The Preferred Equity Program
The Preferred Equity program is geared towards addressing the needs of multihousing real estate owners. The program aims to serve sponsors by offering flexible financing alternatives and a quick execution. Whether to fund the purchase of a new asset, restructure an existing asset, make capital improvements, or replace existing mezzanine financing, this program is tailored to the specific needs of many multihousing scenarios.
The program was established to provide capital to support the acquisition, recapitalization, and restructuring of Class A, B, and C+ properties. It is a viable vehicle to invest in properties in a debt-like position while earning equity-like returns.
The Preferred Equity program assists sponsors to create value for their projects by providing capital for varying market scenarios:
- Value-add and Opportunistic Assets
- Provides Sponsors flexibility to get in and out of a project within a short timeframe
- Supplements long-term financing for projects with significant CAPEX budgets
- May be structured to be co-terminus with bridge or permanent loan financing
- Stable, Cash-flowing Assets
- Reduces lead time to raise equity for time-sensitive acquisitions
- Provides Sponsors with additional leverage beyond conventional first-mortgage financing
- Assets in Lease-Up
- Provides a capital source to bridge properties undergoing lease-ups
- Recapitalizations and Restructurings
- Allows Sponsors to replace expensive or mature financing without having to raise additional equity and dilute current LP investors
- Serves as a source of capital for situations where Sponsors want to create an exit for current LP investors without selling, refinancing, or losing management of the asset
- Enables Sponsors to make capital improvements to an asset without making capital calls
Preferred Equity is well-protected by at least 10% of equity capital.