Financial Model, Investment, Real Estate

10-year Financial Projections, 5-year Financial Projections, Cash Flow Analysis, Cash Flow Projections, Cash on Cash Yield, Cash-on-Cash Multiple, CFO, Developers, Excel, Financial Model, Financial Planning, Financial Projections, Interest Accrual, Investment Multiple, Investor Cash Flows, Investors, IRR (Internal Rate of Return), Private Equity, Sensitivity Analysis, Sponsors, Startup Financial Models, Venture Capital

Instructional Video:

Model Updates:

Added an option to be able to not compound unpaid preferred returns (but still accrue them so they are paid before the GP starts earning their split).
Added a key for primary input cells and added a DCF Analysis for each participant.

This model is designed to plug into any financial model where you know the cash contributions and distributions per year and per preferred equity vs. common equity. The model goes out for a period of 10 years and can easily be drug out as many years as you want or have fewer years. Preferred equity is different than just having a preferred return sit on top of an IRR hurdle waterfall Preferred equity has a claim on equity and means any cash flows available will go to draw down that preferred position until it is 0 prior to anyone else receiving a dime.

There is often a preferred return associated with preferred equity, but there doesn’t have to be. If there is not, then there is going to be an equity kicker (share of profits), which is usually smaller. It is smaller because the position has less risk since the equity is paid back with priority. If you do enter input for the preferred return, you can choose to have unpaid past returns accrue to the preferred equity position or not.

After the preferred equity has been satisfied, any remaining cash flow will go to a secondary waterfall, which was designed to be split based on IRR hurdles, as you would often see between an investor and sponsor.

Having this separate from preferred equity adds to the flexibility and amount of use cases the model can work with, as well as provides maximum financial strategy. There are annual summaries for all 3 parties, including yearly cash flow (visual plus values), cumulative cash position (visual plus values), and IRR, as well as equity multiple.

You must log in to submit a review.