Preferred Equity

acquisition

Preferred Equity

Basic Terms: NYMT’s investment must meet the general requirements as noted in its Investment Focus.

Investment Amount+$5.0 million
Investment Size+7.5% of property value
Geographic FocusNational (Conventional Apartments, Build for Rent (SFR), Age-Restricted)
Accrued Return13-15%
Required DistributionN/A
Surplus Cash Flow7.0% initially, increases over term
Minimum DSCR Constraint1.05x (using fixed rate Senior amortizing payment + 5.0% of Investment Amount)
Maximum LTV Constraint90% (Senior + Investment Amount)
Investment Term<12 years (typically co-terminus with Senior maturity)
Origination Fee1.0%
Minimum Return Multiple1.5x
Senior Loan Term5+ years
Senior Interest Rate Cap1.00x DSCR (using fixed rate Senior amortizing payment + 5.0% of Investment Amount)
Drag to MarketFollowing 2nd anniversary of the Investment

General Characteristics

NYMT’s position in the capital stack is senior to the common equity and subordinate to the Senior loan

    • During the term of the investment, Surplus Cash Flow is distributed to NYMT with excess distributed to the sponsor
    • At a capital event, NYMT’s investment and any Accrued Return is distributed to NYMT with excess distributed to the sponsor
    • A Minimum Return Multiple must be met at exit for NYMT’s Investment

NYMT uses a preferred equity investment that directly invests into an LLC as a member with governing terms provided in an operating agreement

NYMT’s investment is nonrecourse except for carve-out guarantees of a similar nature to Senior loan obligations

NYMT’s investment does not have a performance measure for stepping into the management of the company

    • NYMT has a right to Drag to Market after 2 years
    • NYMT will require an upfront fee as needed