Preferred Equity for Multifamily Value-Add Project in Coral Gables, Florida

Gelt Financial, a CRE hard money lender based in South Florida, provided preferred equity capital for a 29-unit multifamily value-add project in Coral Gables, Miami Dade County. The project was about 90% done, and the investor was completely tapped out of funds. He had a 1st mortgage from a conventional lender that would not allow a junior lien to be placed. Instead of a 2nd/mezzanine loan, Gelt invested $150,000 into the ownership entity and received 25% of the LLC membership. Instead of sharing 25% of the profits when the project is completed, the investor will likely buy us out of the LLC before the property is sold. Our return requirements for this type of deal are in the mid-teens, plus cash flow if any. In this case, there is no cash flow. We estimate the CLTV to be around 75% of the completed value. Our creative financing structure was a great solution that allowed the investor to keep his existing 1st mortgage, and quickly complete the project. This deal was brought to us by a mortgage broker in April 2021, and we closed it very quickly. This CRE bridge loan was funded in May 2021.