A Catch-Up Promote (50/50 Until Waterfall) is a structure used in UK property development finance that allows the sponsor to “catch up” on their entitled promote after investors receive their preferred return. Once the preferred return is achieved, distributions are split 50/50 between the investor and sponsor until the sponsor’s full promote share is met. After the catch-up phase, the deal reverts to the standard distribution waterfall. This method helps sponsors reach their carried interest entitlement while preserving investor priority through preferred return protections.
In practice, a Catch-Up Promote 50 50 Until Waterfall refines how the Sponsor / Promote Carry is realised, accelerating sponsor participation once the investor hurdle is cleared without disturbing initial capital protection. This mechanism is often modelled alongside Tiered Promote (10%, 20%, 30%), although the catch-up phase typically delivers a sharper shift in cash flow allocation over a shorter period. The precise operation will be documented in agreements such as a Minute of Agreement, ensuring clarity on distribution sequencing. From a performance perspective, developers and investors may analyse its impact using measures like the Exit Liquidity Pressure Index, particularly where timing of exits and profit crystallisation is critical.
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