Your returns will vary depending upon the type of deal (investment or development), the risk profile of your deal and where your investment sits in the Capital Stack.
Typically, the investor return will range from a Coupon of 5% (at the lowest risk layer of the stack when we have first ranking security) up to 15%-20%. Depending on the deal type, this will be compounded either monthly or quarterly and either paid current or deferred. In addition to showing the Coupon, we use Internal Rate of Return ("IRR") calculations for comparison purposes. The IRR is the annualised return, taking into account compounding and timing of receipts. Returns are shown gross of tax.
The amount of finance to be arranged is split into a series of layers representing differing LTV bands.
You choose whether you want to join the Capital Stack at a lower LTV position and get a lower return, or to seek a greater return higher up the stack.
There’s no restriction on the maximum amount you can invest (although there will be a minimum participation, which varies according to the deal). You can choose to invest in a number of different layers in the CapitalStack - on the same deal and in other deals - in order to spread your risk and return.
Upon redemption, the senior debt will be paid out first at maturity, then the lowest risk investors in the CapitalStack and finally the highest risk participants. Only when all participants have been paid out do we receive our margin fee and the Borrower his share of the proceeds.