Unlocking the full potential of a real estate transactions often requires a flexible approach—one that conventional funding may struggle to provide. That’s where unconventional equity (UE) comes into play.
UE is an innovative funding approach that offers tailored solutions to meet the precise requirements of borrowers and their funders. Whether through specialized share classes for incorporated holdcos or separate partnership units for limited partnerships, UE empowers both borrowers and investors with unprecedented flexibility.
What sets UE apart is its ability to incorporate a wide range of customizable conditions, including:
- Special dividends or distributions mirroring interest payments
- Share features like redemptions or retractions, akin to loan terms
- Priority terms on sale proceeds, optimizing project
Furthermore, UE can deliver mixed returns of monthly payments, accretion payouts or first priority returns at time of redemption allowing investors to better match their own preferred investment earnings.
Too often, borrowers find themselves grappling with the challenge of securing the full funding they require. While there are numerous options for sub-debt or mezzanine debt, these secondary debt options can burden a project with excessive leverage, leading to higher demands for debt service. This imbalance often leaves borrowers unable to reach the right levels of conventional A debt, which should ideally form the backbone of any project’s funding strategy.
UE offers a distinct advantage by sidestepping the pitfalls of excessive debt. Unlike traditional loans, UE doesn’t weigh down debt/equity ratios or burden investors with hefty servicing calculations. With standard shareholder postponement agreements in place, UE stands as a new solution in a financing mix.
Embrace the potential of unconventional equity and elevate your real estate investment strategy to new heights. Partner with us to explore the boundless opportunities UE can unlock for your next venture.
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Would you like to learn more about Unconventional Equity and how it can become part of your funding strategies?