Waterfall calculation
When returns are paid to more than one party in a vehicle, the order of priority for cash flows of these is set out in the waterfall calculation.
Global Definitions Database
Access, learn and discover all terms related to the non-listed real estate sector.
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Carried interest
A re-allocation of profits from the investor's capital account to the investment manager capital account based on the ability of the latter party to outperform a certain predetermined benchmark. Carried interest is structured as a re-allocation of equity within the capital accounts rather than a straight charge to the investment manager generally due to tax purposes.
Performance fee
Also known as incentive fees, promote or carried interest, are fees charged by investment advisors, or managers, after a predetermined investment performance has been attained. Carried interest represents a re-allocation of equity and should be treated accordingly for accounting, tax or regulatory purposes.