Anyone here an expert in preferred equity investing or mezzanine lending?
Trying to learn more about these spaces. Does the analysis basically look at the investment normally to see if the sponsor's assumptions are in line, and then a takeout analysis to make sure the sponsor will be able to finance/refinance and take out the pref or mezz piece?
If anyone has any example analysis (specifically interested in the takeout or possibly loan sizing) to share that would be extremely helpful.
I briefly worked at a Mezz, Pref and Bridge shop. On the mezz and preff deals we mostly looked at the property's value and made assumptions on Gps ability to manage and follow through with his plan. We focused on more value-add stuff that we felt could be taken out by a traditional Refi. We also looked heavily on a downside scenario and looked at what out total exposure would be if the sponsor screwed up.Its a lot less sophisticated than underwriting a full acquisition.I will try to find an old model I can send you but like all loans you are underwriting your basis, CF, and exposure against market value.
Interesting that it's that much less sophisticated than a normal acquisition. Is that because you receive the sponsor's model?
If you have an old model that would be great.
Define expert.
Hah, expert was probably a stretch. Really anyone with experience of doing a few deals who wants to share their knowledge.
Bumping for more insight/info.
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