So, often in a real estate syndication, you have a choice between one to two classes of investors. You can go more than that, but it’s not too common. In most syndications I see, people will choose two classes. This means there will be class A units and class B units. Class A units are usually given to investors, and Class B units is usually taken by the manager or the sponsor.
Having two classes allows for different levels of rights, ownership, and distributions. It basically allows for a lot more flexibility when it comes to distinguishing what a Class A versus a Class B member can do. For example, when you’re coming up with your distribution or your waterfall structure, the Class A investors will get a preferred return, but Class B members will not. Class A members may get a different split from Class B members.