WaterfallCash Flow Waterfall (Real
Estate)http://www.globaliconnect.com/excel_models.phpAnnual
IRRInvestorDeveloperEquity Contribution90%10%Mthly IRRAnnual
IRRRate Conversion:mthly to annual((1 + r) ^ 12 ) - 1Preferred
Return11%90%10%0.8735%11.00%annual to mthly(( r + 1 ) ^ 1/12) -
1Both parties get return of capital pari passu.Technically, the
preferred return rate is the first hurdle, and all dollars
necessary to return the pref yield is split "equally" ie.
proportional to their respective equity contributions.In a
pari-passu deal, all dollars distributed are split at the same
ratio as invested up to the preferred return rate, ie. until each
receives a 11% annual yield.Hurdle 115%65%35%1.1715%15.00%Hurdle 1
(after the return of equity to both investors & preferred
return), the Investor receives 65% of the monthly cash flows until
the Investor achieves 15% IRR.All IRR's are calculated from the
very start ie. wef initial investment.Waterfall Model:Hurdle
218%60%40%1.3888%18.00%- The waterfall assumes two parties who
split cash flows based on a "waterfall" structure.Hurdle 2 (after
Hurdle 1 is completed), the Investor receives 60% of the monthly
cash flows until the Investor achieves 18% IRR.- The waterfall is
really IRR hurdles which determine how cash flows at each level are
split.- The waterfall structure is a typical real estate capital
structure where the developer is usually the minority
investor.Hurdle 324%55%45%1.8088%24.00%- The primary investor sets
progressive target yields (IRRs) as hurdles.Hurdle 3 (after Hurdle
2 is completed), the Investor receives 55% of the monthly cash
flows until the Investor achieves 24% IRR.- The Developer typically
receives a disproportionate share of the cash flow after the first
hurdle is hit. This is knownas the "promote." The fact that the
developer is no longer pari-passu above the preferred implies him
being "promoted".Final Split50%50%- Enter fields marked in blue
font, yellow cells, ONLY. All mandatory.Final Split (after Hurdle 3
is completed) allocates monthly cash flow 50% to each party.- One
or more -ive values (investments) are followed by +ive values (cash
flows / profits). This is mandatory.- To skip a particular hurdle,
enter zero values. The model is dynamic and amenable to deal
variation.- To help us improve this model, please send your
feedback to [email protected]:Preferred
ReturnHurdle 1Hurdle 2Hurdle 3Final SplitTotalCF AvailableCF to
Investor atCF AvailableCF to Developer atBalance - PostCF
AvailableCF to InvestorAddl CF to DeveloperCF to DeveloperBalance -
PostCF AvailableCF to InvestorAddl CF to DeveloperCF to
DeveloperBalance - PostCF AvailableCF to InvestorAddl CF to
DeveloperCF to DeveloperBalance - PostCF to InvestorCF to
DeveloperCash FlowMonthCash Flowto InvestorPreferred Returnto
DeveloperPreferred ReturnPreferred Returnto Investorat Hurdle 1at
Hurdle 1at Hurdle 1Hurdle 1to Investorat Hurdle 2at Hurdle 2at
Hurdle 2Hurdle 2to Investorat Hurdle 3at Hurdle 3at Hurdle 3Hurdle
3at Final Splitat Final
SplitCheck0(1,550,000)(1,395,000)(1,395,000)(155,000)(155,000)0(1,395,000)(1,395,000)0(155,000)0(1,395,000)(1,395,000)0(155,000)0(1,395,000)(1,395,000)0(155,000)0(1,395,000)(155,000)01(110,500)(99,450)(99,450)(11,050)(11,050)0(99,450)(99,450)0(11,050)0(99,450)(99,450)0(11,050)0(99,450)(99,450)0(11,050)0(99,450)(11,050)02(120,000)(108,000)(108,000)(12,000)(12,000)0(108,000)(108,000)0(12,000)0(108,000)(108,000)0(12,000)0(108,000)(108,000)0(12,000)0(108,000)(12,000)03(155,000)(139,500)(139,500)(15,500)(15,500)0(139,500)(139,500)0(15,500)0(139,500)(139,500)0(15,500)0(139,500)(139,500)0(15,500)0(139,500)(15,500)04(85,000)(76,500)(76,500)(8,500)(8,500)0(76,500)(76,500)0(8,500)0(76,500)(76,500)0(8,500)0(76,500)(76,500)0(8,500)0(76,500)(8,500)0512,50011,25011,2501,2501,250011,25011,25001,250011,25011,25001,250011,