Glossary

Acquisition fees are a standard one-time fee charged when a syndicator closes on a deal. The fee compensates for the time, effort, and resources required to source and purchase a real estate investment opportunity.

Asset management in real estate syndication refers to the sponsor’s efforts in executing the business plan. In exchange for these efforts, an asset management fee is charged. Asset management fees range from 1-3%.

Averaged Annualized Returns (ARR) is a financial metric measuring the average return rate earned by an investment over a year.

Capital expenditures (CapEx) are the investments made by property owners or investors to acquire, upgrade, or maintain physical assets.

A cap rate is a financial metric used to measure the rate of before-tax return in comparison to the value of a property. It’s also commonly used to value properties. Market cap rates are effective tools for analyzing property prices and comparing different markets.

Cash flow is a term used to describe all income from a property or investment that gets distributed to investors or owners.

The cash-on-cash return metric measures investment performance by comparing cash invested and pre-tax cash low.

A catch-up provision in a real estate syndication that accompanies a preferred return, which is a provision of a waterfall structure designed to protect passive investors (LPs). This provision allows the sponsor (GP) to ‘catch-up’ on profit distributions once investors receive their preferred return.

A Co-GP is a partnership relationship that involves two or more sponsor entities who combine their complementary skills to work together in a syndication project.

The Development Spread is a term that refers to the added return a developer expects to make in exchange for taking on the added risk of a new development or value-add project.