Preferred Equity for Development Sites
Quick answer
Kismet Kapital structures pref equity financing for development sites at 85–90% LTC, typically closing in 30–60 days. Lender focus on sponsor track record, GC strength, fixed-price contracts, contingencies, and exit underwriting.
- Product
- Preferred Equity
- Asset Class
- Development
- Typical Leverage
- 85–90% LTC
- Typical Close
- 30–60 days
- Term
- Co-terminus with project plan
- Recourse
- Non-recourse, equity-style
Overview
Ground-up development capital is the most structured area of CRE finance — combining senior construction debt, mezzanine, preferred equity, and JV equity. Preferred equity is junior to debt and senior to common equity, with a fixed coupon (sometimes accruing) and priority on distributions and capital return. It is often used to fill the gap between senior debt and sponsor co-invest. For development sites, pref equity proceeds are sized against lender focus on sponsor track record, gc strength, fixed-price contracts, contingencies, and exit underwriting. sub-debt and preferred equity routinely fill the gap between senior ltc and sponsor co-invest.
Why sponsors use Kismet Kapital for development pref equity capital
development transactions are typically capitalized with Construction, Mezzanine, Preferred Equity, JV Equity. Kismet Kapital identifies which of those structures the current lender market will actually fund for your business plan, then runs a competitive process across the desks pricing development risk today.
Terms at a glance
- 85–90% LTC typical proceeds for pref equity on development sites.
- Executions generally close in 30–60 days.
- Fixed coupon with accrual, priority return of capital, and major-decision rights.
- Common structures: Construction, Mezzanine, Preferred Equity, JV Equity.
- Construction equity gap funding
- Acquisition co-invest replacement
Key facts
Kismet Kapital typically closes pref equity financing on development sites in 30–60 days.
Preferred Equity for development sites generally size to 85–90% LTC.
Development capital stacks commonly include Construction, Mezzanine, Preferred Equity, JV Equity.
Frequently asked questions
What leverage is available on pref equity financing for development sites?
Preferred Equity for development sites typically size to 85–90% LTC, with the exact proceeds driven by in-place income, business plan, and sponsor experience.
How long does a pref equity loan on development take to close?
Most development pref equity executions close in 30–60 days from signed term sheet.
How do lenders underwrite development sites?
Lender focus on sponsor track record, GC strength, fixed-price contracts, contingencies, and exit underwriting. Sub-debt and preferred equity routinely fill the gap between senior LTC and sponsor co-invest.
What capital structures work best for development sites?
Development Sites are typically capitalized with Construction, Mezzanine, Preferred Equity, JV Equity. Kismet Kapital engineers the mix that maximizes proceeds without breaking the business plan.
When is pref equity the right product for an development deal?
Structured equity sitting between common equity and mezzanine, with priority distributions. It fits development transactions such as construction equity gap funding and acquisition co-invest replacement.
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