equity kickers

Hi Yujin,

In a transaction involving loans equity kicker is a kind of offer of an ownership position.

Let me give an example to make it clear. Often mortgage real estate limited partnerships receive small ownership position from the real estate developers in a building to whom they lend money. It is a kind of equity kicker.

The limited partners get an appreciation payout out of the proceeds when that building is sold.

In exchange for getting the equity kicker, the lenders often charge a lower interest rate on the loan provided to the developers.

In addition to what McCabe said, equity kickers can also be called as a lender or investor's right to share any income from a property, in addition to loan payments.

Hi Guest,

Equity kicker is the right to acquire ownership equity in a property against which a mortgage loan is taken. Lenders may benefit from such a deal as they get their share of money when the property is sold. The amount they receive is proportional to their share of ownership interest in the property.

To know more about Equity Kicker, go through an article on this topic.

Thanks,

Sara