What are the typical economic terms of an investment by Hillcrest?
In our Real Estate Lending: We invest our capital as debt, secured by a mortgage on the real estate collateral offered, typically in either a first priority or a second priority position. We often structure the note as interest-only for a period of time. Typically, interest rates are fixed and we require interest-only payments. In our Small Business Investments: Our investments are structured as debt, often with detachable warrants that can be converted to a certain percentage of the subject companys equity. We prefer to obtain a first priority lien or at least a second lien (subordinated to a senior lender) on the portfolio company’s assets, and frequently, a pledge of the stock (or membership interest in the case of a limited liability company). Typically, these investments are structured with fixed interest rates.
