A distribution waterfall is the contractually-defined order in which proceeds from a fund’s investments flow back to investors. Typical waterfall structures include: return of LP capital first, then a preferred return (often 8% IRR) to LPs, then catch-up to the GP, then carry/promote (typically 20%) above the hurdle.
For real estate syndications and private equity funds, waterfall structures can be complex — multiple hurdles, deal-by-deal vs. fund-level carry, claw-backs. Investor portals display each LP’s share of distributions calculated correctly through the waterfall, ideally with transparency into why a given distribution is what it is. See Real Estate Investor Portals.