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 Focus | National (Conventional Apartments, Build for Rent (SFR), Age-Restricted) |
| Accrued Return | 13-15% |
| Required Distribution | N/A |
| Surplus Cash Flow | 7.0% initially, increases over term |
| Minimum DSCR Constraint | 1.05x (using fixed rate Senior amortizing payment + 5.0% of Investment Amount) |
| Maximum LTV Constraint | 90% (Senior + Investment Amount) |
| Investment Term | <12 years (typically co-terminus with Senior maturity) |
| Origination Fee | 1.0% |
| Minimum Return Multiple | 1.5x |
| Senior Loan Term | 5+ years |
| Senior Interest Rate Cap | 1.00x DSCR (using fixed rate Senior amortizing payment + 5.0% of Investment Amount) |
| Drag to Market | Following 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