Distribution Waterfalls in Real Estate: A Complete Guide to Preferred Returns, Catch-Ups, Promotes, and the Mechanics That Determine Who Gets Paid
Ask two real estate sponsors to describe their waterfall structures and you will often get the same high-level answer: eight percent preferred return, eighty-twenty split. Ask them to walk through the exact calculation on a specific distribution — accounting for compounding, interim payments, catch-up mechanics, and the interaction between operating cash flow and sale proceeds […]