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RPP – Preferred Equity vs. Common Equity

Rand Partners own Dylan Marma and Mike Taravella discuss the evolution of preferred equity in the multifamily investing space.

  • Preferred Equity
    • Receives preferred return of cash flow before common equity
    • Doesn’t receive upside 
    • Ideal for investors who want to receive yield
    • This structure has been used in Office and Retail asset classes
  • Common Equity
    • Doesn’t receive preferred return
    • Receives upside 
    • Ideal for opportunistic investor seeking high IRR
  • Expert Tip: Don’t just invest in an Opportunity Zone for the “Tax Benefits”
    • Make sure the deal works first and treat the Opportunity Zone as an added benefit

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