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