In this episode, host Litan Yahav joins forces with Mike Arndorfer (A2 Passive Coaching) and Kaley Kris (Portfolio Manager at Johnson Financial Group) to analyze a self-storage fund pitch deck that proves appearances can be deceiving.
Nomad Capital presents a $30M self-storage conversion fund targeting the Southeast, with an interesting twist – they’re not building from scratch, but converting retail and industrial properties. The strategy catches our experts’ attention, but what follows is a masterclass in reading between the lines.
The team uncovers an unusual LLC arrangement that prompts a fascinating discussion about fund structures. As Kaley notes, “This makes me think your preferred return is not going to be this European waterfall…” – leading to insights about what this means for investors.
“I really think these guys know what they’re doing… they just don’t understand what an LP needs,” Mike observes, sparking a valuable conversation about the difference between operational experience and investor communication. The discussion reveals what investors look for beyond impressive numbers.
When the conversation turns to the sponsor’s vertically integrated model, our experts dive into an analysis that reveals surprising insights about fees, conflicts, and opportunities that aren’t apparent at first glance.
Whether you’re an experienced LP or new to private equity real estate, this episode offers valuable takeaways about:
What starts as a straightforward pitch deck review evolves into a deeper discussion about investor due diligence, market dynamics, and the importance of asking the right questions. The experts’ analysis reveals why sometimes the most important insights come from what’s not in the deck.
Ready to hear the full analysis? Tune into Episode 13 to catch all the insights and detailed discussion.
A distribution structure in funds where the sponsor doesn’t receive their promoted interest (carry) until all investor capital has been returned across all investments in the fund. This differs from deal-by-deal waterfalls and can provide additional investor protection.
When a sponsor handles multiple aspects of the business in-house (like property management, construction, etc.) rather than outsourcing to third parties. This can affect fee structures and alignment of interests.
The minimum return that limited partners must receive before the general partner can participate in profits. Often called the “pref,” it can be structured in various ways that significantly impact investor returns.
The GP’s share of the profits above the preferred return, serving as their primary incentive compensation. Also known as “carried interest” or simply “carry,” this typically represents a percentage of profits (often 20%) that the sponsor receives after hitting certain return thresholds for investors.
Note: This episode review is provided for educational purposes only and should not be considered investment advice.
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