Access trapped equity without defeasance penalties

Many apartment and commercial property owners have seen their assets’ values and implied equity climb in recent years. Unfortunately, due to yield maintenance or defeasance loan prepayment penalties this equity is often trapped and virtually inaccessible to owners.  

FAST Preferred Equity provides a structured financing mechanism that enables multifamily and commercial property owners to affordably tap into “trapped equity” without paying punitive lender pre-payment penalties. Because it’s not a loan, preferred equity will not violate senior lender’s additional debt restrictions. It does, however, behave like debt, meaning owners do not have to give up long term ownership in the property.

FAST structures the term of our investment to help owners reach a point where the senior loan’s prepayment penalties are no longer overly punitive. We generally offer terms of 2-3yrs (plus possible extensions), at which point the property would be in a position to refinance into a low-cost Freddie/Fannie, or other permanent loan, thereby taking out the old senior loan and our preferred equity position at the same time.

Our investment is perfectly suited for owners of operating properties to:

• Finance tenant improvements or remodel common areas

• Fund adaptive reuse or property conversion projects

• Make capital improvements, such as expansion, to increase leaseable area or re-purpose building functionality

• Secure new tenants by funding broker commissions