Same target IRR on two platforms, and the fee stack makes them different deals

The gross assets versus equity catch is a good one and I hadn't thought about it that way. So the more debt the sponsor puts on, the more they get paid, regardless of whether the debt helped?

sextant is right that the LP cash flow schedule is the comparable artifact. Two things to check when you get it.

First, confirm whether the projected distributions are shown gross or net of the asset management fee, and whether the disposition fee is deducted from sale proceeds before or after the waterfall runs. A 1% disposition fee taken off the top of gross sale price behaves differently from one taken from net proceeds after debt payoff, and on a 65% levered deal the difference is roughly three times the dollars on the same stated percentage.

Second, ask whether the asset management fee is paid current out of operating cash flow or accrues if cash flow is short. Accrued fees compound the same way accrued pref does, and they usually sit ahead of your pref in the payment order.

On the gross assets basis, your arithmetic is right in direction. At 65% loan to cost, a fee on gross assets is close to 2.9 times the same percentage charged on equity, so 1.25% on gross assets sits near 3.6% on equity, which is what you calculated. That comparison holds only if leverage stays at 65% for the whole hold. A refinance that increases the loan increases the fee.

The assumption your whole comparison depends on is whether Deal B's 14% is a project-level IRR or an LP-level IRR. Project level means before promote and before most fees, and the LP number could be several hundred basis points lower. Get that answered in writing before you spend more time on the spreadsheet.

I ran a version of this last year on four offerings and the spread between stated target IRR and LP net IRR ranged from 40 basis points to 410. The 410 was a deal with a gross asset fee and a promote measured against a project level hurdle rather than an investor level one.

That second thing is worth as much attention as the fees. If the 14% hurdle in Deal B is measured at the project level, the sponsor can hit their promote on a deal where you personally are earning nine.

Saving this thread. Six months of reading and I'd never once thought to ask what the fee percentage is charged against.

compass, the no platform fee disclosed on Deal A's page is the line I'd push on. That doesn't mean there isn't one, it often means it's charged to the sponsor and then baked into the deal costs, which means you're paying it anyway with an extra step in between. Ask directly what the portal is paid on that offering and by whom.