FeatherStone is introducing Residual Revenue Certificates (RRC) as an investment opportunity for accredited investors, as well as a funding solution for single-family rental portfolio property owners.
Accredited Investors Investment Opportunity:
FeatherStone has developed a unique structure that unlocks the value of equity investment in SFR residential properties, the Residual Revenue Certificate (“RRC”).
Residual Revenue Certificates are created by the differential between the operating and debt service expenses of the bond offerings. The Residual Revenue Certificates re-directs all the residual revenue that would normally go to management to the investor.
RRCs are created in various amounts from $1 million - $25 million. RRCs are also created from FeatherStone’s clients seeking to raise unrestrained capital.
Single-Family Rental Property Portfolio Owners Funding Opportunity:
The funding can be accomplished by single-family rental portfolio property owners selling their residual reserves (cash-flow) at a discount. The capital market discount would be anywhere from 8 to 15%.
Example:
A single-family rental portfolio property owner after expenses has excess cash flow of $100,000 per year. That rental property owner can now sell forward five years of residuals through the RRC for $500,000.
For an investor, the $500,000 RRC is given a 15% discount. The investor purchases the RRC at the 15% discount for $425,000. This is not a loan, nor does it have to be paid back, thereby eliminating stringent qualifications for the property owners. There is no need for BPOs, credit checks or financial verification.
The funding is generally a non-delusive flexible funding pathway that provides financing solution to companies without the forced exit typically of venture capital and private equity or mezzanine debt transaction.
Traditionally, this funding mechanism has been used in the music, pharmaceutical and oil and gas industries. Significant upside in the future cash-flows can be produced in these industries and has the ability to leverage off their future cash-flows to fund their activities.
This alternative funding mechanism is now being used in various forms by both investors and firms that have recognized the merits of using the RRC. For instance, the RRC can be used for traditional business and single-family rental portfolio property firms. By selling RRCs to raise capital, small and midsize businesses are successfully filling the capital gap between friends and family financing and sourcing from traditional capital markets.
RRCs compare favorably to convertible debt and equity securities for the small and midsize business sector where under normal circumstances investors struggle to achieve liquidity, fair valuation and exit timing.
Characteristics:
In the funding continuum the RRC ranks in between the debt and equity, and has characteristics of both the debt and equity depending on the type of transaction and the associated funding terms.
How can FeatherStone help?
FeatherStone can provide assistance to firms or investors who are contemplating to use the Residual Revenue Certificates as part of their funding process. Our scope of service in relation to the RRC would include:
• Providing assistance in sourcing and securing funding from RRC investors. FeatherStone is developing a relationship with a US Based Exchange specializing in forward contracts for financial instruments funding.
• Structuring a capital injection transaction to make it fit with the RRC parameters and providing related advice to best implement the alternative funding mechanism; and
• Modeling the impact of using the RRC on cash-flow and P&L.
Success Fee:
FeatherStone only has a success fee of the Residual Reserves Certificate values upon completion.
About:
FeatherStone Capital Markets LLC (FCM) is a securitizer of single-family rental properties and presently undergoing the process to establish itself as a broker dealer. While going through the approval process FeatherStone is utilizing a lead underwriter and the strategic relationship of an equity investor and market maker.
Media ContactCompany Name: FeatherStone Capital Markets LLC
Contact Person: Media Department
Email:Send Email
Phone: 1.888.797.6175 Ext 0
Country: United States
Website: http://featherstone-cm.com/
