Preferred Equity

Make your next investment wisely. Contact our professionals on (03) 9900 6227

Contact our experienced professionals to discuss financing for your next project.

Preferred equity is a form of financing that effectively takes a direct stake in a project and is paid back before common equity but behind any debt positions. Typically, a preferred equity facility will come with a coupon rate of annual return rather than a profit share arrangement.

Like mezzanine funding, taking a preferred equity facilitiy may enable a developer to spread capital across projects, start earlier on a project and potentially increase their return on cost. Preferred equity differs from mezzanine finance, however, as rather than take a 2nd mortgage position on the property with a defined interest rate, a provider will take an equity stake in the development entity, usually with a fixed coupon rate. The end result is very similar but this structuring can be more suitable than mezzanine finance in certain situations, such as where the senior debt provider does not allow a mezzanine finance facility to go in behind them.

As a business that is focused on solutions and with a flexible model of funding, MFEG has the ability to structure the most appropriate financing model for a particular project including the taking and arranging of preferred equity positions where it is appropriate and workable to do so.

Preferred Equity Melbourne

Helping fund the future

 

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Melbourne Finance & Equity Group - MFEG is committed to ensuring that the collection and processing of data carried out by our mfeg.com.au site complies with the General Data Protection Regulations (GDPR) and the Data Protection Act. To know and exercise your rights, particularly concerning the withdrawal of consent to the use of collected data, please consult our privacy policy
Our services:
  • Property development finance
  • Mezzanine finance
  • Preferred equity
  • Land Finance
  • Residual Stock
  • Short Term Lending
Our Commitment:
  • Over 15 years of experience
  • Professional service
  • Reliability, Responsiveness and integrity
  • Knowledgeable advice
Servicing:
  • All parts of Australia

Preferred Equity Vs Mezzanine Debt

Mezzanine debt and preferred equity both sit between the senior debt and common equity in the capital stack and generally serve similar functions to fill a gap in funding and/or provide additional leverage.

The primary difference between the two is that mezzanine debt is generally structured as a loan that is secured by a lien on the property while preferred equity, on the other hand, is an equity investment in the property-owning entity.

Both Mezzanine debt and preferred equity can be effective tools to provide a borrower or sponsor with higher levels of leverage at a lower cost than common equity. In return, investors get a more secured position relative to the equity but a higher yield for their additional risk in being subordinate to the senior loan.

Higher leverage at lower costs

 

Preferred Equity Yarra Ranges

Whether you are looking to invest, or need investors, our expertise can help. Call now!

MFEG is thankful to the thousands of clients around Melbourne who trust us to deliver the best financial and funding solutions. Why not contact us today to find out how we can help make a difference for you or your clients?

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Melbourne Finance & Equity Group - MFEG is committed to ensuring that the collection and processing of data carried out by our mfeg.com.au site complies with the General Data Protection Regulations (GDPR) and the Data Protection Act. To know and exercise your rights, particularly concerning the withdrawal of consent to the use of collected data, please consult our privacy policy

Make your next investment wisely. Contact our professionals on (03) 9900 6227

Real estate developers or owners who are seeking to increase their leverage often turn to Preferred Equity. This helps them by financing a project with capital that is lower priority to the mortgage debt but higher priority to the equity the project sponsor already has in the project. For further details on how you can make this work for you, turn to the experts at Melbourne Finance and Equity Group  (MFEG) today!

Preferred Vs Common Equity

Like debt, preferred equity most often involves a fixed term. This is usually two to three years. At the end of the term or in the event of certain triggering events related to the non-performance of the sponsor, the sponsor is typically required to redeem the preferred equity interest for a redemption price equal to the unreturned capital plus any accrued but undistributed interest earnings.

Common equity, on the other hand, is more than just a loan. It is buying into the project. An investor receives a percentage interest in the project. That way, he or she receives a part of any increase in the value of the completed project. Or they might receive a portion of rental income. Or both. This is pretty much like buying stock from your broker. You own a portion of the company. But if the project loses money, the investor may also lose his or her money.

Are you looking for investment opportunities, or maybe looking for investors? Either way, our experts at MFEG have the skills to find you what you need. Call now for details!

Preferred Equity Melbourne

Helping fund the future

 

Enquiry Form


Text value required
Text value required
Phone number value required
E-Mail address value required
Checkbox mandatory
Please fill in captcha confirmation code
captcha
Melbourne Finance & Equity Group - MFEG is committed to ensuring that the collection and processing of data carried out by our mfeg.com.au site complies with the General Data Protection Regulations (GDPR) and the Data Protection Act. To know and exercise your rights, particularly concerning the withdrawal of consent to the use of collected data, please consult our privacy policy
Our services:
  • Property development finance
  • Mezzanine finance
  • Preferred equity
  • Land Finance
  • Residual Stock Finance
  • Short Term Lending
We guarantee:
  • Over 15 years of experience
  • Professional services
  • Customer satisfaction
  • Reliable and comprehensive services
  • Knowledgeable advice
Serving:
  • All parts of Australia