In any syndication, you have general partners (the investors actively managing the deal) and limited partners (those not active in the deal). We structure our investments so that our limited partners will receive a preferred return, often referred to as a "pref."

A preferred return is typically a set annual percentage that must be paid to limited partners before the general partners receive any share of the profits. It ensures that our investors have priority in receiving returns on their investment. In other words, before any profits are distributed to other equity holders, our LPs will receive a certain percentage, usually 6-8%, of the returns generated by the investment

Understanding Preferred Returns

For simplicity, let's say you invest $100,000 with BLVD. The preferred return can vary depending on the deal, but it typically falls between 6% and 8%. For this example, we'll use a 7% preferred return.

As the property generates cash flow, it is first distributed to the limited partners (LPs) until they have received their 7% return on their $100,000 investment. If the property doesn’t produce a 7% return, which can be common in the early stages of the investment, the unpaid portion accrues and compounds until it is paid out. The full 7% return must be paid to the LPs before the general partners (GPs) receive any profits from the deal.

The preferred return is designed to give our investors added confidence by stacking the deal in their favor and creating a strong incentive for us to perform to earn our share of the returns. It's also important to note that in every one of our deals, we also invest as limited partners (LPs).

Our Unique Preferred Return Structure

Our preferred return accrues and compounds, offering retail investors an institutional-style structure. Accruing means that if the investment does not generate enough returns to meet the preferred return in a given period, the shortfall is not lost but carried forward to future periods. For instance, if the preferred return is 7% and only 5% is achieved, the 2% shortfall is added to the amount required in the next period. Compounding means that this unpaid shortfall also earns interest on itself, growing over time based on the remaining capital balance. This ensures that any shortfalls accumulate and increase, providing maximum protection for the LPs’ investment.

Our preferred return structure is designed to provide significant protection and value to our limited partners, distinguishing us from many other investment groups. By ensuring that LPs receive their preferred return before any profits are distributed to GPs, and by using an accruing and compounding mechanism, we prioritize the security and performance of our LPs' investments. This approach aligns our interests with those of our LPs and demonstrates our commitment to delivering strong returns.

If you have any further questions about our investment structure or would like to learn more, please feel free to reach out. We look forward to connecting with you.

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