60 cents on the dollar at disposition and I still owe the LP their full pref

Compounding pref on a 3-year hold extension is what kills it, not the exit price.

@op what was the pref rate and was it compounding annually or quarterly, because that gap between $190k on paper and $11k at close is doing a lot of work and I want to understand how fast it was accruing while the property sat. I'm pre-closing on my first deal, nowhere near sponsor territory, but I've been pulling apart waterfall structures for months and the number that scares me isn't the guaranty, it's exactly what you described. The pref clock doesn't care that the market went soft or that you couldn't move the asset. The promote looked real at underwriting because the hold period assumption was probably 4 to 5 years clean, and when that slips by 18 to 24 months the accrued pref can quietly consume what looked like a 6-figure GP payday. $80k co-invest to zero while LPs get made whole is the scenario I never see modeled in the decks people share publicly.

Signed a personal guaranty on a slow multifamily deal in 2021 and watched $62k disappear the same way.