JV Equity Converting to Preferred Equity During a Development Deal

Has any one ever structured a development deal where the JV equity partner (LP) has the option to convert to a preferred equity structure? I've been starting to see this structure socialized on master planned communities / large industrial phased deals and wanted to see if any one has had experience working on this deal structure and the mechanics behind it. In shorty summary, it is basically just offering the LP significant downside protection if leasing is stagnant, pro forma rents are not being achieved, construction delays, etc. Obviously there is a period of time for the LP to execute this option and I'd imagine that there could be some hurdles with getting the construction lender comfortable with this structure.

Interested in hearing feedback on this.

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JV Equity Converting to Preferred Equity During a Development Deal

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JV Equity Converting to Preferred Equity During a Development Deal

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