Capital Call true ups

Hey guys,

this may be a really naive questions but I am trying to wrap my head around true ups for a private RE fund. I get the part about equalizing the paid in capital for later capital call rounds, but I don’t fully understand the rationale for the 8% extra that’s also paid back to earlier LPs.

I’ve looked it up and can only find explanations about the mechanic but not the why it exists and also why is 8% such a standard rate.

Any insights would be greatly appreciated.

Thx!

 

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