Kingsbarn Multi-Net Debt Fund makes mezzanine loans to (or preferred equity investments in) wholly-owned subsidiaries of KB Exchange Holdings (the "Sponsor") as bridge financing for its acquisitions. The Sponsor provides simplified 1031 Exchange solutions for private investors through fractional ownership. Through its wholly-owned subsidiaries, the Sponsor acquires high-quality commercial properties utilizing fractional ownership structures. The principals of the Sponsor are highly experienced real estate syndicators having acquired more than $2 billion of commercial income-producing properties and placing 1031 Exchange equity into the capital structure of the acquired properties.
PURPOSE OF MEZZANINE LOANS
The mezzanine loans (or preferred equity investments) made by Kingsbarn Multi-Net Debt Fund are part of the capital stack between the first mortgage (approximately 60%-65% LTV) and the equity provided by the Sponsor. The mezzanine loans are used as "bridge" financing for equity needed between the acquisition of the property and the sale of fractional interests in the underlying property owner or the property itself. Funds deployed by Kingsbarn Multi-Net Debt Fund will be collateralized by indirect interests in income-producing commercial real estate. The Sponsor currently has significant investor demand for its property interests and expects that demand to increase in the coming years.
A typical acquisition is one in which the Sponsor acquires a newly-constructed, single-tenant property with a financially strong tenant – usually a publicly-traded company. The Sponsor targets properties that investors would want to own if they had the equity needed for such a transaction, which is typically larger (in sales price) than what an investor could purchase individually. Although the Sponsor may invest in other types of fractional ownership interests, Delaware Statutory Trusts (DSTs) are presently the fractional ownership structures preferred by lenders due to the Sponsor retaining control of the investment and all major decisions throughout the life of the investment.
The mezzanine loans (or preferred equity investments) are retired as the fractional interests in the underlying property are sold to 1031 Exchange investors. Mezzanine loans bear interest at a fixed rate and may include points and/or origination fees and have terms of up to twelve (12) months.