TYPICAL TRANSACTION STRUCTURE
For Developers
Information for developers seeking financing for to-be-built and rehab real estate projects
Equity Financing
The Fund will provide up to 90% of the total equity required. Developers are required to contribute a minimum of 10% of the equity required for a project. A special purpose Limited Liability Company (SPE) would be created as the investment vehicle to build, own, manage, and sell the project. Ownership percentages, preferred returns, and cash flow distributions are negotiated on a deal-by-deal basis. ECAP attempts to structure deals that align the interest of the Fund and our development partners and that increase the likelihood of a successful project in varying economic environments. This investment structure is illustrated below:
Mezzanine Debt Financing
A special purpose Limited Liability Company (SPE) would be created as the investment vehicle to build, own, manage, and sell the project. The Developer would own 100% of the SPE. The Fund would invest Mezzanine Debt into the SPE. The Fund’s Mezz Debt would be subordinated to the Senior Debt but be superior to/have a priority over all other distributions from the SPE. The Fund would receive a return of its principal investment and all interest due (current as well as deferred) prior to the Developer receiving any distributions of profit. The investment structure is illustrated below:
