This is an overview of how and when we distribute money to our Generations investors.
Timing
We pay distributions quarterly, typically, within two weeks after the close of the quarter. For example, we paid distributions for 4Q20 on January 11, 2021.
Occasionally there might be an extraordinary distribution in connection with a capital event (such as a refinancing) outside the normal cadence.
Mechanics
When we issue distributions, we will send you a distribution notice that indicates a number of data points:
Current distribution - broken into "distribution" and "return of capital" (see below for more details)
Distribution history - outlining distribution and return of capital amounts for year to date and over the lifetime of the investment
Contribution history - a summary of the amount you invested and your percent ownership of the asset
You will receive an ACH payment in the bank account that you specified during the subscription process within 1 - 2 business days of the issuance of the distribution notice.
Allocation
Distributions are broken into two categories, according to the terms of the transaction outlined in the subscription paperwork:
Distribution - this is the amount of the payment you receive that is your return on capital; typically this is equal to the preferred return your investment earned during the distribution period (calculated by number of days in the period divided by 365 days in the year)
Return of capital - this is the amount you received in excess of your preferred return. Sometimes this will be zero if we haven't cleared the preferred return hurdle during the distribution period. Once we have returned all of your initial capital (after satisfying your preferred return), we begin to take a share of distributions (called the "promote", carried interest or simply carry).
The deal structure, including preferred return and sponsor (Glencrest) carried interest are outlined in the documents you receive and sign as a part of our online subscription process.
At any time, you can log into your Glencrest investor portal to see up-to-date distribution accounting and access an archive of your executed subscription documents.
Amount
Glencrest strives for consistent and growing distributions as part of our Generations program, recognizing that local economic conditions and the reinvestment needs of properties will vary over time and might impact cash flow available for distribution. Our initial distribution forecast can be found in the Investor Overview document you receive as a part of the Glencrest offering process. Look for a table titled "Projected distributions and depreciation, first 11 years”, generally around page 4 or 5 of the document.
Distribution performance will inevitably vary from forecast given the nature of the apartment business. Over time we will keep you updated about property performance via semi-annual reports, which should give context for recent and anticipated cash flow.
Questions
As always, if you have any questions about how our investment process works, please don't hesitate to reach out to our team via email or phone call.
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