Sponsor's promote based on Cash on Cash Return instead of IRR?

[Account Closed]

I know people frequently structure deals with disproportionate distributions to the sponsor to reward them for their performance. 

Every waterfall model I've ever done has used IRR targets as hurdle rates.

This is great and all, and obviously if the property does exceed these hurdle rates, the sponsors can get paid off in a big way...

But since so much of the IRR comes from the sales proceeds, the sponsor doesn't see any of that bonus until the end. And why should they, right? I mean, most of the return for the investor is coming from that last cash flow when you sell. 

The problem is, if you're a lowly sponsor without much money, you might have to live off of your crappy pro-rata cash flow for years before your partnership sells off properties and you're rewarded with a huge windfall. 

Are there cases where sponsors are rewarded if they meet certain cash on cash targets, rather than IRR?

So far example, rather than giving the sponsor a 20% promote for anything above a 12% IRR, they'd receive a 20% promote for every year they exceed a 12% return on equity, then receive 20% on the backend in excess of whatever return brings the cash flows above 12% IRR. 

As an investor, would you ever consider this type of arrangement?

One alternative might be to give your investors a preferred return, and a locked in profit split for when you sell... do you think promising a preferred return would create problems for lenders?

Anything thoughts would be appreciated. 
Thanks,
Patrick