In need of preferred equity to complete your real estate capital stack?
Preferred equity is a great option in scenarios like when an owner is renovating apartment units, under a hard contract with a short closing schedule, seeking more favorable sponsor economics, or when limited partners need liquidity or an early exit.
If you are unfamiliar with the structure, preferred equity bridges the gap between senior debt and common equity in real estate investments. It's a mix of debt and equity, with the benefits of both. It's unsecured like equity, but has priority over equity and fixed returns like debt. The cost of preferred equity is more than senior debt, but less than common equity.
The pricing for preferred equity ranges from high single digits to low double digits and is influenced by factors such as leverage, property type, market, business plan risk, and sponsor experience.
Preferred equity is usually available for most asset types and risk profiles, with multifamily sponsors being the most common users.
Preferred equity lenders often ask for control rights in case of default, such as the ability to remove the developer and take over decision-making, force a sale of the property, or terminate the management agreement.
Kligier Capital is a real estate finance brokerage that keeps tabs on 217 preferred equity lenders. We have the skills and relationships needed to get deals done. If you're working on a real estate deal, reach out and let us show you what we can do! Matt@solairecapital.com