b'Analysis In the straight split scenario, on sale: 1.Class A would receive 70% of $5M, or $3.5M, and 2.Class B would receive 30% of $5M, or $1.5M.What was Class As cash on cash return? Class A received distributions of $700k/year for 5 years ($3.5M) plus $3.5M from sale for a total of $7M. Thus, Class A earned an overall return of 70%; when divided by the 5 year hold period, this equals a 14% annualized return on investment. WhatwasClassBstotalreturninnumbers?ClassBreceived $300k/yearfor5years($1.5M),plus$1.5Monsale,equalingtotal distributionsof$3M.Dividedover5years,thatwasanannualized distribution of $600k. Preferred Return With a 70/30 Split Thewaterfallbelowreflectsa70/30split,afterpaymentofan8% preferred return to Class A.Distributions From Operations (Cash Flow) Cashderivedfromoperationsoftheproperty(cashflow),willbe disbursed in the following order until exhausted: First, Class A members will be paid all of the distributable cash until they have received a non-compounded, cumulative annualized return of 8% (the preferred return), determined quarterly and calculated against the Class A unreturned capital contributions. 208'