Waterfall distribution
A distribution waterfall is the agreed order in which cash from a property or fund is paid out to the parties involved. Money flows down through tiers, each filled before the next receives anything.
Common tiers
- Return of capital to investors.
- A preferred return (a target rate paid before profit splits).
- Profit splits between investors and the sponsor or manager, sometimes with a promote.
Whatever the structure, the manager still has to compute each party’s share and pay it accurately every period. AXYS applies your fee, withholding, and split rules as policy so distributions resolve consistently.
What is a preferred return?
A stated annual percentage on invested capital that investors receive before the sponsor shares in profits. It fills first in the waterfall, ahead of any profit split.
What is a promote?
The sponsor’s outsized share of profits above a hurdle, compensation for finding, structuring, and operating the deal beyond their pro-rata investment.
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