Private Equity Commercial Real Estate:
Looking for private equity for commercial real estate in value add or stabilized investment properties? Here is just one of many equity partners available through Caffrey & Company LLC.
Investment Criteria and Property Type:
Equity for Apartment Building:
- Class A- to C+, prefer infill location with strong demographics and good school district.
- Best properties will have 9’ ceilings and pitched roofs. However, the equity investor will consider properties with 8’ ceilings.
Equity for Flex/Industrial:
- Class B/C +/- 1970 Vintage
- Minimum 30”+ Ceiling height, Multi-tenant, 3-points of entry, and less than 1-mile from a major highway.
- Class B/C 1970+ Vintage
- Prefer anchored, good visibility, great signage, great tenant sales ad 4:1000 parking ratio.
Capital Stack and Private Equity Strategy:
- Investment real estate with values ranging from $2 million to $50 million.
- Equity Investments of $1 million to- $10 million in Private Equity per deal.
- Private Equity for Commercial Real Estate prefers not to use more than 70% loan to costs, but will consider more debt.
- Co-Invest with local sponsors
- Capitalize on sponsor’s experience within the market to best source, finance, acquire, manage and sell real estate assets.
- Create joint venture partnership in which the capital stack is split between 90%/10% and 50%/50% between Private Equity and the sponsor. Therefore, the sponsor much contribute at least 10% of the required capital.
Return Parameters for the equity investor:
- The Private Equity investor prefers stabilized and value add investments with investor capital seeking both current income and value growth.
- The minimum levered cash on cash returns of 9% between years 2 and 4.
- Minimum property level levered IRR’s of 16%
- Hold Periods Typically range from 3 to 7-years.
Preferred Equity Strategy:
- Preferred Equity for local sponsors:
- For instance preferred equity can be used to assist in the recapitalization and deleveraging of current ownership groups or capitalizing new acquisitions.
- Minimum 9% to 12% in current pay with a minimum look back IRR of 15%.
- Equity Investor prefers to partner with sponsors who self-manage the properties and the equity partner will agree to compensate them for the work as managers. Therefore it best to have a history in the same property type.
- The equity investor will require some review and approval of certain major decisions, including the execution of large leases and sell/refinancing decisions.
For more information on equity products through Caffrey & Company LLC contact Mike Caffrey (913) 402-7077, email: Mike@CaffreyLoans.com or complete this Free Loan Quote Form.
On our web site you can read about specific loan products: www.caffreyloans.com/loan-products, offered by Freddie Mac, Fannie Mae, HUD/FHA, Commercial Mortgage Back Securities (CMBS) and other loan products. Want more details on sample interest rates for apartment check out Interest Rates for Apartment Loans also on our web site: www.caffreyloans.com/apartment-loans.