A Beginner's Guide To Real Estate Equity Waterfalls

A Guide To Real Estate Equity Waterfalls // Real estate private equity can be a really lucrative industry to work in (or start a company in), and a huge reason for that is the existence of promoted interest.

​​Promoted interest allows an individual investor raising capital or (most often) an investment or development firm raising capital to earn an outsized percentage of the profits on a deal, over and above their original equity interest.

​​This amount is determined by what’s referred to as an equity waterfall structure, and while the details of these can get pretty complex, in this video, I want to break down what a typical equity waterfall structure actually looks like in commercial real estate, how these structures tend to function in practice, and the calculations behind these that end up driving the cash flow splits between investors on a real estate deal deal.

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🕒 Timestamps 🕒
0:00 Introduction
1:03 Promotes & Hurdles
4:40 Catch-Ups
6:24 Clawbacks

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*Nothing in this video should be construed as tax, legal, accounting, valuation, or financial advice or recommendation. All information in this video is intended solely for educational purposes, and you are advised to consult with your own personal professional advisors regarding your personal investment decisions.

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