Strictly, they're different instruments. A mezzanine loan is a loan. It's secured by a pledge of the equity interests in the entity that owns the property, so if it goes bad the mezz lender forecloses on that pledge under the UCC and ends up owning the borrower entity. Preferred equity isn't a loan, has no lien, and nothing gets recorded against the property. You buy a membership interest in the LLC that owns the building, and the LLC agreement says your distributions come ahead of the sponsor's.
Loosely, plenty of people in the market call any subordinate capital "pref", including positions documented as loans. Read what the documents call themselves rather than what the email says.
On your 12 percent, ask whether it's paid current out of monthly cash flow, accrued and compounded until a sale or refinance, or split, say 8 current and 4 accruing. That one answer changes both your cash yield and your risk. Ask too whether there's a minimum multiple, meaning you get at least something like 1.25 times your money back even if the deal exits in year one.
The other thing to raise before you fund: the senior lender usually has to know about the pref and consent to it, and mortgage documents often treat a change in control of the borrower as a default. So the remedy you'd rely on if payments stop can collide with the senior loan. Ask to see the senior loan's transfer and control provisions, and any consent or recognition letter the sponsor got.
