Jeffrey bijur, Building Capital Stacks in Today's Market

Capital StacksWhat Worked, What Didn’t Covington Realty Partners

The Good

The Bad

The Ugly

One That Didn t Work• Denver, CO high-rise apartment development• Large deal size - $80M• 65% construction loan

Didn t Work (cont.)• 35% equity• Option to add mezz financing up to 85% of the capital stack• Top of the market proforma rents

Apartment Development12010080 Equity60 Mezz Debt ‐ 14%40 Construction Loan ‐ Libor20 + 225 0 Capital Capital Stack ‐W/O Stack ‐W/ Mezz Mezz

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)

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

One That Worked• Single Tenant Triple Net Retail Portfolio• Acquired in a DST structure

One That Worked (cont.)• 50% LTC CMBS permanent debt• 50% bridge equity• Approximately 2/3 investment grade, 1/3 sub-investment grade

Retail Portfolio Bridge Equity CMBS ‐ 5% FixedCapital Stack

Retail Portfolio ‒ DST Structure• Blended acquisition cap rate – 6.72%• Closing costs – 3%• Fees/syndication expenses – 10%

Retail Portfolio ‒ DST Structure (cont.)• Bridge equity funded at closing – 2.5%• Interest rate on debt – 5%• Levered return to investors – 6%

I am obviously NOT Clint Eastwood But I’m feeling lucky……..

Jeffrey bijur, Building Capital Stacks in Today's Market

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