LFB recently arranged both debt and equity for the purchase and renovation of a 640-unit multifamily property in Fort Myers, FL. The capital stack was made up of $75,000,000 in senior debt and $26,200,000 in preferred equity. The balance of the funds were sponsor level equity requirements.
LFB was able to structure the senior debt at 75% LTC at L+275. The term of the senior debt was 3+1+1 and was non-recourse except for standard bad boy carve outs. The senior debt also includes a capex holdback for future renovations as part of the value-add process.
In addition to the senior debt, LFB was able to structure the preferred equity to cover up to 93% of total project costs. The preferred equity has a return of 12%, with 8% effective and 4% accruing, plus back-end profit participation. The term of the preferred equity is 5 years which allows our client the time needed to successfully complete the value-add process prior to a refinance or exit.
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