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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 ...
Apartment Development12010080                             Equity60                             Mezz Debt ‐ 14%40          ...
Denver, CO High Rise Apartment              Development•   Total capitalization - $80M•   65% LTV construction loan due to...
Denver, CO High Rise Apartment           Development (cont.)•   Equity Multiple – 1.71 w/o mezz, 2.04 w/mezz•   Levered IR...
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-inve...
Retail Portfolio                                   Bridge Equity                                   CMBS ‐ 5% FixedCapital ...
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%...
I am obviously NOT Clint Eastwood     But I’m feeling lucky……..
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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

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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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