Hybrid vs. Preferred Equity
Preferred Equity
Capital Stack
Preferred equity is a class of shares that sits ahead of common equity in the capital stack and has enhanced rights. Preferred Equity offers a balance between the security of debt and the yield of equity, however, unlike Hybrid Equity, it falls short of traditional common equity returns.
WELCOME INVESTORS
Our family run firm, along with our investment partners, have directly transacted on over $500mm of real estate, providing investors with strong returns and unique downside protection by utilizing capital structures specifically designed for quality middle market assets.
Velocity’s Valued Investors
In addition to our principals and advisors, who are often among the largest investors, Velocity Capital Partners’ investor base has expanded to include family offices, HNW individuals and over 250 colleagues, friends and family members.
If you think you may be a good fit to invest alongside us, please contact us or schedule a call.
How does Velocity Capital Partners Invest?
Velocity Capital and their Investment Partners invest together through close ended private funds. The firm uses the capital to originate what we call ‘Hybrid Equity’ investments, a niche form of preferred equity.
Hybrid Equity Fund Offering
• Multifamily anchored investments
• Preferred return to investors: 10%
• Duration: 3-5 years
• Target Equity Multiple: 1.4 – 1.8x
• Target IRR (net): 14%
• Performance based fees only
With Velocity’s Hybrid Equity structure, investors get their current-pay distributions and return of equity before the property’s common equity investors receive their return of equity. Additional profits are shared based on predetermined splits.
By blending features of debt and common equity, our fund achieves returns typically found in the common equity space while keeping our principal and profit distributions in a preferential position.
Hybrid Equity
The Velocity Capital Strategic Advantage
Organic deal flow from an expansive network
Operational experience as owner operators
Hands on management approach
Capital markets experience
Lean operations and investor friendly fee structure
Family led and easy to work with
Why We Focus On This Niche
We proudly focus on providing hybrid preferred equity to quality middle market multifamily investments. We stick to our investment thesis because:
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Multifamily continues to be among the most stable and fundamentally strong real estate asset class.
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Private Equity Middle Market CRE investments have much higher yields than publicly traded REITs or institutional assets
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It is a mostly untapped market with virtually no direct competition in our niche, and lots of demand from sponsors who would like to avoid traditional preferred equity
