Liquidity Constraint - sourcing deals

yoruba123's picture
Rank: Gorilla | 597

How do sponsors/developers with a sub $1M net-worth get deals done on the acquisition or development side of the business? Will be challenging to do a deal that is $20M due to liquidity constraint from a lender that requires a borrower to meet a certain liquidity profile. Would be great to know how syndicators or developers deal with this issue. Thanks!

Comments (3)

May 15, 2019

Have funded two deals off this same profile. Find an equity partner willing to flash their liquidity/balance sheet strength to help secure the debt. May or may not require a liquidity guarantee fee (anywhere from 75-100 bps) if the LP is signing up for a completion guarantee or other limited recourse carveouts.

May 15, 2019

echo the above...they're also a lot of different structures (recourse vs non recourse) that will have significantly different guarantee profiles that are required by the lender. Leverage relationships - tap into experience and knowledge from lender contacts and let them be the initial guide.

May 16, 2019