The Cloisters at Ave Maria · Investor Memorandum · Confidential
Capital Structure & Waterfall Framework
The Cloisters at Ave Maria
Cloisters Development Group LLC · May 2026
This memorandum describes the capital structure and waterfall framework governing LP investment in The Cloisters at Ave Maria. The project is capitalized at $49,317,303, structured as 60% senior debt and 40% LP equity, and designed to provide investors with priority return and meaningful downside protection while aligning the sponsor's participation with long-term asset performance.
The project is structured through a three-tier entity framework that separates strategic control, fee income, and project-level investment — ensuring clean financial isolation and clear accountability at every level.
General Partner & Control Entity
Cloisters Development Group LLC
HoldCo — strategic oversight, GP interest in all projects
Wholly Owned by HoldCo
Management Company
ManCo — receives all development & management fees; bears associated operating expenses
One Entity Per Project
Project Entity
ProjectCo — owns and operates the asset; capitalized with LP equity and GP interest
Third-Party Capital
Limited Partners
Investor equity — majority of project capitalization; priority return structure
Why this structure matters: Separating ManCo from ProjectCo creates a clean boundary between fee income and investment returns. Investors in any given ProjectCo can see exactly what the asset earns and what fees are paid, without commingling across the portfolio. Each project is economically self-contained.
· · ·
Cloisters follows a consistent, market-standard economic structure across projects. Investors receive an 8% annual preferred return on invested capital, which accrues over the investment period and is paid from available operating cash flow. In any event, the preferred return is satisfied in full prior to any sponsor participation in profits. Upon a capital event, invested capital is returned to investors, and any unpaid preferred return is distributed. Thereafter, remaining profits are distributed 70% to investors and 30% to the sponsor.
Preferred Return
Annual Preferred Return
8.0%
On invested capital, accruing annually. Paid from operating distributions; satisfied in full before any sponsor promote.
Residual Split
Profit Distribution
70 / 30
After return of capital and preferred return. 70% to Limited Partners, 30% to Sponsor (Cloisters).
Development Fee
One-Time Sponsor Fee
4%
Of total project cost. Earned at construction completion. Paid to ManCo and does not reduce LP invested capital.
Ongoing Fees
Management Fees
5.5%
Of gross revenue annually. Comprises 1.5% asset management + 4.0% property management. Paid to ManCo.
Cash flows are distributed in strict sequence. No step is reached until the prior step is fully satisfied.
1
During Hold Period
Operating Distributions
Available cash flow after debt service is distributed to Investors toward the 8% annual preferred return on invested capital. Distributions occur as cash is available; any shortfall accrues and is paid at exit.
2
At Exit · Priority
Return of Capital
100% to Investors until all contributed capital is returned in full. No sponsor participation until this step is complete.
3
At Exit · If Required
Accrued Preferred Return True-Up
100% to Investors until any unpaid accrued preferred return (from Step 1) is fully satisfied. Ensures the 8% annual return is honored in full regardless of operating cash flow timing during the hold period.
4
At Exit · Residual
Profit Split
Remaining proceeds distributed between Investors and Sponsor.
70% — Limited Partners
30% — Sponsor
Alignment of interests: Investors receive priority return and full capital protection through Steps 1–3 before the sponsor participates in any residual profit. The sponsor's primary economic participation is through the Step 4 profit split, which is entirely contingent on investor returns being satisfied first. Management fees paid during the hold period are separate from and do not offset the waterfall.