For Operators
Wellings Capital is a boutique commercial real estate private equity firm investing preferred equity and JV common equity for acquisitions and recapitalizations alongside operator partners.
Preferred Equity Investment Criteria
| Investment Size: | $3-15 Million |
|---|---|
| Markets: | National |
| Term: | Up to 10 years; coterminous with senior loan |
| Maximum Loan-To-Cost: | Up to ~85% |
| Current pay: | 7-10% |
| Coupon: | 15%+ |
| Property Types: | All except hospitality, office, and development |
| Agency and CMBS compliant? | Yes |
JV Equity Investment Criteria
| Investment Size: | $3-15 Million |
|---|---|
| Markets: | National |
| Term: | Up to 10 years |
| Property Types: | All except hospitality, office, and development |
| Structure: | We customize flexible JV terms and structure to meet the needs of the deal, sponsor, and common equity investors |
What Sets Us Apart From Other Equity Providers
Our first five funds focused on LP equity investments, and we apply that same approach to our preferred equity and JV common equity investments. We conduct thorough due diligence upfront and then allow the operator to execute their business plan without interference.
We write checks under $5 million (our current stated minimum is $3 million but we can go lower in special circumstances)
Our fund has captive capital ready to deploy so we do not need to raise capital on a deal-by-deal basis
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 goal with every deal is to develop and nurture decades-long, programmatic relationships with our operator partners
Compared to other institutional equity, we employ a hands-off approach as long as the operator is performing according to plan
How We Can Work With Developers
Development is a tough fit for our preferred equity, as we need current cash flow.
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 operator’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.
