What’s your promote fee?
To all the syndicates/PERE associates, how do you/your company set up their promote fee?

Do you get creative or is the typical 8% pref. Anything over is split 70/30 etc.?


[{"id": "ec0yof3", "text": "I thought a standard promote was something like a 12%/88% split after 9% IRR, then a 15%/85% after a 12% IRR and then 50/50 after 15%.  \n\nI guess it depends on the project, but for context I now work in the MH space and our promote is very similar to that on the operators side. ", "replies": [{"id": "ec11gl3", "text": "Second this", "replies": [], "depth": 2}, {"id": "ec18mld", "text": "Any consequences for you if there is a loss?", "replies": [{"id": "ec1qrqa", "text": "The GP co-invest I've been seeing is anywhere from the 2-10% range depending on the size of the project.  So if the project requires $10m of equity, you would be required to put in $200k to $1m.  Usually investors just want to see the co-invest large enough that it would hurt you to walk away.  ", "replies": [], "depth": 3}], "depth": 2}, {"id": "ec1hrj0", "text": "Yea but what\u2019s your initial equity split??", "replies": [{"id": "ec1igur", "text": "Call it 95/5", "replies": [], "depth": 3}], "depth": 2}, {"id": "ec1qkx4", "text": "I'm a multi-family operator, and our typical splits are 80/20 over an 8% pref and then 70/30 over 12% IRR.  The co-invest is typically 5-10%.  These are with mostly family offices and foreign investors in $10-$20m equity range.    \n\nWe are finalizing an equity fund (it's a EU fund, but only buys properties in the U.S.) that will be straight 80/20 over a 7% pref.  The GP co-invest is 1%.  This is a larger transaction.   \n\nAlso, these are all acquisition splits.  Our development deals usually have an additional waterfall like 60-40 or 50/50 over a 15% iRR. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "ec0znl5", "text": "Promotes vary across the board depending on a thousand different factors. What's your co-invest, what's the strategy, who's providing any loan/completion guarantees or on the hook for carve outs? \n\nIs there a catch up for the GP? Is it a return on capital to the LP then return to the GP, or a return on then OF to the LP prior to any return to the GP? Is cash flow treated differently than capital events?\n\nSyndicated promotes are generally more simple. Think a 70/30 or 80/20 over an 8-9% pref. Institutional JV's can have multi tiered waterfalls tied to IRRs, equity multiples or the greater of either. \n\nHard to answer without any specifics. Shoot me a note and I'd be happy to discuss offline or send you some resources.", "replies": [], "depth": 1}]