Case Study
Mixed-Use Development with Preferred Equity
expertMixed-Use (multifamily + retail podium)Senior debt + preferred equity~25 min
The Deal
You are underwriting financing for Harbor & Main, a mixed-use development combining a 220-unit multifamily tower over an 18,000 SF ground-floor retail podium. The sponsor has capitalized the deal with a senior construction loan, a preferred equity tranche from an institutional investor, and common sponsor/LP equity. You'll review the sources-and-uses budget, the preferred equity term summary, and an excerpt from the anchor retail lease, then work through how the pieces fit together and what could go wrong.
You’ll Practice
- Identify lease risk that can cascade across a mixed-use capital stack
- Calculate total development cost and senior loan-to-cost for a mixed-use project
- Calculate accrued preferred return using Capital Balance x Preferred Rate
- Determine payment priority across senior debt, preferred equity, and common equity
- Evaluate why preferred equity was chosen over additional senior leverage or a JV equity partner