What Is the Difference Between Preferred Equity and Mezzanine Debt? The primary distinction between pref equity vs mezz is that one functions as debt while the other functions as equity. Mezzanine financing, whether from a bank or a private lender, is considered debt. This is because it comes after senior debt in terms of repayment, and the recall rights are structured differently than preferred equity. Mezzanine debt and preferred equity can both be useful tools for providing a borrower or sponsor with greater leverage at a lower cost than common equity. In exchange, investors receive a more secure position in comparison to equity, but a higher yield for the additional risk of being subordinate to the senior loan.
What does a commercial real estate debt analyst do? A real estate capital market analyst, such as Clearwatercm, is in charge of selling real estate projects and transactions. They devote a significant amount of time to researching the local real estate market. Market assessments, macroeconomic factors, Mezz loan real estate, and financial models are all examined in this study. It is used in executive summaries and other market reports for each project to offer finance or project options.
Analysts also underwrite loans to ensure the viability of a project. They examine and evaluate real estate documents such as leases, appraisals, and loans. These individuals plan client meetings, memos, contract discussions, and marketing materials. These experts frequently work for companies that specialize in asset management.
Based on their well-established capital market relationships, Clearwatercm specializes in debt placement for pre-development, development, transitional, and stabilized properties across the United States. Banks, credit unions, debt funds, family offices, hedge funds, high net worth individuals, life companies, mortgage REITs, and pension plans are among their capital sources.
Clearwater arranges subordinated debt for clients looking to increase overall leverage, maximize returns, reduce risk, and generate liquidity. A pledge of a partnership interest in the ownership equity secures mezzanine loans. Clearwater has relationships with a proprietary network of preferred equity partners who provide gap funding but usually require a “equity kicker” – an additional right to profits if the project performs well.
Their investment professionals understand the critical role that real estate mezzanine loans play as a funding tool for investors. Clearwatercm can help you secure a real estate mezzanine loan by discussing your project.
Clearwater Capital Management, LLC
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Website – https://clearwatercm.com/