So let's say that that LP puts in 95% of the equity, GP puts in 5%, they each get 8% pref on their equity, after that a 70/30 split investor/sponsor of the next 12% in returns, then 60/40 in favor of the sponsor thereafter.
What would you think is a fair split of the capital appreciation of the asset? Someone was proposing to me a 50/50 split of that. Does that seem reasonable?
In the prior transaction given to me, pre-sale split of equity returns were roughly 75/25, and they want a 50/50 split on sale, maybe moving it to like 72/28, but they also said on future deals they would ideally like 50% of all the returns, which seems outrageous. I would think max that an LP would go for is an overall 70/30 split.
Thoughts, experience?
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