Preferred Return Model with Optional Split During Preferred Return Phase

As you likely know by now, I've done many different joint venture cash flow waterfall templates over the years. This is often for real estate deals, but it can apply to any type of deal in any sector. These models are good at showing how cash flows are split based on some rules about who has priority to receive a certain amount of distributions based on various hurdles or other performance criteria (such as a preferred return).

$45.00 USD

 

After purchase, the template will be immediately available to download. This is also included in the joint venture waterfalls bundle and The Super Smart Bundle.

Remember, this is a preferred 'return' model, meaning the LP has a priority on the 'return', not the full equity investment made. However, I've added a few different performance tiers in this model that do allow one to trigger new distributions splits based on the equity being fully repaid. Up until then, there are a few ways to split cash flows between the GP and LP in this template.

Template Features:

• Tier 1 Split - Define a percentage of the cash flow available that goes to the GP and LP until the LP has been fully distributed their preferred return amount, including any unpaid / accrued returns. This does not include return of invested capital. This step is a new feature that I've never included in any other waterfall before.
• Tier 2 Split - Takes the remaining cash flow after Tier 1 is satisfied and splits it based on a new defined percentage between the GP and LP. This split is in effect until the LP has been returned their entire initial investment.
• Tier 3 Split - Here is the final distribution tier and the user can define final percentages for how the remaining cash flow is split between the GP and LP after all other tiers have been fulfilled. (pref. fully paid plus return of capital to the LP).
• Handles arbitrary amounts of cash flow streams (contributions / distributions over time).
• Option to capitalize unpaid returns (compound).
• Option to reduce equity basis with distributions paid above the pref.
• Option to accrue unpaid returns or start clean each year.
• The preferred return rate is defined manually.
• All distribution splits are defined for each tier.
• Final exit IRR and Equity Multiple as well as the contributions and distributions for each tier are summarized for the GP and LP at the bottom.
• I've added a summary for the GP and LP that call out the specific cash distributions that classify as preferred return, return of capital, and profit distributions for each tier.

All the logic for this spreadsheet is contained on a single tab so it is easy to port into any working model that you have. Simply create a reference from your model for the required capital investments and available distributions rows at the top of this model. The logic then takes effect from there to determine distributions.

All formulas and tabs are unlocked and editable. You can also upload the file to Google Sheets if you like.

Also, you can hire me for custom financial modeling.

More Joint Venture Waterfall Models:

• Preferred Return - Basic
• Preferred Return with Multiple GP Catch-up Options
• Preferred Equity with a Subordinate IRR Hurdle Waterfall
• Preferred Equity (equity multiple hurdle)
• General Cash Flow Waterfall: 3 IRR Hurdles
• IRR Hurdles with GP Catch-up
• Preferred Return - Simple Interest / Multiple Hurdles / Non-Compounding
• Preferred Return Fund Tracker (IRR Hurdles)
• Cumulative Distributions
• Mixed-Use Real Estate
• Multi-family Real Estate Acquisition
• Joint Venture Model - IRR Hurdles / Waterfall
• Hedge Fund Fee Model with a Soft Hurdle
• Self Storage: Multi-Fund