The Promote Podcast The Rise of Pref & Meridian Out of Agency Jail
Apr 23, 2025
Discover the booming trend of preferred equity deals in real estate and their implications for investors. Learn about Meridian Capital Group's recent revival after being sidelined by Fannie Mae and what it means for the brokerage's future. Dive into the repercussions of tariffs shaking up the CMBS market, causing chaos and transaction paralysis. Explore the evolving dynamics of financing and how market uncertainties challenge both investors and smaller tenants in today’s climate.
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Institutional Adoption of PREF
- Large institutional players heavily invest in PREF funds due to higher yield and downside protections.
- Pref has become the main method for firms to deploy equity capital while common equity remains less favored.
Career Risk Drives Equity Choices
- Career risk outweighs deal risk, leading institutions to prefer PREF despite big multifamily deals.
- Pref equity is currently the primary and safer vehicle for equity deployment in CRE markets.
Consider Structured Preferred Equity
- Consider structured preferred equity to minimize cash interest and share upside beyond certain hurdles.
- Structured PREF offers sponsors flexibility to manage pay and exit options effectively.