Distressed Debt, Mezzanine Financing and Opportunity Funds How Active by iht11609


									            RealCapital 2010
              Session C2

          Distressed Debt,

      Mezzanine Financing and

         Opportunity Funds:

How Active Is This Part of the Market?
                        2nd Mortgage Financing
Property #1:     Four-4 storey apartment buildings comprising 231 suites
Property #2:     4 storey apartment building comprising 75 suites
Purpose:         Refinance
Loan Amount:     Facility “A”: $13,000,000 - Facility “B”: $3,825,000
                 Total Loan: $16,825,000
Interest Rate:   Facility “A”: Greater of 5.00% Per Annum or
                 TD Prime + 2.50% Per Annum
                 Facility “B”: 9.75% Per Annum
Term:            18 Months - fully open, no penalty
Repayment:       Facility “A”: 25 Year Amortization; Facility “B”: Interest Only
LTV:             Facility “A”: 65%; Facility “B”: 80%
                 * Note: First and Second Mortgage on Property #2 in the amount of
Guarantees:      Limited Corporate and Personal Recourse

       Mezz Financing – Residential Condo Development
Property:        342 unit (44 storey) condominium project located in Toronto, Ontario
                 (80% pre sold)
Facility:        $10,900,000 - Third mortgage loan postponed behind bank
                 construction financing and a purchaser deposit facility
Purpose:         Payout existing vendor take back mortgage and fund project soft
Equity:          Cash equity – 5.0%; appraisal surplus – 9.0%
LTC:             Bank loan – 62.5%; FCC – 81.4%
Term:            3 Years
Rate:            Base Coupon – 10% Per Annum
Discharge Fee:   A $ amount to provide us with a yield equal to 18.0%

                               Joint Ventures
Type:            Industrial development from green field land.
Capital:         90% equity from institutional investor
                 10% equity from IGRI
                 no debt on land
                 65% debt for pre-leased design build construction
Purpose:         Obtain land zoning and entitlements and long term lease on design
                 build facilities to hold.
IGRI Services:   Manage land entitlement process, marketing, leasing, development
                 and construction management.
                 Upon completion provide asset and property management.
Returns:         20% to partners after promote
            Mezz Financing - Commercial Development
Property:       ●   200,000 sq. ft. light industrial building (905 area code)
                ●   100% of space pre-leased to single tenant for 10 years
                ●   New building to be constructed (50% land coverage)
Loan:           1) $4 million second mortgage loan
                2) $11 million standby loan to payout first mortgage
Term:           1) 15 months from lump sum advance
                2) 12 months from lump sum advance
Pricing:        1) 150 bps upfront fee; 10.5% interest rate
                2) 75 bps upfront fee; 8.0% interest rate if drawn
Recourse:       To property only; no guarantors
LTC:            90%
LTV:            80% of purchase price
NOI/Debt:       9.25%
Exit:           Merchant builder – KingSett purchased property
              Mezz Financing – Investment Property
Properties:     6 existing office & retail assets; 400,000 leasable sq. ft.

Loan:           $19 million second mortgage behind $31 million first mortgage

Term:           2 years

Pricing:        1% upfront and exit fees; 10.4% interest rate

Recourse:       To property only; no guarantors

LTC & LTV:      80% of purchase price

NOI/Debt:       10.0%

Exit:           1) Increase first mortgages
                2) Equity injection

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