My firm is allowing me to co-invest in the GP stack on an un-promoted basis. I want to be sure that I fully understand how the WF will ensue given that my contribution will not be promoted. I will receive my pref + capital contribution, and any remaining cash that falls through the promote WF structure will be paid out to me based on my pro rata contribution and not split with the GP promote (which I am not in), correct?
Am I thinking about this accurately?
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What I would confirm is if your return is getting diluted by the promote or not. That is, is your personal return less than the deal level (no waterfall) return?
Your returns should be the same as the LP:
Multifamily development total cost: $50MM Assumes 55% LTC, 25% IRR, 3 year hold Carry % is a % of the $6.2MM LP contribute 95% equity, the waterfall IRR increasingly shifts returns to the promote.
You'll either be at the deal level returns (if you're not paying a promote or funding pursuit costs), or at the LP returns (if you are paying a promote). My initial thought is that you should be at the deal level, but certainly worth confirming here.
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