Hey guys, wanted to get your opinion on typical REPE fund structures you have seen.
Say you are a private equity fund like Greystar, you raise a multifamily fund where you have LP investors including pension funds, insurance companies etc., and Greystar itself contributes 10% to the fund. You have your typical hurdle, pref, catchup, carried interest structures where "available cash flows" are distributed as pref, catchup, carried interest etc.
Now my question is, what is the source of the "available cash flows"? Say the above example, Greystar is now gonna deploy the capital from the fund. They found a good multifamily asset they want to invest in, but because Greystar's expertise in MF operations, they decide to be the GP in that specific asset, and have an equity partner like Blackstone put in say 80% equity. Essentially the Greystar fund is the GP (20% equity) in that asset, and Blackstone is the LP (80% equity). Say Blackstone agree to pay the Greystar fund a promote if cash flows from the specific MF asset meet certain hurdles.
Now for the LP's in the Greystar fund (the pension funds, insurance companies, etc.), what are counted as "available cash flows"? Does it include all the cash flows the Greystar fund get from the MF asset, or does it exclude the Promote Blackstone pays to the Greystar fund?
I know every deal is different in REPE, but would appreciate any insights and experience on this!