Real Estate JV Waterfalls: Preferred Return, IRR Hurdles & Promote
Split one fictional apartment joint venture between LP and GP: compounding pref, IRR hurdle balances, a three-tier promote, equity multiple hurdles, the GP's effective share, exit cap sensitivity and American vs European timing, every cell checked as you go. Educational only, not investment advice.
The first lesson is free — no account needed.
About this course
A real estate equity waterfall course that splits the cash of one fictional apartment joint venture between the LP and the GP in a spreadsheet, for real estate analysts, acquisitions and asset managers, LPs reviewing sponsor deals and students preparing for real estate private equity interviews. You build the equity cash flows with the sale and measure the levered IRR and equity multiple, run the return of capital and a compounding preferred return year by year, track the LP's 8% IRR hurdle balance and prove the tier-1 cash earns exactly 8%, cascade the sale proceeds through 12% and 15% hurdles with rising GP splits, compare IRR and equity multiple hurdles in four exit scenarios, value the promote and the GP's effective share, test the promote against the exit cap rate and compare American and European waterfall timing with a clawback. Educational only, not investment, legal or tax advice. The first lab is free.
Lessons
- Deal Cash Flows & the Levered IRRFree
- Return of Capital & the Compounding Preferred Return Pro
- Tier 1 to an 8 % IRR Hurdle: the Hurdle Balance Pro
- Tiers 2 & 3: the Promote at 12 % and 15 % IRR Hurdles Pro
- IRR Hurdles vs Equity Multiple Hurdles Pro
- GP Promote Value & the Effective GP Share Pro
- Promote Sensitivity to the Exit Cap Rate Pro
- American vs European Waterfall Timing (Simplified) Pro