IRR Equity Waterfall Template Excel
Originally published: 24/04/2020 14:34
Last version published: 03/06/2020 08:00
Publication number: ELQ-42570-3
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IRR Equity Waterfall Template Excel

Equity IRR Waterfall Template for Download JV Income Split

Clear and transparent waterfall template suitable for any real estate transaction where the split of income proceeds is based on IRR.

It should take you less than 10 minutes to link and integrate this template into your financial model.

The template considers 3 hurdles, where the last 3rd hurdle will distribute income proceeds pro-rata between equity partners. The first hurdle is a preferred return. The General Partner might contribute an equity share of the initial capital or you might choose to set zero equity contribution from the side of General Partner (Sponsor) and the template will still work perfectly. The proceeds will be distributed to both partners based on the distribution participation you choose for each of the three hurdles.

This waterfall template can be easily integrated into any type of real estate financial model which has an annual cash flow calculation. What you must do is to:
1) link the area which I highlighted in yellow to your cash flow;
2) change blue font cells/assumptions for the equity contributions in % and IRR hurdles.

That's it! The rest will calculate automatically.

Waterfalls are considered challenging and often when I see other people creating waterfalls, they are messy and hard to read. Therefore I have created this version for my clients which is clear, transparent, 100% reliable, easy to understand and use for an investor with any level of experience.

Of course, this is a standardized version and you would have to adjust it for any specific clauses, if any, in your term sheet. However, if the terms of the deal are not yet clear and you are looking to underwrite potential income split - this the best template to use for your estimates.

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Further information

How to determine the income split between JV partners in a real estate transaction

Any Real Estate investment opportunity with an engagement of a JV partnership. Applies when the term sheet considers split based on IRR.

Unnecessary when the partnership does not consider a waterfall.

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