Rosemont Heights Apartments
Preferred equity funding a maturity paydown on a 2021-vintage multifamily bridge recapitalization
The Challenge
What the sponsor faced.
A 316-unit Charlotte multifamily asset carried a 2021-vintage floating-rate bridge loan of $64M reaching final maturity with its rate cap already expired. At current rates and in-place NOI, a refinance supported only $52M of new senior proceeds, leaving a $12M paydown gap to clear the maturing balance. The common LP declined to fund its pro rata share, and the sponsor would not write the full check alone.
The Structure
How we structured it.
Preferred equity of $12M funded the entire paydown gap behind a $52M new senior loan, taking combined last-dollar exposure to $64M against a $78M as-is value (82% combined LTV, leaving $14M of common value cushion beneath the pref). The pref carried a 9% current pay coupon plus a 5% accrual, a 36-month stated redemption date, and a 1.40x minimum multiple. Change-of-control remedies (removal of the managing member and forced-sale rights) sprang on a trigger event, and a recognition agreement was executed with the senior lender to preserve the pref's cure rights.
The Outcome
What the sponsor got.
The recapitalization closed with the preferred equity funding in a single draw, retiring the maturing $64M bridge loan concurrent with the new senior closing. No incremental common capital was required from the sponsor or the LP. The sponsor retained operational control and a 36-month runway to stabilize and refinance the pref out of the stack.
Deal Mechanics
Structural highlights.
$12M pref cleared the full maturity paydown gap with no new common capital
9% current pay, 5% accrual, 1.40x minimum multiple, 36-month redemption
Recognition agreement executed with the senior lender
More in Sector
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