Preferred Return Tiers Explained
What Is the Minimum Investment in SCI Funds?
At Sunrise Capital Investors (SCI), our investment structure is built with one goal in mind: aligning our success with yours. We believe that transparency builds trust, including being clear about the minimum investment required, the return tiers we offer, and how each element is designed to reward long-term, performance-minded investors.
This guide breaks down the key components of SCI’s fund structure so you can make an informed decision about whether our model aligns with your capital goals.
Key Takeaways
- SCI’s minimum investment is $100,000, with higher preferred return tiers starting at $250,000.
- Preferred returns range from 8% to 10%, depending on how much and when you invest.
- Investors receive return of their principal and preferred returns, minus a small fee during a cash-out refinance event, before SCI earns any profit share, ensuring aligned incentives.
- Distributions are made quarterly, with 30+ consecutive quarters of no capital calls
- Early investors may receive bonus promote splits, such as a 76/24 structure instead of the standard 70/30.
Table of Contents
- What is the Minimum Investment to Invest in an SCI Real Estate Fund?
- When Do SCI Funds Return Investor Capital?
- What Is a Preferred Return and How Does It Benefit Investors?
- What Preferred Return Rates Does SCI Offer at Different Investment Levels?
- When and How are Preferred Returns Paid to SCI Investors?
- How This Structure Aligns Interests
- Choosing the Right Tier for Your Goals
- Frequently Asked Questions
What Is the Minimum Investment to Invest in an SCI Real Estate Fund?
The current minimum investment to participate in an SCI fund is $100,000. This threshold is consistent across our fund offerings, though exact terms may vary slightly from one fund to the next.
SCI funds are available to accredited investors only. These are investors who meet SEC guidelines based on income or net worth.
When Do SCI Funds Return Investor Capital?
SCI’s real estate fund structure prioritizes the return of investor capital and pays preferred returns, minus a fee to the sponsor after the event of a cash-out refinance, before the sponsor earns a share of profits.. This “return of capital” structure ensures that your principal investment is preserved as a top priority.
Once the original investment has been returned and preferred return targets have been satisfied, any remaining profits are then shared according to the promote structure. This tiered approach ensures that investor interests are protected, and that SCI only earns performance-based compensation when real value is created.
This helps align incentives between sponsor and investor, encouraging disciplined acquisitions and strong operational execution.
What Is a Preferred Return and How Does It Benefit Investors?
Put simply, the preferred return sets a minimum annual return investors must receive before SCI shares any upside. This structure ensures that investor capital is prioritized before any profits are shared with the sponsor.
It’s important to note that preferred returns are not guaranteed. However, once the fund begins generating distributable cash flow, those funds must first go toward satisfying the preferred return before SCI earns any share of the profits.
What Preferred Return Rates Does SCI Offer at Different Investment Levels?
SCI offers a tiered preferred return structure based on how much capital you commit:
| Investment Amount | Preferred Return |
| $100,000-$249,999 | 8% |
| $250,000-$999,999 | 9% |
| $1,000,000+ | 10% |
Beyond the preferred return itself, SCI also offers enhanced promote structures for early investors to compensate for the uncertainty of investing in a fund early, before all fund assets are acquired. For instance, those who committed capital early in Fund 4 received a 76/24 equity split, compared to the standard 70/30 split offered to late investors in the fund.
When and How Are Preferred Returns Paid to SCI Investors?
Preferred returns are calculated annually, but distributed quarterly, and we have delivered over 30 consecutive quarters of in-full distribution across all funds. These payouts typically come from operational cash flow, such as lot rents in mobile home parks or hourly/monthly revenue from structured parking facilities.
How This Structure Aligns Interests
SCI’s entire structure is designed to reward performance, not fundraising.
- Investors receive distributions first
- Preferred returns are prioritized before sponsor participation
- SCI’s profit share is performance-based and earned only after investors receive preferred returns
This creates a strong alignment between operator and investor: we succeed when you do.
Choosing the Right Tier for Your Goals
Whether you’re investing $100K or more, SCI’s model is built to offer fair, transparent terms across the board. Larger commitments earn higher preferred returns and better promote splits, but all investors benefit from the same disciplined acquisition strategy, tax-efficient structuring, and focus on long-term value creation.
We encourage prospective investors to consider how each tier aligns with your capital goals, income needs, and time horizon.
If you’d like to explore which tier aligns best with your investing goals, our Investor Relations team is happy to walk you through the options.
Frequently Asked Questions
No. Preferred returns are not guaranteed. They represent a target return threshold that must be met before SCI shares in profits. This structure helps ensure investor capital is prioritized, but actual returns depend on the performance of the underlying assets.
Yes, SCI allows investors to add capital over time. If your cumulative investment crosses into a higher preferred return tier (I.e. $100K to $250K+), your account may become eligible for the higher return rate and promote structure moving forward. Adding capital to your investment is limited to the period the fund is open for accepting capital. Reach out to our Investor Relations team to confirm your current tier and how future contributions could affect it.
Preferred returns are only paid out from available distributable cash flow. If the fund underperforms and cash flow is insufficient, the preferred return may be delayed or partially unpaid. However, the unpaid portion is generally accrued and must still be satisfied before SCI participates in the promote split with investors.
Brian Spear
Co-Founder | Sunrise Capital Investors