Credit investment strategy

Optimize risk-adjusted returns by employing a rigorous, data-driven approach to investing in value-add and opportunistic debt investments


Pennybacker Credit I, LP is the second in a series of CRE debt funds (the first fund was WestRiver Capital).  Pennybacker Credit is located in New York City and is an extension of the Pennybacker Capital’s CRE equity investment business.

Pennybacker Credit invests in high-yield debt and preferred equity interests backed by commercial real estate-related assets or real estate operating companies located throughout the United States. These investments include securities, first mortgage loans, subordinate interests in first-mortgage loans, second liens, mezzanine investments, subordinate debt, preferred equity investments and other structured products.

GSE Preferred Equity

Pennybacker Credit is a GSE-approved preferred equity investor, including previously having purchased interests in B-pieces in Freddie Mac CME securitizations (as WestRiver).  Investments have been made both simultaneously with new agency originations as well as retroactively after seasoning.


Focus on quality

We focus on credit quality and strive to achieve an attractive basis in our investments. We target investments that are as senior in the capital structure as possible and backed by commercial real estate-related assets or real estate operating companies located throughout the United States. 



Aim to preserve capital and emphasize consistent income

We seek durable, predictable returns and repayment. We do not rely upon leverage to achieve returns. Instead, we focus on mitigating real estate risk.


Fundamental analysis

We perform relative value analyses to properly price and manage risks and maintain a credit-driven investment discipline using real-time market intelligence. We perform independent, "bottom up" underwriting and do not rely on third party valuations or ratings. Rather, experienced, knowledgeable, and financially-sound sponsorship is paramount. We are early adopters of new technologies that enhance our ability to identify investment opportunities.

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Operationally-intensive management

Our approach to real estate asset management is operationally-intensive.  We leverage our team’s specialized expertise in owning and operating a variety of property types. Our proactive, analytical approach focuses on producing a consistent income stream and favorable returns for our limited partners.

Investment Parameters

  • Collateral: Preferred Equity in GSE Borrower

  • Sponsorship: High Net Worth and Institutional Grade Borrowers

  • Returns:

    • Current preferred return target of 6-9%

    • Accrual to total preferred return of 10-13%

  • Term: NLT 12 months following maturity of GSE mortgage

  • Underwriting Criteria:

    • 1.05X - 1.10X coverage ratio calculated using:

      • (i)  GSE amortizing mortgage payment, and

        (ii) Minimum Current Pay Preferred Return

    • 85-90% LTV

  • Standard Remedies:

    • Delinquent Current Pay Preferred Return payment results in increased Preferred Return

    • Look-back IRR declining below negotiated threshold triggers Forced Sales Event

    • Failure to redeem on Anticipated Redemption Date results in both increase in Preferred Return and Forced Sales Event

  • Recourse:

    • Sponsor provides GSE standard carve-out guarantees

    • Forced Sale Event provisions are included in carve-out guarantees

  • Geography: Within the United States

Note: This material does not constitute an offer to sell or the solicitation to buy securities.

Transaction Parameters

Investment Type Lien Position Size ($MM) Term (Yrs) Pricing Max. Leverage
Entitled Land and Pre-Development First $10 - 30 1 - 2 11.00% - 13.00% 70% LTC
Construction Completion Mezzanine $10 - 30 1 - 2 11.00% - 14.00% 80% LTC
Mezzanine / Preferred (Construction) $5 - 30 2 - 5 12.00% - 15.00% 80% LTC
Mezzanine / Preferred (Cashfloow) $5 - 20 2 - 10 10.00% - 13.00% 75% stabilized LTV
Fannie / Freddie Preferred Equity $5 - 20 5 - 10 10.00% - 13.00% 90% LTV
Loan Acquisitions Mezzanine $5 - 30
Notes: Domestic US only; All asset types considered

For further information, please contact:

Pennybacker Credit
230 Park Avenue, Suite 908
New York, NY 10169

Alexander Zabik
Email • (212) 335-0237

Sebi Salas
Email • (212) 335-0489

Reagan Hall
Email • (212) 335-0364

Brendan Keen
Email • (212) 335-0147