Equity Waterfall - Market Standard

Based on the most helpful WSO content, catch-up provisions can indeed be negotiated in single-asset JVs, but they are less common compared to their use in GP fund structures. In single-asset JVs, the more typical structure involves the operator earning a percentage (X%) of profits above a specified preferred return hurdle. However, there are instances where operators negotiate a full catch-up provision, allowing them to earn X% of all profits once the preferred return is met.

This type of structure is more prevalent when the operator has significant leverage in the negotiation or when the deal dynamics justify it. For example, if the operator is taking on substantial risk or contributing unique value (e.g., development expertise or recourse risk), they might push for a catch-up provision.

In contrast, catch-up provisions are more standard in GP fund structures, where the GP earns a share of all profits after meeting the preferred return, aligning incentives across multiple assets in the fund.

Sources: LPs/Investor Return Structure, https://www.wallstreetoasis.com/forum/real-estate/waterfall-technical-question?customgpt=1, Negotiating Participation - Boutique SoCal Development shop, Promote Structure Alternatives, Promote vs Carried Interest vs Catch up