10 to 15 percent is the quoted range for pref, so where inside it does a first-time pref investor belong

Both stories describe something real, and they're separable if you look at the pieces of the return instead of the headline number.

Take two positions. Position A is 11 percent, all current, stabilized asset, combined LTV around 75, sponsor has 12 percent of the stack in cash equity behind you. Position B is 14.5 percent, 6 current and the rest accruing, lease-up asset at 68 percent stabilized occupancy, sponsor equity behind you is mostly a promote and some deferred fee. B's headline is 350 basis points wider. Its current pay is 500 basis points narrower. The dollars you actually collect in the first two years are lower on the higher-quoted deal, and everything else depends on the exit.

So the question isn't where in the band you sit. It's how much of your return is contractual cash from operations, how much is a minimum multiple that only pays on a sale, and how thick the common equity below you is. I'd rather have 11 percent with 20 percent of real cash equity underneath me than 15 with 5 percent, and I've passed on wide paper for exactly that reason.

@meridian, the sourcing point in your second story is fair though. Competitive processes do compress pricing, and if your only edge is willingness to accept whatever pricing is offered, you're the one being selected.

@ledger's split between contractual cash and exit-dependent dollars is the part I hadn't separated out. I'd been reading 14.5 as "better than 11" without asking when any of it arrives. Still not clear how you get comfortable with a minimum multiple that only pays on a sale you don't control the timing of.