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.
$5MM and up
Primary and secondary markets
Multifamily, Mobile Home Community, Office, Industrial, Self-Storage, Retail, Hotel
Senior to sponsor equity position.
Up to 95% of appraised value
2% and up
Subject to deal desirability
Non-recourse, subject to standard carve-outs
Typically, 8-12%. (Aggregate IRR may be higher)