Lending & investment · Defined
Preferred equity
An ownership investment with negotiated preferences, often concerning distributions or return of capital, ahead of common equity.
Why it matters
It is not simply another construction loan. Distribution priorities, control rights, and remedies vary by agreement, and a preference does not guarantee repayment or protect against project losses.
In practice
A project example
A preferred equity investor requests progress reporting to understand whether delays may affect the investment’s projected distributions.
General educational guidance from KOW Building Consultants. Examples are illustrative, not project records. The applicable contract, standard, program, and jurisdiction control the requirements for a specific assignment.