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This template provides users with a ready-to-use Real estate waterfall calculator and analysis template.

Private Equity Waterfall is the colloquial term for the way partners distribute the share of the profit in an investment. It is common in all types of Private Equity investments and is especially prevalent in the Real Estate Private Equity industry.

The term “waterfall” is used to describe how the cash from an investment flow down to the different parties involved. The top-down nature of the cash flow distributions indicates the relative priority of the parties at different levels.

Sponsors are the people who find the deals, manage the assets of the deal or the fund, and assemble the investors. They are the ones who control the deal and make day-to-day decisions about how the property or fund operates. They are often called the General Partner (GP) and may be a single person or a firm.

Investors are the people who contribute the majority of the equity on a deal but do little or no work involved in operating a deal or fund. They can be individuals, family offices, pension funds, or other institutional investors. They are often called Limited Partners (LPs) because their liability is limited to their investment, but they also have a limited amount of involvement in the operations.

The main feature of the Private Equity Waterfall, which ensures the LP’s priority is the initial return paid on their capital invested and the return of capital. This is referred to as the Preferred Return because it is the first cash flow paid to equity partners, which means ensures the LPs receive adequate compensation for the risk taken as the majority equity capital provider in the project.

The template provides users with a complete and ready-to-use real estate waterfall cash flow calculator and analysis.

The template not only helps users to run waterfall calculations by established hurdle rate automatically but also could let users understand the Real Estate Waterfall logic. We setup 5 hurdle rates and the corresponding split percentage and then performed cash flow analysis under each hurdle rate.

The template is user-friendly for professional analysts or users with little experience in financial modeling since it’s a simple design pattern and easy-to-follow logic.

To guarantee the user’s satisfaction, the model does not place any complicated formulas or VBA codes. The structure and content have been created following the Best Financial Modeling Principles and considering the high level of flexibility and user-friendly priority.

Please feel no hesitation in contacting us if you experience any problems when using the models provided.

In addition, if you need a customized model for your specific business, please let us know, and we would be happy to help you with this.