$112M Northeast Mixed-Use Acquisition

An institutional sponsor was acquiring a stabilized vertical mixed-use asset in a primary Northeast market with 78% multifamily NRA and 22% ground-floor retail. The seller required a 45-day close.

The senior lender the sponsor had originally targeted scoped the deal as multifamily-with-overhang and declined to underwrite the retail income at face value, sizing the senior at $78M rather than the $92M the sponsor needed.

Additionally, the sponsor's senior lender did not permit mezzanine debt, which closed off the most obvious path to incremental leverage.

VS Capital Group pivoted to a senior lender that actively underwrites mixed-use as a category and was comfortable with the retail income profile, sizing the senior at $92M at 62% LTV.

Because mezzanine debt was prohibited by the senior, we layered $20M of preferred equity at the holding-entity level, not requiring senior lender intercreditor consent, to bring total capital to 76% of value without exceeding the senior's permitted subordination.

The preferred equity partner was selected for compatibility with the sponsor's exit timeline and existing institutional LP relationships.

Closed in 42 days from engagement, meeting the seller's required closing timeline.

Sponsor reduced common equity from $58M (at the original senior-only scenario) to $36M, preserving capital for the next acquisition in the sponsor's programmatic pipeline.

Asset is performing at original underwritten basis with the retail component leasing ahead of pro forma.