Preferred Equity = Rented Equity.

To senior lenders preferred equity serves the same function as traditional equity, providing a bridge that covers the gap between the principal’s equity and the requirements of the lender. However, a preferred equity investment behaves much like a secondary, short-term debt. 

Our clients essentially ‘rent’ our equity investment for the duration of construction, in exchange for an accrued preferred return. Once the project is complete and a permanent loan is secured, the principal repays invested capital plus accrued interest to FAST, and we return the ‘rented’ equity and 100% ownership to the principal.

FAST Preferred equity differentiates itself from competitors in that we take no long term profit participation above our mandatory preferred return.

PREFERRED equity in detail

Preferred equity allows sponsors, developers and commercial real estate entrepreneurs to reduce their capital outlay, while preserving ownership, control and upside without utilizing advancement of project equity from other capital investment providers.

Our preferred equity real estate financing is a close cousin to mezzanine lending with one big difference: we will dovetail terms with the senior lender and structure our collateral in the form of a pledge on the partnership interest, along with writing contract remedies into the operating agreement with the partnership/entity borrowing the equity.

Preferred equity, placed on top of a convention bank construction loan, is an affordable way to increase leverage, minimize sponsor equity outlay and maintain full control and long term project upside. If you’re curious whether your development project is suited for a FAST Preferred Equity investment, click the button below and share some general info about your project. We’ll get back to you within 24 hours to discuss.