Carried Interest / Preferred Return

A share of profits from a private equity investment paid as compensation to the investment’s general partner. Carried interest is most commonly structured such that it is only paid if the investment achieves a certain minimum return (also called the 'Preferred Return' or 'Promote').

For example, if the Preferred Return is 9%, that means limited partner investors will receive a 9% return (compounded annually) before the general partner starts making performance fees.

Commerical Real Estate Glossary

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