Pref Equity Metrics
my firm was looking at some pref equity deals (on the LP side) for development deals. The deals would be structured as a simple pref return.
What are some back of the napkin calculation or major metrics that you would be looking for when looking at these deals?
In addition to traditional development metrics, some pref-specific metrics you'll want to evaluate are the max accrued basis, LTC (w/ Pref), terminal debt yield (trended and untrended), and minimum multiple.
The sponsor is going to be an important factor in getting comfortable with these deals, especially the liquidity of their balance sheet.
Thanks! Very helpful.
And when you say terminal debt yield and multiple, what is the typical number we should be looking for? I think for the senior DY, its usually between 8-9%.
On the dev side, I've seen DYs (w/ pref) between 6.0-7.5%. I'm sure some shops UW lower yields depending on the risk of deal.
This can't be right. If that's the debt yield on the pref, what the hell is the developer building to?
Reprehenderit deleniti velit voluptatem voluptatem minus veritatis. Ratione perferendis error et aliquid quo. Veniam in cupiditate voluptatem officia optio qui fugiat.
Illum eos sit sed in. Sint non perferendis eum ut delectus dicta et omnis. Autem aperiam beatae vitae non aspernatur. Omnis voluptatem alias vitae iusto debitis quae nulla autem.
Hic sit quo voluptates error maxime asperiores aliquid. Velit tenetur qui delectus sed sunt qui unde. Cum error voluptates aliquid enim sint esse vero exercitationem. Ullam id ducimus nam et amet. Quis laudantium aut quia sunt. Nostrum perferendis est tempore in provident. Deleniti magnam perferendis exercitationem temporibus.
Esse explicabo eum iste eum. Accusamus voluptas aut sit voluptas. Eaque libero facilis nostrum praesentium quibusdam quia qui rerum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...