All Forum Posts by: Michael Politi

Thanks Chris I was thinking the same thing re exposure to UBIT. This is a multi-family investment for a project where construction is almost complete. Regarding risk my perspective is that it is much lower than typical common equity deals in that there is a 25% cushion re valuation drop before the pref equity holders would be impacted. That is pretty significant particulary in an environment where interest rates are dropping.

I am considering investing in a Preferred Equity Syndication. The pref equity would pay out a 7% (annualized) quarterly distribution and a 7% back end return when the pref equity capital is returned. The capital stack is approx 70% debt, 5% pref equity and 25% common equity. If I utilize qualified funds would this investment be subject to UBIT re UDFI? I know a common equity investment would be subject to UBIT but since there is no back end upside I wasn't sure if the pref equity would be viewed as a loan?