Filling the Gap: Structuring and Negotiating Preferred Equity Investments for Real Estate Transactions
Emanuel Tsourounis & Nicole Dlugosz-Howard are presenting the CLE “Filling the Gap: Structuring and Negotiating Preferred Equity Investments for Real Estate Transactions”.
As traditional sources of debt financing continue to be constrained in the current market, sponsors are increasingly turning to providers of preferred equity investments to “fill the gap” in the capital stack when closing new real estate transactions and restructuring or recapitalizing existing ones. While preferred equity has proven to be a flexible financing alternative, preferred equity transactions can be tricky to structure and negotiate because they tend to exhibit both debt- and equity-like characteristics and may receive inconsistent treatment (as either debt or equity) in different circumstances and by different parties.
This webinar will explore the range of potential features and terms negotiated by parties when structuring preferred equity investments, how these features and terms may be similar to, or distinguishable from, typical mezzanine loan transactions and joint venture arrangements, and certain considerations attendant to preferred equity investments and how they are structured and documented. We will also review the types of protections that lenders and preferred equity investors will generally seek from each other when preferred equity investments are made in conjunction with senior secured financing, ranging from limited permitted transfer rights (which may be conditioned upon the receipt by lender of replacement guaranties) that are embedded in the loan documents to stand-alone recognitions agreements that create privity between the lender and preferred equity investor and are often similar to intercreditor agreements.
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