1) Equity CF tab – Cells F46 and F57: Model currently showing “Error” message in both cells. I think the intent was for “All Equity Returned” to be displayed. Are you missing an interest calculation due to timing?
2) What happens to the Ending Balance in the LP Capital Account and Sponsor Capital Account – cells M50 and M59 respectively. How are those remaining balances worked into the returns?
1) This is a good comment. The “Error” message is poorly worded. It actually should read: “Insufficient Cash Flow” to return all capital to LP/sponsor including accrued pref. I’ve gone ahead and rewritten the message to avoid confusion. The spirit of the cell remains however, which is to let the user know whether the investment as underwritten provides sufficient cash flow to return 100% of the LP and sponsor’s capital plus accrued preferred return. You can test this by simply changing the Preferred Return (cell D18 of the Equity CF tab) to a percentage less than the property-level Levered IRR.
2) Again, because the investment as currently underwritten has insufficient cash flow to cover a return of capital plus pay the required pref, their respective capital accounts are positive at the end of the analysis period. The LP and Sponsor capital accounts are left unpaid and that amount is not figured into their respective returns.
