Does the hotel fund amendment in my LP documents mean what I think it means about preferred return order
Got an amendment last week from the fund GP on my hotel LP position. The original docs said preferred return at 8% before promote kicks in, pari passu across LP class. The amendment is reordering the waterfall so that a new tranche of preferred equity they are bringing in sits above the existing LPs on the 8% pref, but they are calling it a "capital stack optimization" and framing it like it is neutral to us. It is not neutral. If the new preferred tranche pulls its 9% coupon first and the hotel NOI is anywhere close to what the Q3 actuals showed, the existing LPs hit the pref on paper but not in cash timing. I have read the amendment three times and that is what I get from it. My comparison is simple: original waterfall had me at roughly $34,000 in preferred distributions in year two based on the projections they sent at close, this reorder puts that same number at risk if occupancy sits below 71%, and the Q3 report showed 68.4%. The GP is pitching a call Thursday to walk through it. I am going in with the question of whether existing LP consent was actually required under section 8.2 of the original agreement, because I think it was and I do not remember signing a consent.
