Structuring Preferred Equity Investments in Real Estate Ventures: True Equity vs. "Debt-Like" Equity
Negotiating Deal Terms, Investor Return, Change in Control Provisions; Assessing Remedies, Tax, Bankruptcy Issues
Recording of a 90-minute CLE webcast with Q&A
This CLE webinar will discuss structuring preferred equity investments (PEIs) from the perspectives of both 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 key agreement terms and trends in the current market, and outline approaches for negotiating terms and provisions.
- Preferred equity vs. mezzanine debt
- Structuring the preferred equity deal
- Remedies for default
- Change in control issues
- Relationship to mortgage lender
- Impact of entity bankruptcy on preferred equity holder
- 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 either the investor or the financing recipient must understand and negotiate when structuring the PEI agreement?
- How should counsel to a preferred equity investor address potential default, change in control or bankruptcy by the financing recipient?
- What are the most important tax consequences that can arise out of preferred equity financing and how can counsel anticipate and mitigate those consequences?
Mark S. Fawer
Mr. Fawer is a partner in the firm’s Real Estate group, where he focuses on representing senior and mezzanine... | Read More
Mr. Fawer is a partner in the firm’s Real Estate group, where he focuses on representing senior and mezzanine lenders, developers, real estate debt and equity funds, REITs, CDOs, and investors in the acquisition, financing, development, refinancing, recapitalizing and sale of single-asset and portfolios of multifamily, retail, industrial, office, and hotel properties and the origination, purchase, disposition and restructuring of senior and mezzanine real estate and corporate loans and loan participation interests. He writes and speaks extensively on the subject of intercreditor and co-lender agreements and arrangements.Close
Benjamin R. Weber
Sullivan & Cromwell
Mr. Weber has experience in a broad range of commercial real estate, corporate finance, and private and public... | Read More
Mr. Weber has experience in a broad range of commercial real estate, corporate finance, and private and public securities transactions, including acquisitions and dispositions, corporate and partnership restructurings, securitizations, financings, private equity investments, and public and private offerings of debt and equity.Close