When I decided to share my real estate equity waterfall model in Excel, I never imagined it would be as popular as it has. The model has been downloaded thousands times and many of you have written to extend your thanks for sharing. It is gratifying to know that the model has been put to good use and we welcome the opportunity to give back to the commercial real estate community in any way we can.
The genesis of this model, is that I received a nice email from someone requesting that I modify my equity waterfall model to include monthly, rather than annual, cash flow periods. The modification took a bit of work, but you can find a link to download the model at the end of this post.
This model uses the same general methodology as my other equity waterfall model, only this version uses monthly rather than annual periods. Unlike its annual counterpart, it does not have an option to use Equity Multiple hurdles nor does it include the option to model asset management fees or development fees. As time permits, I’ll work to add those features to this model.
Using the Equity Waterfall Model with Monthly Periods
Using the model is simple. Just drop in your analysis start date, net levered cash flow stream from your DCF, sponsor vs. partner equity share, preferred return and IRR hurdles, and let the model do the rest. And again, it is not intended to be a standalone model, but it should be rather simple to plug into your own model.
The model has been available for several years and gone through several updates. Nonetheless, there may be errors so please let me know if you find any. And as always, feel free to reach out with any comments or questions you may have.
Download the Real Estate Equity Waterfall Model with IRR Hurdles (Monthly Periods)
To make this model accessible to everyone, it is offered on a “Pay What You’re Able” basis with no minimum (enter $0 if you’d like) or maximum (your support helps keep the content coming – similar real estate equity waterfall models sell for $100 – $300+ per license). Just enter a price together with an email address to send the download link to, and then click ‘Continue’. If you have any questions about our “Pay What You’re Able” program or why we offer our models on this basis, please reach out to either Mike or Spencer.
We regularly update the model (see version notes). Paid contributors to the model receive a new download link via email each time the model is updated.
- Revised ‘Error Check’ formula to account for rounding errors
- Fixed an error where in some cases the 2nd tier LP distributions were overestimated
- Added option to model sponsor fees; can include up to two different sponsor fees (e.g. AUM fee, acquisition/disposition fee)
- Changed analysis start date assumption
- Removed reference to USD to better support non-US users
- Renamed tab to ‘Partnership Returns – Annual’, to better reflect purpose of module
- Various formatting improvements
- Simplied hurdle 1 modeling; no longer tracking sponsor capital account
- Improved version tracking
- Miscellaneous bug fixes
- Added link to waterfall module with annual periods
About the Author: Born and raised in the Northwest United States, Spencer Burton has over 15 years of real estate investment and development experience. In his current position, Spencer assesses new acquisition, development, and debt opportunities for a $45bn real estate fund. He resides in Dallas, TX.