Real estate capital can be structured as either debt or as a cash investment. A debt/mezzanine structure is expensive financing with yields in the low to high teen range, but it’s a cheap partner due to the no profit participation. The alternative capital structure is a traditional cash investment, which means you have a financial partner who expects to participate in the project profits.
Edward Voccola & Co. LLC offers both institutional and private capital for real estate projects enabling our clients to make the best choice in capital structuring for the following types of properties:
- Residential & Commercial Land Developments
- Residential Housing Developments
- Value Added Commercial Properties
- Credit Tenant & Single Tenant Properties
- Condo Conversions
- Apartment Projects
- Industrial Parks
- Retail Properties
- Office Buildings
We offer mezzanine financing, preferred equity, development agreement structures, and joint venture equity to our clients to determine and pursue the best execution for each real estate transaction.
- Mezzanine debt provides developers with subordinate debt funding up to approximately 90% of the value of the property. This program is attractive to developers who want to retain a greater share of the profits. The first mortgage is the higher risk and higher yield instrument, which has either a higher coupon or exit fee. The lender may be the same for both debt instruments or there may be two different lenders. The structure is particularly good for developers who want to retain 100% ownership.
- Preferred equity is best suited for situations where the developer lacks the additional capital required to bridge the gap between debt and purchase or development costs. A preferred equity investment is typically structured so that the investor received its investments plus a preferred return and a participation in profits to achieve their target internal rate of return.
- A development agreement is where the investor actually takes the ownership position and through an agreement, contracts the developer to build and manage the asset. The developer receives 25% to 30% of the profits. This is ideally suited for developers who have no cash equity of their own, young developers with an experienced background but just starting out on their own, and for those developers who want to minimize risk.
- Joint venture equity is traditional equity investment into the ownership entity as a partner member or stockholder. Investments are with qualified developers and operations in transactions where there is a significant opportunity for value creation or cash flow enhancement. The equity and preferred return will be distributed on a percentage basis.
Competitive Rates and the Service You Deserve
At Edward Voccola & Co. LLC, our goal is to provide investors nationwide with the most favorable financing rates available. We want to make the process of financing real estate easy and hassle-free, and that’s why we go out of our way to offer great service, no matter the size of the loan or transaction. Every member of our team is committed to excellence; and we work hard to not just meet, but exceed our customers’ expectations.
If you want to invest in real estate, come to us for help with your financing. Call or visit us today for more information or to schedule an appointment.