Waterfalls in Asset Management....
What's the best way to model a waterfall in Asset Management? I made the switch over from acquisitions, so I know how to run a waterfall if it's only forward looking....
However, now that I'm in Asset Management, it seems like a messy job piecing together historicals and projections together to run through a waterfall. Anyone have a good clean way to do this?
Same waterfall, just have a budget to actual for your cash flow proforma. The only thing that would change would be your expected cash flow, the structure should not change from the JV docs
Editing because it sounds like you get it conceptually. I think you just have to hardcode in the historical data for year 1, year 2, etc (or on a monthly basis).
If your historical are more detailed than your model, you can “code” each line item to match your original model
Should be pretty straightforward. Bring your actuals into the cash flow up to X date, this date being latest period actuals are available for, and continue to take the forecast from that point on. Sense check variances vs. overall budget, make sure you’re not missing a big payment about to go out which was in the forecast just prior to X date but hasn’t hit the actuals yet.
Pull your actuals in from a separate underlying sheet where they’re hardcoded rather than hardcoding into the same cash flow where you project forecasts, makes it much easier to quickly compare historic projections vs actuals and sense check variances.
Why did you switch jobs?
As has been mentioned, the waterfall is consistent. The historicals will be the actual contributions and distributions that has occurred. On go-forward projections, I'd loop in your reforecasted pro-forma projections along with the assumed reversion value. If applicable, account for your cash balance at sale as well. Good luck!
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