Preferred Return - Annual Waterfall - Includes Shortfall Repayment Option and More

Description
Latest Updates: - Added a second version that has a second profit sharing tier triggered after investor equity is fully repaid.
- Added option to reduce LP equity basis with distributions above the preferred return.
 - Added a DCF Analysis to the end of this model.

A preferred return is a claim on profits. This is different from preferred equity. This model can handle any range of project level contributions and distributions on an annual basis for up to 10 years worth of time. It will split the available cash flow and allocate equity contributions according to the assumptions for both the General Partner and Limited Partner.

There are all kinds of ways to structure these deals. In this template, my goal was to allow for the most common and widely accepted styles of doing a preferred return deal.

1. Assumes the preferred return is just for the investor pool.
2. Option to compound unpaid preferred returns into the following year or not.
3. When cash is available, it automatically pays down any accrued unpaid returns first.
4. Dual percentage definition (for equity contribution and post preferred return split).
5. There is a yes/no option to allow for a 'reset' after each year (meaning no accrual of preferred return shortfalls).

The model was designed to drop in the entire project level contributions and distributions for up to a period of 10 years, whatever those flows may be. The logic will do the rest.

I included IRR calculations and two visuals (to show annual cash flow to each group and cumulative cash position). Equity multiples are also included.

This template is also included in three bundles:
- All Models Bundle: https://www.eloquens.com/tool/P8Y4TX4v/finance/financial-forecasting-models/financial-models-120-useful-and-usable-logic
- Real Estate: https://www.eloquens.com/tool/vJdYH9R7/finance/real-estate/the-complete-real-estate-bundle
- Joint Venture Waterfalls: https://www.eloquens.com/tool/MQJ8h73v/finance/joint-ventures/joint-venture-template-bundle