Welcome back and I hope you all enjoyed the long weekend.
Today I’d like to deep dive on the topic of preferred returns (also referred to as pref), something I find to be often deeply misunderstood among LP investors.
We’ll cover three topics:
What is a pref (and more importantly what it’s not!)
Why you can’t look at a pref in a vacuum
Isn’t a 90/10 split with no pref better for the LP than 80/20 with 8% pref?
AKA “to pref or not to pref” 😊
We’ll run through these in detail and I’ll also provide a graphical example to illustrate a point on the third topic.
