Participating Preferred Equity


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 Contribution70% - 80% of the total equity requirement
Maximum Loan to Cost95%
Structure‘Participating’ preferred equity
Minimum IRR15%
Origination Fee1.0%
Minimum Return Multiple1.40x
Surplus Cash FlowFull Sweep
Investment TermUp to 12 years (co-terminus with Senior Lender)
Recourse ObligationNon-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