U.S. Strategies
Our Offerings
Peakhill’s strength lies in our proven ability to meet and exceed our clients’ expectations by providing customized and simplified solutions for multifamily sponsors. We take a bespoke approach to deal structuring and customize our preferred equity investments to align with sponsors’ business plans. Peakhill is a vertically integrated preferred equity investor focused on the U.S. multi-family sector with in-house asset management and servicing capabilities.
U.S. Preferred Equity
U.S. Preferred Equity
- Investment Size: $3-10 Million
- Eligible Property Type: Multi-family, BFR, Student & Manufactured Housing
- Geographical Focus: Top 50 MSAs
- Term: 5-10 years
- Purpose: Acquisition, Refinance, Light Value Add
- Rates: 13-15%
- Loan to Value: Max 80%
- Min. Debt Yield: 6.75% In Place
- Interest Payments: Hard and Soft Pay
- Fees: 1.0-2.0%
- Minimum Multiple: 1.40X
- Preferred Transactions: Stabilized Cash Flow, Sponsors with additional assets in market, Sponsor cash equity, Senior Mortgage Min 2-years I/O, Primary & Secondary Markets, Light value add
Other Characteristics:
- During the term of the investment, surplus cash flow after debt service is distributed to Peakhill with excess distributed to the Sponsor
- At a capital event, Peakhill’s investment and accrued interest is distributed with any excess to the Sponsor
- Non recourse except for carve out guarantees similar to the senior loan obligations
- Forced sale provision after 2-5 years
U.S. Preferred Equity
U.S. Preferred Equity
- Investment Size: $3-10 Million
- Eligible Property Type: Multi-family, BFR, Student & Manufactured Housing
- Geographical Focus: Top 50 MSAs
- Term: 5-10 years
- Purpose: Acquisition, Refinance, Light Value Add
- Rates: 13-15%
- Loan to Value: Max 80%
- Min. Debt Yield: 6.75% In Place
- Interest Payments: Hard and Soft Pay
- Fees: 1.0-2.0%
- Minimum Multiple: 1.40X
- Preferred Transactions: Stabilized Cash Flow, Sponsors with additional assets in market, Sponsor cash equity, Senior Mortgage Min 2-years I/O, Primary & Secondary Markets, Light value add
Other Characteristics:
- During the term of the investment, surplus cash flow after debt service is distributed to Peakhill with excess distributed to the Sponsor
- At a capital event, Peakhill’s investment and accrued interest is distributed with any excess to the Sponsor
- Non recourse except for carve out guarantees similar to the senior loan obligations
- Forced sale provision after 2-5 years
Why Preferred Equity?
Reduce Sponsor
Exit Risk
Although bridge financing can be a good option for transitional assets, it typically carries shorter terms (2-3 years) which can significantly increase investment risk for assets that could be faced with a longer time horizon to achieve its targets. Peakhill preferred equity can be structured to accommodate long term senior loans (up to 10 years) allowing the sponsor to eliminate short term refinance risk and costs.
Enhance
Sponsor Returns
Preferred equity allows sponsors to increase the leverage on a deal in a capital constrained market with senior lenders that are limited to today’s metrics and not the sponsor’s business plan for a project. With Peakhill preferred equity capped at a fixed rate of return, sponsors can reap 100% of the upside benefit from our capital with no promote or profit-sharing structure typical with common equity.
Take Advantage of Loan Assumptions
Peakhill can structure preferred equity on existing senior financing assumed by the sponsor as part of a purchase. Legacy financing may have favorable low interest rates in place but is low leverage. We allow our sponsors to increase leverage on an acquisition, which eliminates potential prepayment costs and a blended cost of capital that is lower than available for today to generate enhanced returns on their investment.
Relationship
Focused
Peakhill looks to partner with our sponsor clients for the long term. We invest time and energy to understand a sponsor’s needs and craft financing solutions aligned with their goals.
Reduce
Syndication Risk
Peakhill preferred equity can stretch leverage to over 80% LTV, reducing the burden of sourcing equity and allowing Sponsors to fund larger acquisitions.
In-House Servicing and Asset Management
Peakhill performs servicing and asset management functions in-house which allows for relationship continuity after closing. We do not use third party servicing groups.
Bespoke, Sponsor-Focused Solutions
Peakhill provides customized capital, not standardized, “off the shelf” financing products. Our strategy is to tailor financing to help sponsor’s achieve their business plans. Peakhill takes a sensible approach to underwriting that takes current market dynamics along with the sponsor’s strengths and capabilities into account for a comprehensive approach to their needs.
Flexible
Capital
In addition to capital enhancements for traditional acquisitions and refinances, Peakhill preferred equity could also be used to finance a partner buyout. Yes, Peakhill may fund recapitalizations to tap trapped equity from value creation to buyout a member of the sponsor, making our capital unconstrained by cash out boundaries.
Agency
Compliant
Peakhill’s structure and documentation is compliant with both Fannie Mae and Freddie Mac guidelines to confidently execute on these mandates. Supplemental financing offered by the agencies provides an exit vehicle to payoff preferred equity during the initial loan term and offers the means to reduce the cost of capital with the safety of long-term financing.
Investment Process
Initial Screen
Soft Quote
Term Sheet
Underwriting
Closing
Initial Screen
- Initial assessment focuses on the following:
- Location – physical address and surrounding market area
- Sponsorship – experience and presence in the market
- To the extent those areas are acceptable, Peakhill looks for the following information to provide a soft quote:
- Sales broker package and sponsorship offering memo (when available)
- Sponsor pro forma – preferably in Excel format
- Sponsor business plan – to include detail of proposed major capital expenditures and any required reserves
- Proposed Sources and Uses – should include details of the senior loan terms
- Trailing 12-month financials – in Excel format on a monthly basis
Initial Screen
Soft Quote
Term Sheet
Underwriting
Closing
Initial Screen
- Initial assessment focuses on the following:
- Location – physical address and surrounding market area
- Sponsorship – experience and presence in the market
- To the extent those areas are acceptable, Peakhill looks for the following information to provide a soft quote:
- Sales broker package and sponsorship offering memo (when available)
- Sponsor pro forma – preferably in Excel format
- Sponsor business plan – to include detail of proposed major capital expenditures and any required reserves
- Proposed Sources and Uses – should include details of the senior loan terms
- Trailing 12-month financials – in Excel format on a monthly basis
Recent Closings
Preferred Equity
