Participating Preferred Equity
development
Participating Preferred Equity
Basic Terms: NYMT’s investment must meet the general requirements as noted in its Investment Focus.
| Investment Amount | +$8.0 million |
| Equity Contribution | 70% - 80% of the total equity requirement |
| Maximum Loan to Cost | 95% |
| Structure | ‘Participating’ preferred equity |
| Minimum IRR | 15% |
| Origination Fee | 1.0% |
| Minimum Return Multiple | 1.40x |
| Surplus Cash Flow | Full Sweep |
| Investment Term | Up to 12 years (co-terminus with Senior Lender) |
| Recourse Obligation | Non-recourse completion guaranty & standard carve-outs |
General Characteristics
NYMT’s ‘Participating Preferred Equity’ investment structure has the following characteristics:
- Position is ‘non-recourse’, and subordinate to the Senior Lender and senior to the common equity
- NYMT and Sponsor split cashflow after both parties receive a return of capital and a hurdle rate
- Optimize leverage up to 95% LTC without the burden of a high fixed rate
- Benefit from a true ‘Preferred Equity’
- Sponsor maintains control, including exit type and timing
- The remaining common equity can still be promoted
- Minimize capital outlay/maximize common equity returns