For Operators

Wellings Capital is a boutique commercial real estate equity partner investing preferred equity, JV common equity, and LP common equity alongside best-in-class operators.

Our first five funds were all LP equity, and we bring that mindset to our preferred equity and JV investments by performing due diligence up front and then staying out of the operator's way while they implement the business plan and execute their strategy.

 
 

Preferred Equity Advantages

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Less Capital At Risk, Higher Return Potential

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Agency & CMBS Compliant

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Flexible Terms To Fit Any Situation

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Leverage Our Money to Grow Your Business

 

Preferred Equity Investment Criteria

Investment Size:

$3-$10 Million

Maximum Loan-To-Cost:

Up to ~85%

Term:

Up to 10 years

Current pay:

7-10%

coupon:

15%+

Property Types:

All except hospitality, office, and development

Fees and structure:

Willing to trade PIK for points, and willing to structure as participating pref and trade some PIK for an equity kicker if that is of interest to the sponsor

 

Additional Details

A few things that set us apart from other preferred equity providers

    • We write checks under $5 million (our current stated minimum is $3 million but we can go lower in special circumstances or if there is a near-term opportunity to invest programmatically with the sponsor) 

    • Our fund has captive capital ready to deploy so we do not need to raise capital on a deal-by-deal basis 

    • We are not one size fits all; we strive to be flexible with our structure to best align with the needs of the GPs and the expectations of the common equity LPs (for example, we can go pari passu with common equity on distributions of cash flow after debt service, we can trade PIK for points, and we can structure as participating pref with a kicker or promote participation to get the coupon down) 

    • Our business model is based on developing programmatic, decades-long relationships with our sponsor partners

    • Compared to other institutional equity, we employ a hands-off approach so long as the operator is performing according to plan

    • While we are currently focused on starting new relationships with preferred equity, we are historically an LP and JV equity shop, so we are open to transitioning to common equity as the relationship progresses

One limitation to note is that development is a tough fit for our pref, as we need current cash flow for our fund. We can structure a current pay reserve to reach stabilization, but this can be rather dilutive on development deals, which are often better served by full-accrual pref.

That said, we have provided funding for development by using pref to recap equity out of cash flowing deals in the sponsor's portfolio, allowing them to invest that equity into their development deals.

Another limitation is that we do not provide rescue capital to purchase a rate cap, replenish a debt service reserve, or complete the value add plan in hopes of boosting NOI in order to qualify for a refinance. However, we will fill a gap on a cash-in refi behind new senior debt.

 

 Contact Us With Your Preferred Equity Needs

Troy Zsofka | Director of Investments
603-731-1557 | troy@wellingscapital.com