Preferred Equity Investment Strategy
Preferred Equity - Owner Friendly Structure is a Win/Win for All
An unfortunate fact in the preferred equity space is that many providers provide no additional benefit to the partnership beyond capital. 7Acre has built a reputation of providing quick feedback, offering flexible solutions, and a nimble and easy to work with team. We have no “mandate” or specific way of doing things, but rather structure solutions to fit the specific deal and our partner’s goals.
7Acre was instrumental in popularizing the “priority LP equity” type preferred equity structure. This allows us to go behind Freddie Mac and Fannie Mae, as well as HUD, debt funds, and various other senior debt types. Our structures provide needed equity to sponsors while giving them comfort to operate the property without fear of predatory providers looking for a path to owning the asset themselves.
Recap Solutions
Countless partnerships, including both owners and developers, are having to rethink their investment timelines as short term senior debt solutions from 2-5 years ago start to mature. These loans are coming due during a challenging capital markets environment and owners are often forced to face capital calls, cash in refinances, or selling at a loss.
7Acre is actively providing owners a suite of capital options, ranging from rescue equity to JV/coGP equity. There is no “one size fits all” solution in this space, and 7Acre’s creativity and flexible capital allow us to solve many of these issues where others can’t.
Multifamily Acquisitions
After years of focusing on the passive preferred equity and private credit side of 7Acre, we recently have begun re-focusing on what has been the core of our investment experience, apartment acquisitions. We firmly believe that now is the time to have a “sniper’s approach” to the market, buying only where the fundamentals and future growth support today’s pricing. The 7Acre team and our investment partners are excited to rebuild a portfolio after being heavy sellers between 2021-2023.
Key Investment
Criteria:
150+ units
1990 and newer location
Value add, stabilized, and lease up multifamily
Multifamily development is considered on a one off basis
Somewhat market agnostic with a MW/SE focus
Preferred Equity Typical
Characteristics:
$5,000,000 minimum (smaller amounts are considered case by case)
Soft Pay structure
Owner friendly structure (limited removal/replacement rights)
Fully compliant with Freddie/Fannie/HUD (including assumptions)
Max leverage of ≈ 80% LTV
7Acre Investments has a proven track record.
With a proven track record of success, we specialize in identifying undervalued properties with high potential for growth and helping investors maximize their returns.