Real Estate

The cash required to purchase the property is derived from a combination of the proceeds of the first mortgage loan (which generally approximates eighty percent (80%) of the purchase price) and an "Equity Contribution".  Depending on the specific project facts, the Equity Contribution may be provided entirely by Sentry in the form of a loan or preferred equity ("Sentry Capital"), or primarily by Sentry with participation by our Partner.

In most cases, the Sentry Capital will be provided to the special purpose entity (SPE) and will require monthly payments ("Base Payments") based on a 15 year amortization period and a market interest rate.  The Sentry Capital is required to be fully paid at the earlier of (i) seven years, (ii) the sale of the property, (iii) obtaining a second mortgage loan, or (iv) the refinancing of the property.

In addition to the Base Payments, all cash flow generated by the property in excess of funds needed to (A) operate the property (which operating expenses include management fees payable to our Partner), (B) make the first mortgage loan payments, and (C) fund the required reserves, are paid to Sentry on a quarterly basis, until the Sentry Capital (with a preferred return) is repaid.