Case Studies

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Brewerytown Apartments, Philadelphia, PA

Linden Lane Structured Capital (LLSC) closed on a $4.8 million preferred equity investment for the redevelopment of a 162-unit project located in the Brewerytown neighborhood of Philadelphia, PA. The existing 6-story building was being gut rehabbed into loft-style apartments. Additional funds were required for the retail buildout. The investment was out for approximately 1.5 years and paid a mid-teens IRR. Sponsor recourse was provided to solve for a complex, over-levered capital stack. LLSC’s knowledge of the local market, familiarity with the asset, and knowledge of the sponsor provided a competitive edge.

Situation

Sponsor needed additional cash to renovate retail space and finish the multifamily building.

Strategy

Structured a loan secured with full recourse to the sponsors.
Results – Investment paid off in 24 months with a deal level IRR of 18%
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W Hotel, Atlanta, GA

Linden Lane Structured Capital (LLSC) purchased at a discount a $15.0 mezzanine loan (last dollar – 66% of cost) on an existing 237-key hotel. The loan was repaid in full in less than 2 years. The face yield on the note was a single digit yield. Due to the discount and quick payoff, investors received a mid-teens yield. LLSC’s deep relationships with major commercial bank trading desks, hotel experience and ability to close quickly provided a significant competitive edge.

Situation

Discounted “B” piece note purchase from a major hedge fund looking to reduce their fixed income exposure.

Strategy

Allow the hotel cashflow to stabilize and exit at a par price
Investment paid off in 18 months with a deal level IRR of 21%.
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University Grande Apartments, Hammond, LA

Linden Lane Structured Capital (LLSC) originated a $6.1 million preferred equity investment for a ground-up student housing development in Hammond, LA. The loan was originated in July of 2019 and is expected to be paid off before year-end 2021. Pricing is low double digits; last dollar funded equaled 83% of cost. The project was essentially built in 12 months, is fully occupied and never experienced a COVID pandemic related problem. Significant value was created quickly, reducing our last dollar of LTV exposure to approximately 55%. The loan has always been paid fully current every month; the yield is exceptional for the risk and will most likely repaid in full when the asset is sold. LLSC’s deep broker relationships, superior construction expertise and ability to understand strong middle market sponsors provided a competitive edge.

Situation – Experienced sponsor seeking accretive preferred equity for a ground-up, student housing deal in a tertiary market.

Strategy – LLSC recognized the sponsor as being extremely strong financially and professionally. Though small university town, Freddie Mac and Fannie Mae would lend and size a take-out loan in excess of our exposure.

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Results

Sponsor selling the asset in the Spring of 2021. LLSC total term just under 3 years. Property stabilized in 12 months at a value equivalent to LLSC the last dollar of risk of 55%. Deal level IRR 14%+.
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MTP Hotel Portfolio, N.J. & PA

Linden Lane Structured Capital (LLSC) purchased at a discount a $14.6 senior mezzanine loan (last dollar – 68% of cost) on an 8-property, 932-key hotel portfolio. The loan was repaid in full within 15 months. The face yield on the note was a single digit yield. Due to the discount and quick payoff, investors received a 22% IRR. At the time of payoff, a recapitalization (at a greater loan amount and risk level was completed by the Sponsor. LLSC was requested but declined to participate in that refinance. This proved fortuitous as the Sponsor subsequently defaulted and gave the keys to the subsequent mezzanine lender. LLSC’s disciplined approach to investing secured not only a great return but avoided a significant loss of time and money.
lender. LLSC’s disciplined approach to investing secured not only a great return but avoided a significant loss of time and money.

Situation

Purchased a mezzanine note at a discount from a major money center bank’s trading desk.

Strategy

LLSC knew that the loan was likely to go into default due to construction completion delays. Overall collateral value was strong.
Results – Loan was repaid in full with a 21%+ IRR returned to investors. LLSC had an opportunity to refinance the loan again at a higher basis and choose not to participate. That subsequent loan defaulted and ended up being owned by the next mezzanine lender.
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The Edge at College Hill, Providence, R.I.

Linden Lane Structured Capital (LLSC) originated a $5.1 million second mortgage loan on a ground-up student housing tower and historic mid-rise redevelopment. The loan was originated mid-year 2019 and is expected to be paid off by year-end 2021. Pricing is low double digits; last dollar funded equaled 75% of cost. The project was complete and leased at the time of funding; use of proceeds was to satisfy remaining construction payables. The market has deep barriers to entry and populated with some of the finest universities in the country. LLSC’s strong broker relationships, superior construction expertise and ability to understand stressed downside scenarios provided a competitive edge.

Situation – Sponsor required additional dollars to cover construction cost overruns on a stabilized student housing property

Strategy – LLSC put a 2nd mortgage on the property recognizing that its last dollar of risk was 70% of value in highly desirable, difficult to build northeast student housing market with great universities.

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Results

13% IRR expected when the property sells in the Spring of 2021.
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The Airdrie at Paoli Station

The Airdrie at Paoli Station is a “154-unit” multifamily community adjacent to the Paoli Train Station on Philadelphia`s Main Line. The 7-acre property formerly held four functionally obsolete office buildings. Stepping in after several developers is failed, the Principals of Linden Lane worked with the Township and community to transform the run-down site and remake it into a Class A, award-winning community.

Situation

Frustrated Seller – having gone through severalnational developers who failed to obtain approvals from the township selected Linden Lane to attempt the development

Strategy

Work with Township and community to produce a quality project sensitive its the sorroundings, while at the same time in increasing density.
Results – Airdire delivered to an enthusastic reception by the community and new residents
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The Hannah Callowhill

The Hannah Callowhill is 181-unit multifamily development in a Qualified Opportunity Zone adjacent to Center City Philadelphia. Linden Lane was able to quickly move the project through the City approval process including obtaining several variances in the midst of the COVID pandemic, without the typical delays, by designing a quality project and getting the buy-in of the neighbors and Planning Commission. Given the QOZ status, Linden Lane was able to capitalize the project with all equity and deliver significant risk-adjusted returns to our investors.

Situation

Exceptional opportunity to obtain a greenfielddevelopment site adjacent to Center City Philadelphia

Strategy

Obtain zoing approval quickly and design for high quality / cost effective construction
Status: In Progress
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Gettysburg Village Festival Center

Gettysburg Village is a greenfield development of 268,000 SF factory outlet retail shopping center, plus hotel, restaurants, and movie theater in central Pennsylvania. Linden Lane principals stepped into a stalled, to-be-developed project by The Boyle Group, replacing their equity partner and adding the necessary resources and direct principal involvement to complete the entitlements, capitalize, lease-up, and construct the project.

Situation

Stalled 130 Acre development in need of capital and development expertise

Strategy

Modify Entitlements, Lease and Build
Results – Property sold yielding 18% IRR