Through Hendricks & Partners Capital, LLC, our advisors are able to provide their clients with access to several types of equity structures available to finance multifamily real estate. These financing options range from fixed yield equity instruments to true risk-sharing ownership positions. The common denominator is that all of these structures are secured by the ownership interest in the underlying real estate. Some of the most common structures that we are able to offer include:

Preferred Equity
underlying debt prohibits 2nd lien, short-term profit realization, shortfall of equity

• $2.5M-50M, up to 90% LTC
• Fixed yield instead of a profit participation — yields range from 9%-15% depending on LTV
• Preferred equity and yield on equity is senior in preference to sponsor's equity and return
• Useful where investment horizon is short or financial outcome is certain (funding tenant improvements for a known tenant where the lease value is pre-negotiated)
• Lower cost of funds than a JV structure if sponsor can fund 10% of acquisition/completion costs
• Lesser sponsor experience/operating capabilities than JV equity; higher risk to sponsor

Joint Venture Equity
risk-sharing structure, sponsor yield depends upon performance
• $8M-$50M+, up to 99% of cost, requires a typical 10-20% co-investment by project sponsor
• Waterfall participation structures after a minimum preferred return
• Strong operating credentials and demonstrated success in local market and asset type
• Well-conceived objective strategy to profit — development, value-add or deep discount purchase
• Persuasive market analysis and evaluation relative to specific opportunity: objective and concise
• 18% minimum IRR and 1.8-2x equity multiple: significant pipeline potential for repeat business

Convertible Debt/Synthetic Debt

• $30M+ - typically used by ERISA compliant entities
• Convertible Debt is bridge type position that permits a carried interest upon a transition event or other strategic realization — i.e., an acquisition financing pending entitlement or tenanting
• Synthetic Debt is initially funded as equity that subsequently takes a secured lien position upon transition event and/or income stabilization. The un-secured portion remains invested as equity obtaining a leveraged return commensurate to the fixed senior yield, but only when income is in place to support that debt.