Note that I didn't model the LP Clawback provision in this case - I felt like it would have been a distraction from the core purpose of the Watch Me Build. With that said, if there's interest I'd be happy to provide a follow up video where I add in the LP Clawback feature to this particular model.
Thank you again for your amazing work - really appreciate it! I did have some questions and would really appreciate it if you could help guide me. It would be great to see how to model in the GP Fees, LP clawbacks, GP catch up, how the model changes with multiple instead of irr hurdles, and what to do about construction overages that get split up in the waterfall.
I sincerely appreciate your excellent work, Spencer. I've been learning a lot from your content, and refining my skills in CRE. May you please build one with an LP clawback feature. That would be helpful.
Hi Spencer, thanks for the great video. What is the reason that the required return for the Distributions during Operations only applies to the initial capital contribution rather than the accrued capital account balance? Is this a feature of the partnership contracts one tends to see or is it inherent to how this hurdle has to be modelled? Thanks!
Not sure if this answers your question, but his assumption of a cash on cash return is the reason why it’s like that. If it were IRR based then the required return would be calculated off the beginning balance
you mentioned another a more complex version of this waterfall that handles mid hold refinance... are refinance profits treated different in this version?
Note that I didn't model the LP Clawback provision in this case - I felt like it would have been a distraction from the core purpose of the Watch Me Build. With that said, if there's interest I'd be happy to provide a follow up video where I add in the LP Clawback feature to this particular model.
Thank you again for your amazing work - really appreciate it! I did have some questions and would really appreciate it if you could help guide me. It would be great to see how to model in the GP Fees, LP clawbacks, GP catch up, how the model changes with multiple instead of irr hurdles, and what to do about construction overages that get split up in the waterfall.
I sincerely appreciate your excellent work, Spencer. I've been learning a lot from your content, and refining my skills in CRE. May you please build one with an LP clawback feature. That would be helpful.
The "GP IRR Calc" = 6.04%. Shouldn't it match the 6% hurdle exactly?
Hi Spencer, thanks for the great video. What is the reason that the required return for the Distributions during Operations only applies to the initial capital contribution rather than the accrued capital account balance? Is this a feature of the partnership contracts one tends to see or is it inherent to how this hurdle has to be modelled? Thanks!
Not sure if this answers your question, but his assumption of a cash on cash return is the reason why it’s like that. If it were IRR based then the required return would be calculated off the beginning balance
you mentioned another a more complex version of this waterfall that handles mid hold refinance... are refinance profits treated different in this version?