Seems like one of the popular sentiments is that it's a good time to be making pref equity and mezz investments, given how disjointed the market is, overleveraged borrowers needing cash-in refinances, etc. That said, just like any other provider of capital, some groups/funds do more volume than others. What would be some of the attributes to certain groups being able to deploy more capital in this strategy, vs others not putting out as much capital as they'd like. Is it mainly pricing (i.e. Group A will do pref for a lower IRR than Group B)? Is it the relationship aspect (i.e. Group A is easier to work with on legal, softer touch vs Group B)? Or are there other differentiating factors that borrowers look for?
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Mostly pricing. Developers/Acquisitions need to make the projects penciling in, and 200 basis points can make the difference here.
Senior lenders are largely a no on mezz right now. Just an FYI.
It’s usually an exception historically, but it’s a no right now.
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