RE Debt Fund Carry & Org Structure
Hey everyone, I’m excited to be starting a new role with a private re debt fund and I’m wondering whether their structure and carry are similar to REPE. I know that it’s not going to be part of my comp package but I was wondering if any of you have any insights on their typical organizational and carry structures. My role will be construction loan manager. Thanks 🙏
Carry in a debt fund works the same as an equity fund. The hurdles may be different, ie.: instead of a 8% IRR as the Pref, it may be 5% or 6%, once the hurdle is met, carry is paid. Debt funds can get into the carry faster due to the current coupon nature of debt and potentially being able to be above the Pref month 1. Doesn’t always happens like this, but it’s possible.
How long is a typical fund life on the debt fund side? Sounds like carry is paid out on an ongoing basis because of the current pay and you don't have to wait until all of the deals are realized, which is a huge benefit vs the equity side (at least the opportunistic strategy).
Most debt funds are 7 years with extension.
Debt funds typically vest like any other carry structure so you vesting schedule might be faster, but you don't get current distributions except for tax.
OP here. Thank you for this, do you think there’s any variation in how carry is calculated? I’m also wondering whether the equivalent of a construction loan manager would be associate at a PE firm. Is this a fair comparison? Based from the job description it’s basically an asset management role.
How many YOE?
5-7 depending on how you want to define it, I was in construction management up till now but just finished my MBA
Oh, then probably associate. That would make sense.
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