American-Style Waterfall

« Back to Glossary Index

A common method for distributing investment cash flow between two or more partners. An American-Style waterfall refers to a form of equity waterfall where the sponsor (i.e. general partner) is eligible to receive a promote (i.e. carried interest) before the limited partner has received a full return of capital and earned a preferred return. As such, distributable cash flow during operations and distributable cash flow at a capital event are treated differently.

While referred to as American-style, this form of real estate partnership waterfall is common worldwide including in Europe. It is often preferred by general partners as it front loads distributions to the general partner.

« Back to Glossary Index

Submit a Financing Request

Secure favorable term sheets for your real estate project