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Introduction: The Power of Structure in Times of Crisis
In volatile markets, many investors retreat. Others reposition. The latter group often thrives—not by avoiding risk, but by structuring it intelligently.
At Infinity⁹, we often say: "There are no bad markets, just bad strategies." This case study illustrates that philosophy in action through a structured debt opportunity we managed for clients during the uncertain years surrounding the COVID-19 pandemic.
The Economic Context: 2020–22 Turbulence
The COVID crisis introduced a level of global uncertainty unseen in decades. In the U.S. and Latin America, real estate valuations wobbled, liquidity dried up, and traditional portfolios suffered.
Public equities saw dramatic swings. REITs and bond funds offered little refuge. Investors needed something different—predictable income, capital preservation, and reduced correlation to public markets.
The Opportunity: A Distressed Residential Portfolio
In Q3 of 2020, Infinity⁹ identified an opportunity: a distressed portfolio of Class B multifamily properties across secondary markets in the southeastern U.S.
Many owners in the region had over-leveraged assets and declining occupancy. We saw long-term value, but also short-term instability. Rather than an equity acquisition, we structured a senior debt position with protective covenants and equity participation upside.
Structuring the Investment: Debt First, Then Upside
Here’s how the deal was structured:
- Position: Senior secured debt, collateralized by the real estate assets
- Yield: Fixed double-digit annual return with quarterly distributions
- Term: 36 months with two 12-month extension options
- Protection: 65% LTV maximum, personal guarantees, and escrowed reserves
- Upside: Profit participation above a certain IRR threshold
This structure prioritized cash flow and safety, while keeping the door open for participation in asset recovery.
Results: Income, Stability, and Unexpected Gains
Over the 36-month term, this structured debt investment:
- Delivered 11.2% net annualized returns
- Distributed income every quarter without interruption
- Preserved principal through full repayment
- Provided an additional 2.7% IRR through equity participation upon exit
While broader markets whipsawed, our investors experienced calm.
Why It Worked: Building Capital Framework
This wasn’t luck. The success stemmed from Infinity⁹’s disciplined approach:
- Risk-first underwriting: We assessed worst-case scenarios and structured protections accordingly.
- Local insight: Our on-the-ground partners identified motivated sellers and value-rich assets.
- Alignment: Our compensation depended on performance, aligning us with our investors.
Infinity⁹ doesn’t bet on market direction. We build strategies that work regardless of it.
Strategic Insights: Private Debt as a Portfolio Pillar
This case reinforces a key theme: private structured debt can offer stability, yield, and downside protection, especially when public markets are volatile.
It also shows the unique value of working with a team that understands how to structure and execute private deals with institutional rigor.
As we like to remind clients, "Your money doesn’t need a visa." Especially when invested in resilient assets with the right capital structure.
Conclusion: Calm in the Chaos
In hindsight, this investment didn’t just preserve capital. It preserved confidence.
Structured properly, private debt can be a powerful way to navigate market storms. And with Infinity⁹, investors don’t just survive volatility—they thrive through it.
