Preferred Equity for Multifamily
Just curious what folks are seeing out there in terms of pricing/terms for preferred equity positions. I am specifically looking at value add multifamily, and seems like there is an abundance of pref equity investors in the market. I have heard several stories of firms pitching JV equity when really they are doing mainly pref.
Using round numbers, assuming a $100 total capitalization with a $60M debt piece, is it reasonable to assume that a pref equity investor could come in for $20-$25M and reduce sponsor's requirement to $15M-$20M?
What sort of pricing is out there? Would pref pieceto be swept to them during the hold period until they hit some hurdle? Or could it be structured with a lower current pay coupon so sponsor could still generate some cash to them before a capital/sale event?