What Every Accredited Investor Should Know About Our Fund Durations
Answer: Capital committed to Sunrise Capital Investors’ funds is typically invested for the long term, meaning 5+ years. This structure gives Sunrise the flexibility to focus on stable cash flow, tax efficiency, and long-term value creation without the pressure of short-term exits.
If you’re exploring passive real estate investments, one of the most important questions to ask is how long your capital will be tied up. At Sunrise Capital Investors, funds are structured with a long-term orientation, prioritizing stable income and tax-advantaged wealth creation. Here’s how our capital commitment strategy works.
Key Takeaways
- Sunrise Capital Investors funds follow a long-term investment strategy, often lasting five or more years to allow value to compound over time.
- Capital is generally illiquid, though early exits may be possible through secondary sales.
- Distributions have historically begun well before the end of the hold period, once assets stabilize and produce income, typically after a one-year seasoning period with a new fund.
- Long-term holds support strategic refinances, tax benefits like depreciation and avoidance of capital gains tax, and consistent cash flow.
- Investors should view Sunrise funds as patient capital vehicles designed to support steady, tax-advantaged wealth generation and protection.
How Long Is Capital Committed In Sunrise Capital Investors Funds?
Sunrise’s funds are closed-end vehicles with a long-term hold structure. This means that when investors commit capital, it is intended to remain invested for the full duration of the fund. There’s no pre-set timeline for an exit, as our model prioritizes flexibility, allowing us to unlock maximum value from each asset without being forced to sell prematurely.
That said, we also recognize that life happens.
While our funds are designed for patient, long-term capital, we do our best to accommodate investors who experience unforeseen circumstances and need to exit early. Though not guaranteed, we have historically worked with investors to help find a path to liquidity if needed.
Importantly, we prioritize the return of capital early in the life of the investment. Our strategy is to de-risk the investment, often returning all of an investor’s original principal within five years. From that point forward, many of our investors enjoy ongoing quarterly distributions with no principal left at risk.
How Do Investors Get Paid in Sunrise Capital Investors Funds?
Sunrise uses a waterfall structure that prioritizes investor capital and preferred return before any profit-sharing with the sponsor. Here’s how it works:
- Return of Capital: Investors receive their original investment back before the sponsor earns any share of the profits.
- Preferred Return: Sunrise targets an annual preferred return that accrues based on the unreturned capital.
- Accrued Pref Payout: Once the principal is returned, any unpaid preferred return is distributed.
- Profit Split: Only after both capital and preferred return are delivered does the profit-sharing model begin (commonly 70/30 in favor of the LP).
This approach ensures Sunrise’s incentives are aligned with long-term investor success. It also means that while capital is committed long term, income often begins earlier and investors are first in line for distributions.
When Do Distributions Start in Sunrise’s Funds?
Although capital is committed long term, investor distributions typically begin much sooner. Once assets stabilize and start producing reliable income, distributions are made, often well before the fund’s final exit or disposition events. Historically, distributions have begun approximately one year after the launch of a new fund.
This means investors don’t have to wait until the end of the hold period to start receiving cash flow.
Can I Exit the Fund Early?
While Sunrise’s funds are designed for long-term holds, early exits may be possible through a secondary sale of your interest, depending on fund documents, available buyers, and current market conditions. These scenarios are rare and are not guaranteed.
Sunrise encourages investors to approach these funds as long-term, strategic allocations, aligned with the goal of generating income and equity growth over time.
Why Sunrise Capital Investors Focuses on Long-Term Holds
Sunrise Capital Investors’ investment model is structured to prioritize steady cash flow and capital preservation over time. The long-term approach allows Sunrise to:
- Capture depreciation and tax benefits through cost segregation and bonus accelerated depreciation timelines. Sunrise has, on average, returned over 90% of invested capital as depreciation in the year the investment was made.
- Refinance assets instead of selling, returning capital while maintaining ownership and avoiding capital gains tax
- Avoid pressure to sell during unfavorable market cycles
- Build cashflow and equity through operational improvements in income and expense management
Sunrise’s strategy reflects a belief that real value in commercial real estate is created through time, discipline, and well-executed operations.
Frequently Asked Questions
Capital is typically committed for the full duration of the fund, which is structured for long-term (five years or longer) value creation. There is no guaranteed liquidity until the fund winds down.
Early exits may be possible via a secondary sale, but are not guaranteed. These require a buyer and approval based on fund documents.
Distributions often begin once assets stabilize and generate income. This typically happens a year after a fund opens.
The long term timeline allows Sunrise to act based on market conditions and asset performance, maximizing returns without being forced to sell early.
While specific returns vary, Sunrise structures its funds to provide ongoing income, growth, and eventual capital return, often via refinances.
Brian Spear
Co-Founder | Sunrise Capital Investors