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What is a Real Estate Sponsor Promote?

A key term to a real estate private equity deal is the sponsor “promote”. This term is really just industry jargon for the sponsor’s disproportionate share of profits in a real estate deal above a predetermined return threshold. In this article, we will define the sponsor promote, explore how promotes work, explain how they are justified as well as how they benefit both sponsors and investors and, finally, what they mean to investors under a direct-to-investor model.

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