Small Balance Preferred Equity
We have a Small Balanced Preferred Equity solution for sponsors who are looking for Equity and can co-invest by bringing cash to the table. This program does not offer 100% financing. It is not driven by the value of the property but only but the purchase price and LTC. Sponsors must be able to bring at least 25% of the purchase price in the form of cash.
| Description: | Investments which are typically between $100K-1MM to cover the missing capital requirement |
| Structure: | Preferred equity position within the Operating Agreement of the Mortgage Borrower |
| Capital Stack: | Conventional Loan, 25% of Cash Equity from Sponsor, Preferred Equity. Maximum of 75% CLTV between first mortgage and PE investment |
| Size: | Minimum of $100 Thousand – $1 Million |
| Returns: | Preferred returns between 15-20% |
| Geography: | Preference to Continental 48 States |
| Asset Type: | Multi Family, Office, Retail, Storage, Assisted Living, Industrial & Hospitality. Commercial stabilized assets only. No construction. |
| Benefits: | This program helps by making the required downpayment available to satisfy the lender |
Example: Investor Tom has a great deal and wants to buy an office building worth $2.5 million for $2 million. Tom puts down $500,000. The bank makes a loan of $1,300,000 and requires Tom to bring $700,000. The equity in the property does not count toward a downpayment. Conventional loan qualification is based on the purchase price. Due to the shortfall Tom utilizes our preferred equity partnering program and it makes up the $200,000 additional cash equity needed. Tom now meets the requirements and completes his purchase.