Eyzenberg & Company, a real estate investment bank with offices in Miami, New York and Washington DC, recently arranged a unitranche preferred equity and senior debt package to effectuate the pay off of a general partner buy a foreign limited partner on a mid-lease up multifamily property in Port Orange, FL. PROFILEmiami had the exclusive opportunity explore the process with David Eyzenberg, the founder of Eyzenberg & Co. and one of the industry leaders in ground leases.
Challenges
The general partner was seeking to exit a completed development mid-lease up while the limited partner desired to complete the stabilization of the property and hold until a less volatile capital markets environment. Since the limited partner has no domestic assets, they were not able to directly provide the balance sheet requirements necessary to secure a new senior loan with the GP. Furthermore, a rising interest environment coupled with escalating operating costs was making it harder to qualify for the requisite financial metrics. The closing was very time sensitive as the expiring interest reserve on the original construction loan would have triggered carry guarantees for the general partner.
Solutions
Eyzenberg & Company presented the opportunity to a very limited pool of preferred equity providers who had the structural capability of also providing balance sheet guarantees necessary to qualify for a senior loan. After a broader placement process for bridge financing a revised strategy entailed levering down the senior loan, allowing for a bank execution and getting a second tranche of preferred equity at a fixed cost so that the blended WACC was equivalent to a CLO execution without having to deal with potential structural pitfalls of securitized documentation. All due diligence and closing requirements were coordinated directly since the limited partner was in a different time zone overseas. Analytical, structuring and negotiation support was provided for a partnership buyout, a revised operating agreement and loan documentation.
About Eyzenberg & Co.
Eyzenberg & Company is a commercial real estate investment bank led by David Eyzenberg. Eyzenberg & Co. is one of the industry's leading ground lease and capital advisory firm delivering full capital stack solutions for existing, transitional, and to-be-built commercial real estate projects. Affiliated entities Eyzenberg GroundCap (an institutionally backed private equity vehicle specializing in the creation and acquisition of leased fee positions) and Eyzenberg GreenCap (a joint venture with leading C-PACE firm, Greenworks Lending) provide innovative proprietary capital solutions for CRE transactions. With offices in New York, Miami, Washington D.C. Metro, and Philadelphia, Eyzenberg & Company is one of the fastest-growing real estate capital advisory firms in the U.S.