West Palm Beach Capital Logic Review

Situation

A developer preparing to raise equity for a 42-unit multifamily in West Palm Beach needed review of the proposed capital structure before presenting to investors. The developer was concerned LP/GP terms were not competitive and the downside scenario hadn't been stress-tested.

Approach

River reviewed the full capital structure and identified three concerns: exit cap rate assumption was 50 bps below current comparable transactions; preferred return timing didn't account for realistic lease-up; and construction contingency was below current market conditions. River restructured with a corrected exit cap rate, revised preferred return schedule, and increased construction contingency.

Execution

River reviewed the full capital structure and identified three concerns: exit cap rate assumption was 50 bps below current comparable transactions; preferred return timing didn't account for realistic lease-up; and construction contingency was below current market conditions. River restructured with a corrected exit cap rate, revised preferred return schedule, and increased construction contingency.

Outcome

Two of three LP investors committed capital within 45 days at terms close to the restructured proposal. The developer's GP promote was reduced modestly but the deal closed with institutional-quality investors who valued the conservative underwriting.