Hi Reader,

If you’ve been on our email list for at least a few months, you know that we are bullish on real estate preferred equity.

Preferred equity sits between debt and common equity in a capital stack for a real estate deal.

It features some of the best aspects of both debt and equity. See a graphic example below.

Like common equity (and unlike debt), investors benefit from depreciation to receive tax-advantaged income and the potential to make outsized returns.

Like debt (and unlike common equity), investors assume lower risk while receiving contractual cash flow from day one, as well as significant control rights in the event of problems.

Due to current market conditions, preferred equity offers investors like Wellings Capital highly attractive risk-adjusted returns. Additionally, smaller check sizes (sub $10 million) result in less competition and better terms.

The Sidecar Opportunity

Wellings has invested in six preferred equity deals, and they’re all performing well so far.*

The Wellings Real Estate Income Fund (the "Fund") is diversified across thirteen operators, seven asset types, hundreds of individual properties, multiple geographies, and capital stack positions.

Though we are big believers in diversification (and will continue providing significant diversification to our investors via our funds), some current and prospective investors have seen the ​preferred equity deals​ and said something along the lines of, “I like this deal a lot. Can I invest in just this one deal?”

Among a few other things, they were looking for the following:

• 3-5 year hold time
• One state K-1
• One property/portfolio and one asset type
• Slightly higher year one cash flow (compared to the Fund)

Before last month, the answer to their question was always “no.”

However, we are taking on slightly larger preferred equity deals that could result in higher concentration levels than we want in the Fund.

We are pleased to announce that we are opening the second Wellings Capital preferred equity sidecar opportunity this month.

For this preferred equity investment in Texas (one of three properties in the deal pictured above), we anticipate that the Fund will contribute 20-40% of the total, and this sidecar vehicle will contribute 60-80% of the total, though that could change.

Importantly, we are putting this investment through the same rigorous due diligence hoops as all of our other investments.

Last year, we reviewed 515 potential investment opportunities and invested in 11 of them.

We know of few other real estate investment opportunities to achieve a targeted 42-45% return in three years with lower risk than common equity, immediate cash flow, depreciation, forced-sale rights, and compounded upside.*

Though no investment is guaranteed to succeed, our team has designed this one with the goal of protecting the downside and increasing the upside.

Register for the Webinar to Learn More

The first sidecar opportunity last month was oversubscribed in about two business days.

We’re hosting a live webinar reviewing the details of this new opportunity on Wednesday at 1:30 PM ET/10:30 AM PT.

Join the webinar to learn more about the operator, the properties, the structure of the deal, the terms, and projected returns.

If you can’t attend live, you will receive the recording automatically as long as you register.

Best,

Paul Moore and Ben Kahle

Wellings Capital | www.wellingscapital.com​

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P.S. The demand for the first sidecar last month was honestly very strong. Our goal was to raise $3.5 million in about ten days. But we received ~$4.6 million in subscriptions in about two business days before we shut off the portal.

Helpful Links

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​Tax Strategist Recommendations​

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​Paul's Books on Self-Storage and Multifamily​

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* DISCLAIMER: Past performance is no guarantee of future results. There is no guarantee that any projected results will be achieved. Investors should consider the investment objectives, risks, charges, and expenses of the Wellings Real Estate Income Fund (the "Fund") and the sidecar entity before investing. For a Private Placement Memorandum (“PPM”) with this and other information about the Fund and the sidecar, please call 800-844-2188 or email invest@wellingscapital.com. Please read the PPM carefully before investing.

The information contained in this email communication is for information purposes, does not constitute a recommendation, and should not be regarded as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be in violation of any local laws. All investing involves the risk of loss, including a loss of principal. We do not provide tax, accounting, or legal advice, and all investors are advised to consult with their tax, accounting, or legal advisers before investing. Information and any opinions contained in this email communication have been obtained from sources that we consider reliable, but we do not represent that such information and opinions are accurate or complete and thus should not be relied upon as such. Note that all testimonials and endorsements are views alone of the investor. No payments were made for any endorsement or testimonial, and, other than being invested in the fund, we are not aware of any other conflicts presented by the investor.