Preferred equity is an equity investment that has preference over common equity for cash flow distributions. The preferred equity is positioned between the senior debt and common equity in a real estate investment. This means that the distribution and return of capital to preferred equity holders’ investments are subordinate to the senior debt, and still have priority over the common equity holders. Thus, preferred equity is referred to as a hybrid of debt and equity products.

With the help of Eqvista, you can easily issue preferred shares. Preferred equity holders as a rule have some kind of rights, by which an exchange of control of the real estate can be constrained from the common equity holders to the preferred equity holders assuming that specific defaults happen. Preferred equity investments can be seen as more secure ventures when contrasted with the normal value given the rank in getting appropriations.

Now that you know all about preferred equity and how it is beneficial over common equity, the next question that arises is how shall you create the preferred equity. The answer to this is simple: with the help of Eqvista. Given below is the step-by-step guide to issue preferred equity. 

Step 1: Login to your Eqvista account and select your company profile. On the Dashboard, click on “Securities” and then on “Equities” from the left side menu.

Equities

Step 2: Once you click on the “Equities” feature, a page will open for you as shown below. Under “Equity Classes” on the left hand side, select “Create New Class”.

Equity Classes

Step 3: Under the Equity type,  select the option: it can be Common or Preferred equity. You can choose “Common” for normal shares of ownership, voting, and shared price appreciation and “Preferred” for hybrid shares for ownership, non-voting and dividend payment. Select “Preferred”.

Preferred shares

Step 4: Once you have selected Preferred, you will be asked to input the following information: class name, pre-money valuation, conversion rate, and liquidity preference. Fill in all the details and then click on “Submit”.

Note that the pre-money valuation must be at least USD$1.

preferred equity details

Step 5: Once you have added all the details and clicked on submit, you will see the new preferred equity created by the name of “Series A” or whatever name you chose.

preferred equity created

And with that, creating preferred equity is much easier with Eqvista.  To know more about other features of Eqvista and understand how other tables work under the latest Spreadsheet feature, check out our other support articles here. Feel free to contact us for further information.

How to issue preferred shares on Eqvista?

Preferred equity is an equity investment that has preference over common equity for cash flow distributions. The preferred equity is positioned between the senior debt and common equity in a real estate investment. This means that the distribution and return of capital to preferred equity holders’ investments are subordinate to the senior debt, and still … Continued

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