Preferred Return

As the name suggests, preferred return is a profit distribution preference whereby profits, either from operations, sale, or refinance, are distributed to one class of equity before another until a certain rate of return on the initial investment is reached.  The pref is stated as a percentage, such as an 8% cumulative return on initial investment; however, it can also be stated as a certain equity multiple.  This preference provides some comfort to investors since it subordinates the sponsor’s profits participation or “promote” (see our recent article: What is a Real Estate Sponsor Promote?) up to a certain return threshold.

Click here for more information about preferred returns.

Start your real estate investing journey

Build a real estate portfolio that meets your investment goals.

Group 2010204
Get the word on the street.

Sign up now for our newsletter to discover key insights, market analysis updates, and expert opinions.

You're In!

Thanks for signing up for our monthly newsletter.