Revenue arrives at a property as one number and leaves as six. The order is fixed, each stage is satisfied in full before the next receives anything, and the six sum to the whole. There is no seventh stage.

Why the order is the disclosure

A document can describe the same six stages honestly and still mislead, by presenting them as a set rather than a sequence. Four percentages that sum to a hundred look like a division of the whole. They are not: they are a queue, and where you stand in it decides whether you are paid at all in a bad year.

The two stages nobody asks about

The administrative reserve and the sinking fund are each two and a half per cent of revenue. They are the least interesting stages and the ones most worth understanding.

The reserve exists so that a property with a bad quarter does not become a property with an emergency. It has a floor, and stage six does not run if paying it would breach that floor. A partner can therefore have a profitable quarter and receive nothing, and that is the mechanism protecting the position rather than failing it.

The sinking fund replaces things before they fail. A property that has not funded replacement is a property whose distributions were always partly a deferral.

Reading it backwards

The useful way to read any waterfall is from the bottom. Start at the stage you are in, then count what has to be true above you before you see anything. For a partner in a vehicle carrying debt, five things have to be true.