Why Preferred Equity Is Making a Comeback in Real Estate Financing (2025 Update)

Written By David Hakman

Real Estate Equity is Back… Kind Of.

 

After months of capital market tightness, equity is making its way back into real estate deals—but in a very specific form: Preferred Equity.

 

We’re not talking about the heavy-handed, sponsor-hostile pref from cycles past. This new wave is conventional preferred equity, designed to work in tandem with debt platforms to help deals pencil in today’s rate environment.

 

✅ Key differences:

  • Reasonable return hurdles

  • Sponsor-aligned structures

  • No predatory back-end grabs

  • Used as a flexible gap-filler between senior debt and common equity

 

Lenders like it. Sponsors like it. Deals need it.

For many, it’s become a critical tool to make proformas work, especially in transitional or value-add projects.

 

 

📞 Interested in hearing how others are structuring Preferred Equity in today’s market?

Happy to share insights, deal examples, and lender appetite summaries.

 

👉 Reply here: Contact Gary Cohen at GCohen@Americavest.us or (561) 467-6001 

David Hakman
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