Preferred Equity
Kismet Kapital structures and places pref equity financing for commercial real estate nationwide — sourcing senior debt and complementary structured capital across asset classes.
- Typical Leverage
- Up to 85–90% combined LTC
- Typical Term
- Co-terminus with project plan
- Recourse
- Non-recourse, equity-style
- Initial Read
- Within 48 hours
Overview
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.
Kismet Kapital maintains direct relationships with banks, life companies, agencies, debt funds, CMBS desks, and private credit groups across the U.S. Capital is sourced based on asset, business plan, and sponsor profile.
Underwriting focuses on in-place income, sponsor track record, market fundamentals, and the strength of the business plan. Capital structures are tailored to the specific risk profile of each transaction.
Financing challenges
- Sizing pref equity proceeds against in-place income, projected stabilization, and exit strategy.
- Engineering a capital stack that aligns sponsor economics with lender constraints.
- Negotiating commercial terms — pricing, recourse, reserves, and covenants — to protect the business plan.
Capital solutions
- Construction equity gap funding
- Acquisition co-invest replacement
- Bridge recapitalization
- Hotel repositioning
- Direct outreach to relevant institutional lenders and equity partners.
- Term-sheet negotiation, structuring, and execution support through closing.
Frequently asked questions
What is a pref equity loan?
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.
What leverage and term are typical for preferred equity?
Preferred Equity typically size to Up to 85–90% combined LTC with terms of Co-terminus with project plan. Recourse is non-recourse, equity-style.
How long does a typical CRE financing process take?
Bridge and structured executions typically close in 30–60 days. Permanent and agency debt typically close in 45–75 days. Construction and JV equity transactions often run 60–120 days depending on diligence scope.
What documents are required to start?
An initial review typically requires a deal summary or OM, sponsor bio, sources & uses, an underwriting model or rent roll, and any third-party reports available. Kismet Kapital returns a structured read within 48 hours.
How does Kismet Kapital approach preferred equity for commercial real estate?
Kismet Kapital builds a tailored capital plan, identifies the most likely capital sources, runs a competitive process, and negotiates commercial terms — staying engaged through structuring, documentation, and closing.
Engage
Ready to structure your next deal?
Submit your transaction or schedule an introduction call. Confidential review within 48 hours.