The borrower will pay interest-only in the first year, and the loan becomes fully amortized over the remaining six years, with no balloon payment due at the end of the term. A fee will be charged if there is an accelerated repayment.

One of the Florida residential developments supporting the Strategic Capital loan.

Serving as collateral for the loan is a portion of the cash distributions and other economic rights attached to nine Cornerstone affordable housing developments in Dade, Broward and Palm Beach Counties in southern Florida. The developments, which total 2,609 apartments, are private, gated communities all built within the last seven years and have occupancy rates in excess of 95%. Each was individually inspected during the underwriting process.

George S. Perry, Senior Vice President and Director of Investments for W&M Properties, which sources investments for the Strategic Capital program, says Cornerstone will use the loan proceeds in support of new for-sale townhouse development.

"This is a typical example of how Strategic Capital fills the need for special-purpose entrepreneurial capital in the real estate industry, while offering investors an opportunity to realize superior current yield," says Mr. Perry. "Owners and developers often need relatively small amounts of short-term funding, creatively structured, on a rapid basis, which is not easily accessible from conventional lenders."

In addition to making loans, Strategic Capital provides funds by taking preferred-equity positions, which can be helpful to property owners with mortgage conduit loans that bar them from assuming additional debt.

Introduced by Wien & Malkin five years ago, the Strategic Capital program has raised approximately $56 million of equity from Wien & Malkin investors in three partnership offerings and has made structured equity and mezzanine investments in transactions with total capitalization of $728 million. Its investments have achieved double-digit annual returns.

"This loan was an opportunity for Strategic Capital because it required a lender who can understand the real estate and the market in which it is located," says Mr. Perry. "By maintaining discipline as we pursue and underwrite our investments, we can provide Wien & Malkin investors attractive, risk-adjusted returns that compete very favorably with most other types of investment today."