Preferred Equity has similar economic traits to Mezzanine Debt with regards to pricing and pay structure. In situations where mezzanine financing is not possible due to; lender prohibition, prior encumbrances of the partnership interest or regulatory requirements, Preferred Equity is a viable alternative.
Unlike a Mezzanine loan, which is secured by the partnership interests of the borrowing entity, a Preferred Equity investment is a direct holding of equity interest in the property-owning entity. Additionally, rather than the Mezzanine lender’s inter-creditor agreement with the senior lender the preferred Equity investor negotiates a recognition agreement with the underlying senior debt lender.
Development Preferred Equity:
Senior Preferred Equity will have an attachment point of 50% LTC +/- and a last dollar exposure of 65% LTC +/-
Junior Preferred Equity will have an attachment point of 65% LTC +/- and a last dollar exposure of 85-90% LTC +/-
Due to the common current pay requirement for Preferred Equity, the amount held back from proceeds will usually reduce the true Max LTC to 86-87%.
Pricing will tend to be in the low double to high double digits, with a possible equity kicker depending on first/last dollar exposure.
Development Preferred Equity:
Senior Preferred Equity will have an attachment point of 55% LTC +/- and a last dollar exposure of 70% LTC +/-
Junior Senior Preferred Equity will have an attachment point of 70% LTC +/- and a last dollar exposure of 85-90% LTC +/-
Pricing will be in the mid-single digits on core and high single digits on lesser-quality assets. Low double digits for lower-quality / high LTC, Preferred Equity investments
We source, structure and help close Preferred Equity investments for the following situations:
Low-leverage Preferred Equity investments for core assets
Full/partial accrual pay options for transitional and development deals that go higher into the capital stack than traditional Mezzanine loans
Long-term, co-terminus preferred equity investments behind CMBS loans, where an intercreditor is challenging to obtain post closing
Participating Preferred Equity structures, where a lower preferred return is given in exchange for an equity kicker on the back end
We maintain ongoing relationships with a large variety of Mezzanine debt providers including:
Aruyel Nurbekova joined Eyzenberg & Company in 2022 as Junior Analyst. She assists with underwriting, analysis, and financing memoranda preparation for commercial real estate debt and equity capitalization assignments.
Prior to joining the firm, Ms. Nurbekova worked as a Business Valuation Analyst at Ernst & Young company, one of the Big Four accounting firms.
Ms. Nurbekova completed her Bachelor of Science degree in Corporate Finance and Investment Management at KIMEP University in Almaty, Kazakhstan.
D: (305) 995-0777
Mr. Muniak joined Eyzenberg & Company in 2022 to focus on debt and equity originations in his newly adopted home of South Florida.
Mr. Muniak is Co-Founder and Managing Partner at Makal Equities, a real estate investment firm specializing in multifamily, industrial and retail property in Southern California and New York. He invested, sourced, and underwrote all commercial development and investment opportunities during this time. Furthermore, Mr. Muniak’s previous position as Managing Director at a Family Office in New York allowed him to develop his skills as he increasingly became involved in all aspects of fundraising and deploying the fund’s investment mandate. In his career to date he has invested, sourced, and underwrote commercial development and investment contracts, exceeding 100 million dollars.
Furthermore, Mr. Muniak is a Board Member and shareholder of the Mangia Hospitality Group in New York, where he oversees all aspects of fundraising, including the Group’s investment mandates. As a strategic dealmaker, Mr. Muniak is responsible for retail acquisitions & new developments and acts as a liaison with City and State Government bureaus. Due to his established reputation as a key player in the real estate and hospitality industry, Mr. Muniak has managed to build a wide portfolio of bicoastal projects and has worked closely with top developers, entrepreneurs, and restaurateurs nationwide.
Originally from New York City, Mr. Muniak graduated from Johnson & Wales University in Rhode Island, and completed his graduate Business certificate in Sydney, Australia. He is a long-time martial artist and a philanthropist.