Syndicate question
If you invest in a cre syndicate and origanlly get issued preferential stock, then after the refinancing event you get your original investment back as cash and your residual equity stake

My question is, is that residual equity stake normally ordinary stock, and if so, do management ever pay out dividends, or does all operating profit go to 'management fees' and your residual stock is only good for capital gain?
[{"id": "f6suv3o", "text": "Unless stipulated otherwise in your partnership or subscription agreement, any free cash flow from the property typically gets paid out pro-rata to shareholders. \n\nOften the managing partner gets a fee or a promoted return from the free cash distribution in return for their investment management and their loan guarantee (if the permanent financing is recourse). In this case the remaining cash flow after this is paid will be distributed to shareholders.", "replies": [{"id": "f6t0ptd", "text": "Second the above. In my experience this is how it works.", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6t21p3", "text": "In general, most such syndicates that I've seen are set up as partnership, so the correct term is units (not shares of stock).  And as a partnership, it is set up so that the investors receive K-1s, and report their share of the pass through income on their personal return.\n\nSo, once the preferred units are redeemed and you are left with the ordinary units, the income and distributions are usually pro rata (unless there is a waterfall structure).  And usually the sponsor has a target Coc return (though it may be less than the income of the property, depending on principal payments on the debt and the need for Capex reserves).  As well as most syndicators have a target life (in years) for the fund, as they have an exit strategy in mind (be it sell the property, refi and buy out the remaining ordinary units that they don't own, and sometimes even 1031 into another property).  There can be cases where management can keep all of the cash flow in the partnership, and passes through the gains (ie. you have taxable income, but no cash), but most do cover this in the PPM.\n\nThis isn't tax advise (i.e., consult your tax professional).  Generally, there will not be capital gain on your units until they sell the property or you dispose of your units (and even then, there are usually some special tax impacts of the, due to depreciation recapture; so they may not be at the normal capital gain tax rates). If you are really curious, you can ask for a tax impact analysis from the sponsor.", "replies": [], "depth": 1}, {"id": "f6uslu1", "text": "It depends on the agreement.  You have to read the terms of the agreement which should spell out what happens.  Usually, the investor will continue to get the percentage of cash flow commensurate with his ownership interest.", "replies": [], "depth": 1}]