Jeffrey bijur, Building Capital Stacks in Today's Market

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Jeffrey bijur, Building Capital Stacks in Today's Market

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Jeffrey bijur, Building Capital Stacks in Today's Market

  1. 1. Capital StacksWhat Worked, What Didn’t Covington Realty Partners
  2. 2. The Good
  3. 3. The Bad
  4. 4. The Ugly
  5. 5. One That Didn t Work• Denver, CO high-rise apartment development• Large deal size - $80M• 65% construction loan
  6. 6. Didn t Work (cont.)• 35% equity• Option to add mezz financing up to 85% of the capital stack• Top of the market proforma rents
  7. 7. Apartment Development12010080 Equity60 Mezz Debt ‐ 14%40 Construction Loan ‐ Libor20 + 225 0 Capital Capital Stack ‐W/O Stack ‐W/ Mezz Mezz
  8. 8. Denver, CO High Rise Apartment Development• Total capitalization - $80M• 65% LTV construction loan due to size ($52M)• Equity amount – $28M• 3.25% debt interest rate w/o mezz (65% LTV)• 5.77% blended interest rate w/mezz (85% LTV)
  9. 9. Denver, CO High Rise Apartment Development (cont.)• Equity Multiple – 1.71 w/o mezz, 2.04 w/mezz• Levered IRR – 17% w/o mezz, 22% w/mezz• Yield on cost – 7.25% in either scenario• Investor required return – 2.0 equity multiple, 20% IRR
  10. 10. One That Worked• Single Tenant Triple Net Retail Portfolio• Acquired in a DST structure
  11. 11. One That Worked (cont.)• 50% LTC CMBS permanent debt• 50% bridge equity• Approximately 2/3 investment grade, 1/3 sub-investment grade
  12. 12. Retail Portfolio Bridge Equity CMBS ‐ 5% FixedCapital Stack
  13. 13. Retail Portfolio ‒ DST Structure• Blended acquisition cap rate – 6.72%• Closing costs – 3%• Fees/syndication expenses – 10%
  14. 14. Retail Portfolio ‒ DST Structure (cont.)• Bridge equity funded at closing – 2.5%• Interest rate on debt – 5%• Levered return to investors – 6%
  15. 15. I am obviously NOT Clint Eastwood But I’m feeling lucky……..

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