Capital Spotlight – Highlighting featured capital investors. We regularly publish the detailed criteria of our most unique real estate capital sources.
We are finding that many of our clients are completing their value-add or construction deals and entering a capital markets environment that is far different from the one they entered at their project’s inception. There is a limited buyer pool, few reliable bank options available, and an excess of expensive private bridge debt. This scenario is leaving many sponsors with a need to identify a reliable and reasonably priced capital source which will provide the flexibility to wait out this capital markets “storm”. Fortunately, one of our trusted capital relationships stands out as an excellent alternative to traditional bank debt due to its competitive interest only pricing, flexible pre-payment penalties, willingness for cash out refi’s, and a 30-day close.
This fund is currently structuring senior permanent debt facilities designed to meet the demands of the current real estate market. It operates nationwide, offering senior perm debt for multifamily and mixed-use properties, supporting a versatile use of funds, including acquisition, CapEx, refinancing, and cash-out. The fund provides generous leverage options, a stable 5-year fixed term, and competitive interest rates in the mid to high 7’s, making it financially attractive in today’s interest rate environment. With a quick closing time frame of 30 to 45 days, minimal recourse requirements, and straightforward prepayment terms, their process is streamlined and efficient. In order to qualify, the fund requires a minimum debt yield of 8.0%, a DSCR of 1.15x, a 90%+ occupancy rate, and nine months’ worth of debt service liquidity.
| Capital Types | Senior Perm Debt and Bridge |
| Geography / Focus Areas | Nationwide |
| Property Types | Multifamily and Mixed-Use (case-by-case) |
| Use of Funds | Acquisition, Refinance, Cash Out, and Light CapEx |
| Interest-Only Term | 5 Years, Fixed |
| Check Size | $1 – $15MM |
| Leverage | 75% “Cash Out”, 80% for “Cash In” |
| Interest Rate | 7% – 8% |
| Origination Fees | 1.0% |
| Recourse | Non-Recourse, Bad Boys |
| Sponsorship | Comparable deal experience is sought after, especially in value-add situations. 9-months’ worth of debt service liquidity on balance sheet with reasonable net worth in relation to the loan amount. |
| Debt Yield | 8.0% Minimum |
| DSCR | 1.15X Minimum |
| Prepayment | Typically, 5-4-1-1-1 |
| Closing Time Frame | 30 – 45 Days |
| Occupancy Requirement | 90%+ Occupancy |
| Liquidity Requirement | 9 months’ worth of debt service. |
For sponsors seeking an alternative to traditional bank debt, this private capital fund offers an attractive option. With its flexible terms, competitive rates, and efficient closing process, it stands as a valuable partner in unlocking the full potential of your real estate investments.
If this capital source may be of interest, book a call to discuss a potential capital arrangement. Read our last Capital Spotlight: Retro Returns: LP Investor Unlocking Value in 1970s-Era Multifamily Investments.