Preferred equity allows a sponsor to preserve primary ownership interest and control with a cost-effective alternative to utilizing partners or supplement equity capital. It is typically utilized to increase LTV of acquisition financing, monetize existing equity or otherwise recapitalize/restructure an existing ownership structure.

Preferred Equity

Investment Amount:
$2MM and up

Geography:
Primary and secondary markets

Hold period:
2-7 years

Property Types:
Multifamily, Mobile Home Community, Office, Industrial, Self-Storage, Retail, Hotel

Priority:
Senior to sponsor equity position.

Loan-to-Value:
Up to 95% of appraised value

DSCR:
1.10x

Origination fee:
2% and up

Prepayment:
Subject to deal desirability

Recourse:
Non-recourse, subject to standard carve-outs

Rate:
Typically, 8-12%. (Aggregate IRR may be higher)