Structuring Preferred Equity Investments in Real Estate Ventures: Impact of True Equity vs. "Debt-Like" Equity
Negotiating Deal Terms, Investor Return, Change in Control Provisions; Assessing Remedies, Tax, Bankruptcy Issues
Note: CPE credit is not offered on this program
Recording of a 90-minute premium CLE video webinar with Q&A
This CLE course will discuss structuring preferred equity investments (PEIs) from both the perspective of the sponsor and investor and explain the advantages and disadvantages of using preferred equity as a component of a capital stack. The panel will review how PEIs compare and contrast with mezzanine financing and other equity investments, discuss the critical agreement terms and trends in the current market, and outline approaches for negotiating terms and provisions.
- Total return for the investor
- Preferred equity vs. mezzanine debt
- Structuring the preferred equity deal
- Remedies for default
- Change in control issues
- Bankruptcy and tax ramifications
The panel will review these and other key issues:
- What are the primary benefits and risks of PEIs compared to other equity investments or mezzanine financing?
- What are the key provisions that counsel to the investor or the financing recipient must understand and negotiate when structuring the PEI agreement?
- How should preferred equity investor counsel address potential default, change in control, or bankruptcy by the financing recipient?
- What are the most crucial tax consequences arising from preferred equity financing, and how can counsel anticipate and mitigate those consequences?
Michael J. Fritz
Shipman & Goodwin
Mr. Fritz’ business and corporate practice consists of representing private equity funds, venture capital funds,... | Read More
Mr. Fritz’ business and corporate practice consists of representing private equity funds, venture capital funds, and other business entities in connection with a variety of commercial transactions, including, financings, mergers, acquisitions and dispositions, joint ventures, preferred equity investments, distressed investments and private placements. Additionally, he represents healthcare systems and providers in various different business combinations, including affiliations, M&As, and joint ventures. Mr. Fritz also represents clients in the capacity as "outside general counsel", advising on matters such as business formation, corporate governance, business operations, commercial contracting and other general corporate matters. His clients are in a broad range of industries including real estate, healthcare, technology, financial services and manufacturing. Mr. Fritz’ commercial real estate practice focuses on transactional commercial real estate matters, including the purchase, development and disposition of real estate assets, mortgage and mezzanine financings, preferred equity investments, and the formation of joint ventures.Close
Kathleen M. Mylod
Shipman & Goodwin
Ms. Mylod is a finance and real estate attorney whose clients include private equity and sovereign wealth funds,... | Read More
Ms. Mylod is a finance and real estate attorney whose clients include private equity and sovereign wealth funds, investment and commercial banks and large insurance companies across the United States. She practices in the areas of mortgage and mezzanine debt origination; intercreditor, co-lender and participation arrangements; structured finance; equity investment and joint venture formation; preferred equity financing; real property acquisition, disposition and asset management; secondary market acquisition and sales (including mortgage and mezzanine loans); and loan modifications, restructurings, workouts and enforcement actions. Deals for which Ms. Mylod and her team have counseled clients range from a $5MM mezzanine loan (behind a CMBS mortgage) on a multifamily property in North Carolina, to a $90M A-note acquisition secured by a portfolio of office properties in California, to a $1B+ disposition of trophy hotels located in Arizona and Hawaii.Close