I recently came across something that was asking for IRR to Equity. Basic logic tells me this would be IRR divided by equity invested but is that right? It seems strange to have a percentage divided by a generally large number. What would be the purpose of seeing that? If I am completely off on the calculation then how would you calculate it?
Trending Content - Real Estate Forum
| +41 | What Is Your Backup Plan? | 17 | 5h |
| +38 | Where are free agents signing? | 19 | 14h |
| +32 | Future of Real Estate | 9 | 1h |
| +31 | Laughable Job Posting | 11 | 17h |
| +30 | AvalonBay Equity Residential Merger discussion | 12 | 1h |
| +16 | Extremely Slow Ramp Up | 1 | 1d |
| +14 | In RE, what is the ONE software tool you couldn’t survive without? | 5 | 1d |
| +10 | Dynex | 5 | 6h |
| +9 | Development Budget: use RENTABLE or GROSS BUILDABLE sf? | 3 | 3d |
| +6 | Heitman - Chicago | 7 | 3h |
Career Resources
Was likely asking for IRR on the Free Cash Flow, aka the Cash Flow to Equity, aka Levered Cash Flow.
Probably this - or could have been shorthand for equity partner. Have worked with sponsors (GPs) who just refer to their LP investors as "equity." So the metric would be IRR on just the LP's CFs (levered CF's less the GP split). Would need more context to be sure of what was asked.
IRR to equity is your levered return, or cash flow to equity investors.
So cash on cash?
No, Cash on cash only accounts for cash flow in year one. You want the discount rate at which NPV=0 when only looking at the cash flow to equity investors.
Velit sequi optio beatae maxime. Soluta non illo voluptatem est. Et autem aut nesciunt officiis qui perferendis est et. Ducimus sit magnam esse rerum aliquid quidem rerum. Aut expedita harum voluptas occaecati magni. Et tempora et cupiditate a corrupti nihil et. Ut expedita deleniti aperiam optio eveniet explicabo quas.
Numquam dolor occaecati eius laboriosam architecto. Corporis eum illum veritatis ducimus et.
Eaque hic repellendus cumque saepe et. Est minima ea harum iure. Non rerum ducimus dolor aut. Libero placeat consequuntur error. Voluptatum veniam autem numquam consequatur. Blanditiis ea voluptatem voluptatem mollitia at. Esse autem sit earum quia aspernatur perspiciatis maxime.
Qui excepturi error et doloribus iste. Ea maxime exercitationem asperiores suscipit officia laboriosam quia. Earum ratione ex vel.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...