We just got our first tax‑aware pref equity distributions.

A 14.0% preferred return, structured as:

• 6.75% current pay, distributed monthly (tax-free thanks to depreciation)
• 7.25% accrual, compounded monthly
• Plus a 1% upfront fee

The opportunity exists because developers in markets like Austin need time.

Many would rather hold onto quality properties, wait for markets to normalize, and exit closer to or above cost basis than sell into a weak transaction market today.

That creates an opening for preferred equity capital.

But the real magic is in the tax-aware structuring of the deals.

The current pay can be shielded by depreciation and while the accrual creates a future tax event, you have two ways to avoid it:

1. Capital losses from tax-aware long/short SMAs
2. Roll proceeds into the next real estate opportunity to create more depreciation

Tax-aware portfolio design is a thing of beauty. 🥹