A developer puts in 5% equity and a fund puts in 95% of the equity for a
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- A developer puts in 5% equity and a fund puts in 95% of the equity for a development deal. Cash flow is to be distributed with the following order of priorities (e.g., "the waterfall"):
- Preferred return is 10% pro rata to both parties.
- The promote is 20% to the developer then the balance of proceeds pro rata.
- The acquisition and development costs of a deal (occurring at time 0), are $1 million.
At the end of the first full calendar year the project is sold for $1.1 million. - What are the IRR and $ returns to the developer and the fund?
- What if the project is sold for $3.0 million, what are the IRR and $ returns to the developer and the fund?
Related Book For
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
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