A provision requiring the sponsor to return promote it was paid earlier if later losses mean the LPs did not ultimately receive their agreed preferred return.
Related terms
- Closed-ended fund
A fund with a fixed life and committed capital raised in a defined window, deploying then exiting assets over a set term — the standard structure for value-add…
- Co-investment
An opportunity for an LP to invest additional capital directly into a specific deal alongside the fund, usually at reduced or no fees and promote.
- Common equity
The most junior, highest-risk layer of the capital stack; it absorbs first losses but captures all residual upside after debt and preferred equity are paid.
- Core
A low-risk strategy targeting stabilised, well-let assets in prime locations.
- Core-plus
A moderate-risk strategy on largely stabilised assets with some upside from light improvement.
- Distribution waterfall
The contractual order in which cash is split between investors and sponsor — typically return of capital, then a preferred return, then a catch-up, then a prom…
- Diversification
Spreading capital across assets, sectors, or geographies whose returns do not move together to reduce portfolio risk without a proportional cut in expected ret…
- DPI
Distributions to paid-in capital: cash actually returned to LPs divided by capital they have contributed — the realised, cash-in-hand measure of fund performan…