Discussion on REFJ’s Real Estate JV Promote Calculations
Reddit Post: This is the best summary of a promoted interest that I have seen. Does anyone have anything better?
Excerpt from article: One of the more popular ways an institutional investor invests in real estate is to team up with a local operator/developer (a service partner) who has the expertise and experience to locate, develop and manage a real estate asset that may be of interest to the investor. In such a transaction, the service partner is often given the right to earn an incentive bonus or potential reward through a so-called "promote",’ which in its simplest terms, is an extra share of the upside from the transaction.