A preferred return (or "pref") is the rate investors in a syndicated deal receive before the sponsor collects any share of profits. Typical LA multifamily pref: 6–9% annually.
In syndicated LA multifamily deals, limited partner investors receive the preferred return first. Only after the pref is paid does the sponsor (general partner) share in the remaining profits. This structure aligns sponsor incentives with LP returns.
For LA multifamily syndications in 2026, prefs typically run 7–8% on value-add deals, 6–7% on core-plus. Pref rates have risen slightly from 2021 lows as risk-free rates increased. LPs evaluate deals by comparing pref rates, split structures, and historical sponsor track record.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
Thinking about selling? Get a no-obligation evaluation from a broker with $1.41 billion across 254 closed LA multifamily transactions.
Request Free Evaluation →