All Forum Posts by: Percy N.

Quote from @Harish V.:

Quote from @Anderson Bigate Nogueira:

I eco what @Brian Burke is saying above, especially on "Pref is generally a shorter term than common equity, which means you need to have a way to redeem it out. This could come from an early sale or from a refinance" ... and that put you on the clock. "Over the last four tightening cycles, the time between the first hike and first cut averaged 2.2 years, and never exceeded 3.2 years" - credits for www.pensford.com 

 What happens when you cannot redeem it? Does it convert to common equity? Stay preferred. I assume investor still risks loosing money?

 That would depend on the terms of the Pref. Some have a major decision right to force a sale, some would extend, others may convert to common equity. All depends on what you negotiate.

@Luis Herna, do you have any other hard assets that you can collateralize for the deposit? 

How much do you need? What happens if you cannot close the transaction?

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $34,700,000
Cash invested: $7,500,000

192-unit institutional class B+ property located in between the Research Triangle Park area and Greensboro, NC.

What made you interested in investing in this type of deal?

We specialize in owning and operating (we are vertically integrated and manage our own properties) multifamily in markets that have good job growth and good population grown but are underserved and fly below the radar.

After underwriting many deals in the North Carolina markets for almost 18 months we found an off-market deal that met our stringent underwriting criteria.

How did you find this deal and how did you negotiate it?

This was an off-market deal that needed a lot of negotiations with the sellers and we finally convinced them to sell it to us and our investors.

How did you finance this deal?

Through agency debt at ~67%, pref equity from an institutional investor and common equity from our investor-partners.

How did you add value to the deal?

Value-add via cosmetic renovations to the units.
Added additional services that the residents request.

What was the outcome?

We are in the midst of implementing our business plan.
Occupancy is at 94%

Lessons learned? Challenges?

We have gained a lot of real world experience from our 10+ syndications as lead sponsors.

 Thanks Ryan, happy it brought you some value, albeit 9 years later ;-)

Recourse or non-recourse? 

What is your level or experience?

I would approach local banks and credit unions first.

We owned 3 properties right across the university. Exited all 3 of those and have 3 current ones in the greater Huntsville MSA.

Also working on some opportunities in NC not far from some universities.

Is this a 506c raise?

The current "market rate" split for Private Money Partners who are passive on MTRs is 50%

 We are vertically integrated owner-operators of multifamily with our own property management division and construction management. 

We used to operate in TX and exited that portfolio when asset prices became inflated. 

Please reach out if we can be of assistance.