CoC and equity shares in MF syndication

[James Rader]

I have an opportunity to invest in my first MF as a passive investor. The sponsors are putting 10% down for a 25% equity share. That means that the other 90% down only gets a 75% equity stake in the deal... basically your dollar has less equity power than the sponsors. Here's where I get lost: the COC return as a percentage would no longer be the same for the sponsor and investor, right? For the sponsors, it took less money to earn the equity share, thus a higher COC.... and the opposite is true for the investor. The offering I was given shows the projected COC return for investors, but not sure if it's been corrected for this.

Hoping I framed my question well enough and someone can clarify.  Thanks, BP! 

[James Rader]

I don’t think I’m making it more complicated than it needs to be.  I’m leaving no stone unturned and making sure I fully understand every aspect of the deal so there aren’t surprises later.  

For anyone still following, the GP’s accountant had already accounted for it.  I just reviewed the offering again.  The net levered cash flow was reduced by 25% prior to the investors metrics being calculated.  It’s all correct... I’m satisfied now!