Preferred Equity
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:
- Insurance Companies
- Real Estate Funds
- Crowdfunding Platforms
- Private Equity Funds
- Private Family Offices
- Hedge Funds
- EB-5 Regional Centers
- Public and Private REITs
- Investment Banks
We maintain ongoing relationships with a large variety of Mezzanine debt providers including:
- Insurance Companies
- Real Estate Funds
- Crowdfunding Platforms
- Private Equity Funds
- Private Family Offices
- Hedge Funds
- EB-5 Regional Centers
- Public and Private REITs
- Investment Banks