In today’s income‑hungry real estate market, the distribution rate has become a dangerously blunt instrument. Too often, investors — particularly those newer to private real estate — anchor on a single number: the headline yield. In response, some managers have quietly adopted a practice that deserves far more scrutiny than it receives: supplementing operating cash flow with return of investor capital to “support” the dividend.
At first glance, the practice appears benign. After all, the investor still receives cash. The distribution is paid on time. The yield looks competitive. But economically, the consequences are anything but harmless.
In reality, this practice misrepresents operating performance, distorts peer comparisons, penalizes disciplined managers and, ultim
