Heard of preferred equity but not sure what it is or how it could benefit you? Read on to find out how preferred equity investing could be your next go-to strategy.
Preferred equity is a financial instrument and form of leverage often utilized in the creation of real estate capital structures. This unique product straddles between debt and equity as it has characteristics of both and can be structured to lean more in either direction. Preferred equity is an equity investment given priority distributions as well as priority on return of capital, only subordinate to the senior loan. Due to this subordination of the remaining (common) equity, often a fixed rate of return, and default remedies/control rights, preferred equity has many characteristics of a debt investment but has the higher returns and tax benefits of an equity investment in a typical multifamily syndication.
The Preferred Equity Manifesto is a whitepaper by Rob Beardsley, which explains preferred equity financing in great detail, including how to evaluate and structure opportunities as well as how to access these lucrative investments as a passive investor. Get access to The Preferred Equity Manifesto for free below!