Clairmont provides investors with unique access to the GP portion of the equity capital stack in institutional real estate transactions. The GP segment of the capital stack as well as its valuable economic benefits are rarely available to outside investors. This access enables Clairmont’s investors to participate in the GP’s disproportionate profit-sharing mechanism, known as the ‘promote.’
The promote acts as additional incentive payable to the GP for exceeding pre-defined performance hurdles over a transaction’s lifecycle. While the GP may only be required to contribute 10% of a transaction’s total equity, it stands to earn a far greater portion of the profits (upwards of 50%) upon successful execution of the business plan.
Clairmont’s ability to structure participation in the GP’s promote creates the potential for its investors to earn alpha (“a”), or positive return differential, when compared to the returns of the elite institutional LPs it invests alongside while simultaneously limiting downside exposure to commensurate returns as those same LPs.
