Castle Rock’s Preferred Equity Program is designed to assist property owners and developers in value-add acquisition and real estate development projects. Our investors include small investment companies, family offices and high net worth individuals. We partner with sponsors to provide access to reliable capital to carry out projects on all types of commercial real estate assets.

Our focus is in taking minority equity positions where the sponsor is taking the majority equity position and the relative levels of debt in the capital stack are modest (LTVs of 60%-65% are targeted). This provides strong sponsorship alignment and reduces the chances of the asset becoming distressed during down markets or due to a temporary loss of income. In addition, we look for preferred returns in the range of 10%-12% as well as potential profit sharing after all parties have received their preferred return and a return of capital. As is typical for preferred equity positions, our investors take a priority position in the capital stack so that their money is returned prior to the sponsor’s.

Although Castle Rock Capital invests with sponsors in all major product types, our focus is the same in each instance: Invest alongside a seasoned management team in an asset with solid fundamentals.