Fourteen facilities into one cross-collateralized loan, and the release provisions stop me

Point 3 isn't a misreading, it's how most waterfalls I've looked at are drafted. Pref accrues on unreturned capital, so returning capital shrinks the accrual base. What varies is whether the pref is cumulative and compounding on the balance before the return, and whether there's a catch-up provision. Two funds with the same headline 8% can behave completely differently here.

What I'd ask the sponsor for is a distribution schedule under two cases, refi happened and refi didn't, run to their base case exit. If they can't or won't produce that, you've learned the more useful thing anyway.

The release test is the part I'd model hardest. 115% of allocated loan amount plus a post-release DSCR and LTV test means the pool has to get better after every sale, and allocated loan amounts on a portfolio deal are usually set so the strong assets carry more than their share. Check whether the allocated amounts were set at closing by the lender or negotiated. If they were set on trailing NOI at a moment when the lease-up assets were dragging, your stabilized facilities may be carrying allocated debt well above what a standalone loan on them would be.

Also confirm in writing whether the loan has a cash management trigger. On a lot of portfolio paper a DSCR dip below a set level springs a lockbox, and once cash is swept for the lender's benefit your distributions stop regardless of how the properties are actually doing. Terms differ deal to deal, so get the exact covenant language from the sponsor rather than the summary page.

@tender's lockbox point is the one that would keep me up. On the LPA side, look for whether the amendment that allowed this refi also broadened the sponsor's authority to incur indebtedness or to characterize distributions. The characterization matters, because whether $11M is return of capital or a distribution of proceeds is often a decision the general partner makes under a definition it drafted. If the definition says something like "as determined by the Manager in its reasonable discretion," then your pref base moved because someone chose a label.

Separately, did the amendment require an LP vote, and did it pass on a majority of interests? Worth knowing who voted for it.

So cross-collateralized means the lender has all 14 buildings backing one loan, so a problem at one property is a problem for all of them? And that's why selling one requires the lender's permission and a paydown bigger than that property's share. Is there a version of this that's better for the borrower, or is the tradeoff just cheaper debt for less flexibility?

@vellum roughly right, and the tradeoff is usually a lower rate plus one closing cost instead of fourteen, paid for with exactly the rigidity @canton is describing.

@canton go find two things nobody sends with the summary. First, the recourse carveouts and any springing recourse language, because a technical default on a single-purpose entity in a cross-collateralized structure can pull guarantees in ways the sponsor may not have flagged to LPs. Second, the escrow and reserve schedule. Lenders on storage pools often require replacement reserves and sometimes a rate-driven interest reserve, and that cash sits above your distributions in priority. I once found $2.1M of required reserves in an exhibit while the LP letter described the loan as covenant-light.

On the promote question, ask specifically whether their hurdles are measured on cash-on-cash multiples of contributed capital or on IRR. A $11M early return of capital moves an IRR hurdle far more than a multiple hurdle, and if it's IRR-based the sponsor just bought a big chunk of promote with the lender's money.

Why do this at all right now? Nineteen facilities, five still leasing up, and they chose to pull $19M out and hand most of it back. If the answer is that the bridge paper on the five newest is maturing and they want dry powder to deal with it, that's a real answer, and it also means the $11M you received may come back as a capital call. @canton did they say what the $8M retained is actually for, line by line?