Can someone please explain the difference between pref and Jv equity to me? I hear it tossed around a lot, I understand what pref is but don’t really get JV equity and why anyone would be willing to do it in this market.
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Pref equity usually is a smaller investment, has capped upside, and has no say in the project. Standard JV gets more money out the door, has unlimited upside, and is a true partner in a deal.
Pref also gets paid first once senior loan is paid vs. JV Equity which goes pari passu after senior loan (and mezz / pref if you have it) get pid off
Pref is basically credit guys larping as equity guys
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