25011,25001,250011,2501,2500617,55015,79515,7951,7551,755015,79515,79501,755015,79515,79501,755015,79515,79501,755015,7951,75507126,000113,400113,40012,60012,6000113,400113,400012,6000113,400113,400012,6000113,400113,400012,6000113,40012,60008111,00099,90099,90011,10011,100099,90099,900011,100099,90099,900011,100099,90099,900011,100099,90011,10009115,400103,860103,86011,54011,5400103,860103,860011,5400103,860103,860011,5400103,860103,860011,5400103,86011,540010100,45590,41090,41010,04610,046090,41090,410010,046090,41090,410010,046090,41090,410010,046090,41010,046011123,456111,110111,11012,34612,3460111,110111,110012,3460111,110111,110012,3460111,110111,110012,3460111,11012,34601255,67850,11050,1105,5685,568050,11050,11005,568050,11050,11005,568050,11050,11005,568050,1105,568013124,211111,790111,79012,42112,4210111,790111,790012,4210111,790111,790012,4210111,790111,790012,4210111,79012,421014145,678131,110131,11014,56814,5680131,110131,110014,5680131,110131,110014,5680131,110131,110014,5680131,11014,568015131,222118,100118,10013,12213,1220118,100118,100013,1220118,100118,100013,1220118,100118,100013,1220118,10013,12201689,70080,73080,7308,9708,970080,73080,73008,970080,73080,73008,970080,73080,73008,970080,7308,970017200,000180,000180,00020,00020,0000180,000180,000020,0000180,000180,000020,0000180,000180,000020,0000180,00020,00001845,67941,11141,1114,5684,568041,11141,11104,568041,11141,11104,568041,11141,11104,568041,1114,568019110,80099,72099,72011,08011,080099,72099,720011,080099,72099,720011,080099,72099,720011,080099,72011,080020255,700230,130230,13025,57025,5700230,130230,130025,5700230,130230,130025,5700230,130230,130025,5700230,13025,570021114,600103,140103,14011,46011,4600103,140103,140011,4600103,140103,140011,4600103,140103,140011,4600103,14011,460022210,988189,889189,88921,09921,0990189,889189,889021,0990189,889189,889021,0990189,889189,889021,0990189,88921,099023245,678221,110192,89524,56821,43331,350213,273213,27310,97332,4050213,273213,273032,4050213,273213,273032,4050213,27332,405024312,446281,201031,2450312,446203,09082,76844,56744,567185,110193,834163,84754,05298,62049,980191,335191,33522,491121,1110191,335121,111025111,788100,609011,1790111,78872,662000111,78867,073000111,78861,48361,48350,30550,305061,48350,305026220,000198,000022,0000220,000143,000000220,000132,000000220,000121,00086,51270,78370,78362,705117,865102,135027246,890222,201024,6890246,890160,479000246,890148,134000246,890135,790000246,890123,445123,445028199,678179,710019,9680199,678129,791000199,678119,807000199,678109,823000199,67899,83999,839029266,777240,099026,6780266,777173,405000266,777160,066000266,777146,727000266,777133,389133,389030244,444220,000024,4440244,444158,889000244,444146,666000244,444134,444000244,444122,222122,222031288,888259,999028,8890288,888187,777000288,888173,333000288,888158,888000288,888144,444144,444032300,112270,101030,0110300,112195,073000300,112180,067000300,112165,062000300,112150,056150,056033122,000109,800012,2000122,00079,300000122,00073,200000122,00067,100000122,00061,00061,00003445,89041,30104,589045,89029,82900045,89027,53400045,89025,24000045,89022,94522,94503521,50019,35002,150021,50013,97500021,50012,90000021,50011,82500021,50010,75010,7500368,6507,785086508,6505,6230008,6505,1900008,6504,7580008,6504,3254,3250Total2,704,8582,434,372256,000270,48628,4442,420,4131,829,269359,14655,54083,9852,261,7271,716,182440,22454,052138,0372,126,5971,609,853615,709143,578281,6151,807,5341,519,4761,185,3820TotalPreferred
ReturnHurdle 1Hurdle 2Hurdle 3Final SplitNPV Check00000IRR
(Mthly)4.2153%0.8735%0.8735%1.1715%2.1317%1.3888%3.0425%1.8088%4.6716%3.2262%8.2199%IRR
(Annual)64.13%11.00%11.00%15.00%28.80%18.00%43.28%24.00%72.96%46.38%158.04%
Amit Tandon:Annual IRR Conversion Check.Amit Tandon:Target
Annual IRR.http://www.globaliconnect.com/excel_models.php
