Loan Workouts / Rescue Financing
Has the COVID-19 pandemic sidetracked your investment property? Have your tenants stopped paying rent? Has your property shut down and/or has construction stopped due to stop work orders?
Whatever your situation, work with NetLeaseX Capital and we’ll talk to you about raising rescue financing. Structured as preferred equity and/or debt financing, rescue financing is like an infusion of cash which borrowers can use to gain leverage in workout negotiations with their senior lenders, including, for example, (a) negotiating a lower interest rate, (b) extend maturity date, and/or (c) release or reduction of a borrower’s personal loan guaranty.
In addition, borrowers can use raise rescue financing to:
- Increase working capital to pay for operating expenses and/or mortgage payments;
- Fund leasehold improvements for new tenants who replace tenants needing to downsize or otherwise have or will be going out of business, and
- Pay leasing commissions.
and opportunistically to:
- Buy out existing limited partners;
- Cover unfunded capital calls from limited partners, and
- Pay certain tenants to give back leased spaces.
With real estate experiencing a bull market for the past 10 years, understanding and having experience in loan workouts has become a lost art. However, with COVID-19, times have changed nearly overnight. With decades of loan workout experience and purchasing non-performing and sub-performing loans, finding the right team is critical to help guiding you to your investment and financial objectives during these perilous times.
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Using Preferred Equity to Increase Real Estate Investors’ Leverage and Enhance Returns
White Paper
September 2022
This whitepaper discusses how NetLeaseX works with real estate investors to structure investment relationships with “below the radar” high net worth investors, family offices, registered investment advisors, equity funds, and institutional investors to help such investors, including non-institutional sponsors and even new sponsors who lack financial resources, to raise preferred equity so that they can close more deals and earn more fees.
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Strategize With Preferred Equity
The Scotsman Guide
December 2018
This article gives an overview on how real estate investors can increase leverage by raising preferred equity to fill the gap between the amount an investor can raise in senior debt financing and the sponsor’s equity investment. This article further discusses various ways preferred equity investments can be structured including, for example, creating one or more tiers, waterfall priority order (e.g. A/B structure vs. pari passu), recourse, repayment schedules, control rights, and capital shortfall requirements.
Throw Out A Lifeline
The Scotsman Guide
July 2020
This article discusses how real estate investors may be able to raise rescue financing to cover operating losses and/or mortgage payments during the Covid-19 crisis. Raising rescue financing is especially important for real estate investors who may face substantial liability due to personal loan guarantys if their lender were to foreclose; thus, triggering a forced sale at a fire-sale price.
Ride To The Rescue
The Scotsman Guide
August 2020
As a follow-on article to “Throw Out A Lifeline”, this article discusses how rescue financing, in effect, works like bridge equity, a temporary infusion of cash from an investor that well eventually be bought out via refinancing or sale when real estate markets normalize. This article further lists various ways how rescue financing can be structured both as debt and equity investments.