I am considering arranging a joint venture (80/20 structure) for a commercial real estate project in Los Angeles. However, I am running into some issues with the JV partners because of the project’s location—their committees will not approve it. Would using preferred equity work better in this situation or would I get the same pushback due to the location? I have not used preferred equity in a deal like this before. Would the preferred investors require the IRR be split among them? What are the pros of preferred equity versus joint venture equity?
