A MidHudson preferred equity investment provides the working capital and initial operating deficit reserves required by HUD 221(d)(4). For most sponsors, this means less equity and better returns.
MidHudson grew out of the experience of a multifamily developer that saw how the reserves required for HUD 221(D)(4) financed projects increased the amount of equity required and correspondingly, decreased its returns. MidHudson developed a product to address these issues and offers it nationwide to all developers using D4 financing.
MidHudson makes preferred equity investments that provide the working capital and IOD reserves required for HUD 221(D)(4) transactions. For developers, this reduces the equity required for a project and increases the project's IRR. Once the reserves are released, MidHudson exits the project with no ongoing participation or upside.