Meaningful Refinances.
A well-timed refinance can return significant capital to investors mid-hold while keeping a performing asset on the books. This is one of the most powerful tools in a value-add strategy.
Returning Capital Without Selling
In a value-add deal, the goal is to improve the asset, increase its value, and then either sell or refinance. A meaningful refinance allows us to pull out a significant portion of the original equity while maintaining ownership of an asset that is now performing well.
For investors, this means receiving a return of capital mid-hold, often tax-advantaged, while still participating in the ongoing cash flow and eventual sale of the property. The compounding effect of this structure is one of the core advantages of value-add real estate.
We evaluate refinance opportunities based on current debt markets, the property's stabilized value, and the cost of new debt relative to the cash flow the asset generates. We do not refinance for the sake of it. We refinance when the numbers make sense for our investors.
Timing the Refinance
We target refinances after stabilization, when the property has achieved target occupancy and rents, and when debt markets offer favorable terms. Timing matters as much as the underlying asset value.
Tax Efficiency
Cash-out refinance proceeds are generally not taxable events for investors. This is a meaningful advantage over a sale, which triggers capital gains. We factor this into our hold period analysis.
Maintaining Upside
By refinancing rather than selling, investors retain their equity stake and continue to participate in cash flow and appreciation. The refinance returns capital while preserving the remaining upside.
Debt Structuring
We work with regional and national lenders to structure refinance debt that fits the asset and the hold period. We do not over-leverage. We target loan-to-value ratios that leave the asset with positive cash flow after debt service.
Explore More of Our Strategy
Each pillar of our approach is designed to work together.