Preferred Equity Capital for CRE Transactions
Learn how preferred equity fits between senior debt and common equity for commercial real estate transactions.
The middle layer of the CRE capital stack.
Preferred equity is positioned above common equity and below senior debt, creating a structure that can improve execution for sponsors while offering investors priority economics.
Senior to Common Equity
Preferred equity receives priority distributions before common equity, subject to deal documents and available cash flow.
Flexible Structure
Terms may be tailored around business plan, collateral, cash flow, exit strategy, and sponsor requirements.
Risk-Adjusted Return Potential
Preferred returns and upside participation can create attractive risk-adjusted return potential.
Preferred equity vs. other capital.
CRE preferred equity can offer a blend of income, downside protection, and upside potential.
| Characteristic | Preferred Equity | Common Equity | Senior Debt |
|---|---|---|---|
| Position | Between debt and common equity | Residual ownership | First priority |
| Return Profile | Preferred return plus possible upside | Upside focused | Fixed income focused |
| Control | Typically passive with negotiated protections | Sponsor/operator controlled | Lender covenants |
Preferred equity capital for commercial real estate sponsors and investors. Capital. Relationships. Results.
This website is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities. Prospective investors should conduct independent due diligence and consult their own professional advisers.