GLOSSARY · CAPITAL & STRUCTURING
What is preferredequity?
Capital that ranks ahead of ordinary equity for returns but behind all debt. It can fill a funding gap without adding a second mortgage, at the cost of a priority return.
IN PRACTICE
Preferred equity is often chosen where the senior lender will not accept a second mortgage behind it. The terms that matter are the priority return, what happens if it is not paid on time, and how much control the investor takes when things go off plan. Read those clauses before you read the rate.
RELATED TERMS
THE TUESDAY LETTER One considered note, each week. The week's article and a short market note. Read by developers, lenders and private investors.