b'equalingtotaldistributionsof$3M.Dividedover5years,thatwasan annualized distribution of $600k. Final Word on Class B Catchups As you can see, without the Class B catchup, you run the risk of paying all of the cash flow to investors both from property operations and from a capitaltransaction,leavinglittle(ornone)todistributetoyourasset management team. Further, you may even be creating a disconnect between your interests and those of your investors. For instance, if your investors are receiving cash flow from property operations but you arent, they may want to keep the property long-term. However, because you arent making any money for all of the work you are doing, the asset management team may have incentive to sell the property so you can get paid from your share of the equity realized on sale. Or alternatively, you may have to keep chasing acquisitionfeesfromotherdealstosupportyourownfinancialneeds, turning your attention away from this property to the detriment of your investors. The best way to make sure that you and your investors interests are alignedistocreateawaterfallscenariowherebothyou,astheasset manager,andyourinvestorsmakemoneyfromallphasesofproperty ownership.I trust this explanation will help you understand the importance of this concept. I realize that not all deals will support this structure, but it should always be considered when underwriting your deals.214'