"Finally a REIT where 100% of investors' money goes to property acquisition"
A Unique Alignment of Interests Between Sponsor and Investor
Lightstone Group has designed a unique sharing arrangement whereby Lightstone will make a significant equity investment - prepaying the legal, sales and offering costs and putting its capital at risk alongside the investor. We will sell special general partner interests of our operating partnership to Lightstone SLP, LLC, which is controlled by our sponsor, and use the sale proceeds to pay all selling commissions.
100% of investors' money will go into property acquisition
| Expenses | Lightstone | Investor |
| Legal | 100% | 0% |
| Sales | 100% | 0% |
| Offering | 100% | 0% |
For example, if the Trust were to raise investable assets of $300 million, Lightstone SLP would invest $30 million of its own money so that 100% of the investors' money would go into property acquisition. Preferences to investors are set at a level reflecting our belief that Lightstone SLP should earn their return only after investors have already received a significant return on their original investment.
Even though Lightstone SLP will invest 10% of the total equity, it will not receive any return on its investment until investors receive a 7% cumulative total return from a combination of dividends and the sale or disposition of properties. If this threshold is reached, all distributions will go to Lightstone SLP, until it receives a cumulative non-compounded return of 7%. Of course, there is no guarantee that a 7% cumulative return will be achieved by the Trust.
If the 7% return is reached, Lightstone SLP will receive 30% of all cash distributions until investors receive a 12% cumulative total return, at which point Lightstone SLP's share will increase to 40%.