Investment Amount: Typical equity required of $5 – $30 million.
Sole LP: LRE is typically the sole limited partner, making up 70-90% of the required equity for a transaction. This allows LRE principals to negotiate favorable deal terms for investors.
Conservative Debt: Typical LRE transactions take on Fannie Mae or Freddie Mac 7-12-year fixed rate loans with leverage between 65-75% LTV.
Immediate Cash Flow: LRE targets deals that offer investors cash flow in year 1 with average cash-on-cash returns of 5-8%.
Risk-Adjusted Returns: Opportunities target underwritten IRRs of 10-16%.
Deal Structure
Investment Vehicle: LRE forms a new LLC for each deal and invests side-by-side with investors.
Alignment of Interests: Deals are structured to create an alignment of interest with LRE and its investors.
Favorable Structure: There are no incentive fees until all investors have received 100% of investment principal back with a minimum preferred return which ranges between 8% to 12%.
Quarterly Distributions: LRE investors receive quarterly cash flow on a pro rata ownership basis.
Reporting: Investors receive quarterly asset management and financial reports. Additionally, investors receive annual K-1s and the tax benefits associated with owning direct real estate.
