What the operating agreement says, and what the model computes.
This is what we would actually do, in what order, and what it costs.
No discovery call is required to see the number.
What we would go looking for
These are patterns that recur in a real estate sponsor, written as things to
look for. They are not findings from a named engagement.
A distribution waterfall computed by a spreadsheet that has never been reconciled, clause by clause, to the operating agreement it implements.
Preferred return accruing at a rate and compounding on a basis that the model and the agreement describe differently, discovered at the crystallization event.
Covenant ratios reported against a definition borrowed from another loan — DSCR and debt yield are defined per document, and the definitions differ.
Affiliated fees — asset management, construction management, acquisition — charged to deals at rates that were never re-consented as the platform grew.
Investor capital accounts maintained in the fund system and in the tax return with no reconciliation between them.
The sequence
Five weeks for one operating unit. More units run in parallel rather than in
series, so a group does not take five times as long.
Week 1
Intake and reconciliation9 requests written for a real estate sponsor, alongside the 107 covering the operating spine. We tell you which findings the gaps will limit before any fieldwork starts.
Weeks 2–3
Full pass, not a sampleEvery deal in scope is read rather than sampled.
Week 4
Quantification and challengeEach finding sized, and put to whoever owns it before it is written down.
Week 5
Report and walkthroughThe written report, ranked by annual value and by how hard each finding is to act on.
6 core requests written for a real estate sponsor, inside the full intake.
Anything you do not have can be skipped with a reason — skipping narrows what the
review can conclude, and we tell you where before the work starts rather than after.
Entity map: sponsors, funds, JVs and property SPEs — Ownership percentages and who controls each. This is usually the first thing nobody has current.
Operating agreements and the distribution waterfall for each deal — The agreement itself, alongside the model that computes it.
Investor capital accounts and contribution/distribution history — Per investor per entity, reconciled to the agreement.
Loan schedule with covenant definitions per facility — DSCR and debt yield are defined differently in different loan documents; the definitions matter more than the ratios.
Most recent covenant compliance certificates — As submitted, with the supporting calculation.
Affiliated and related-party fees charged to deals — Asset management, property management, construction management, acquisition and disposition.
If any of this is already happening
The review is always worth doing and rarely urgent. It becomes urgent when
something else is happening — and if one of these is, the sequence above compresses
to fit it.
A refinancing or a loan maturity, where covenant definitions get read closely
An investor asking a question about their capital account that takes a week to answer
A fund audit, or the first audit the sponsor has had
A partner separation, where the waterfall becomes contested rather than academic
A promote crystallization event
Who needs to be in the room
Signs it: Principal or CFO of the sponsor
Will resist it: Whoever built and owns the waterfall model — worth telling them what the
review is for before they hear it from somewhere else.
Has been asking for it: The investor relations lead, who fields the questions
What it costs
Priced by operating unit — an entity, a location, or a business the accounts are
kept separately for. The second unit costs less than the first because by then the
intake is built, the chart of accounts is understood and the patterns are known.
Purchase order is the primary route — most
buyers this size raise a PO and pay against an invoice on terms. Card and bank
transfer exist for those who prefer them.