
|Collateral Requirements||Mezzanine Capital: Perfected pledge of the ownership interests in the property and in some cases a second mortgage on the property. Preferred Equity: Units in the LLC with a priority distribution|
|Intercreditor Requirements||Intercreditor agreement or recognition agreement is required with the senior lender. If investing as a mezzanine lender, will allow a preferred equity behind their capital with a recognition agreement|
|Deposits||Typical deposits range between $75,000 to $150,000 to cover third-party reports and legal costs. In some cases, this includes a small underwriting fee|
|Closing Time Frame||30 to 60 days|
If this capital source may be of interest, book a call to discuss a potential capital arrangement.
Read our last Capital Spotlight: 85% LTC Non-Recourse Debt for Horizontal Residential Land Development