Private Equity Waterfall


Overview of the Private Equity Waterfall Model

This distribution waterfall engine allows you to calculate private equity investment structures. The model can be used for private equity real estate funds or any type of individual transaction on a deal-by-deal basis.

On the Cash Flows tab, you can import cash flows from 3rd-party platforms, or use one of our sample deals.

The Assumptions tab allows you to set contributions for the General Partner (GP) and Limited Partners (LPs) as well as the preferred return. You can also set hurdle rates and carried interest at up to four investment tiers.

The preferred return supports both simple and compounding interest, as well as IRR and equity multiple calculations. Investment tiers support simple and compounding interest, and also IRR.

All compounding can be done on a monthly, quarterly, semi-annual, or annual basis.

A Residual Split is included to handle any remaining excess cash flows.

After calculation, you can view a dynamic waterfall diagram, as well as return metrics for the project, investors, and the manager. A detailed distribution waterfall outlines the cash flows on a yearly basis and performs annual cash flow checks.

You can also export the final private equity waterfall model to Microsoft Excel for further analysis.

If you have any questions or feedback please reach out to us using the chat window. We have live analysts and support technicians available to help walk you through any questions.

Also, don't forget to check out our private equity real estate services.

There are 3 ways to get started with the Investor Waterfall Calculator:

You can copy/paste directly from Excel into this box (don't worry if it's not pretty)
Click here for Import Instructions
Import Notes:
  • Please import monthly levered cash flows in a single row with the initial purchase (ie - time 0) in the first column
  • The first cell should be a negative number to represent the initial equity investment for the project
  • This app supports an initial equity amount plus 190 months of cash flows
  • The cash flow report and project cash flow chart shows a maximum of 15 years
Import Instructions:

  1. Open your monthly cash flow model
  2. Click here to download the excel template and open the file
  3. Right click the tab in this excel template and select “Move or Copy…”
  4. A new dialog box will open. In the dropdown menu select your cash flow model and click OK.
  5. Place your LEVERED CASH FLOW (including initial equity and all distributions from operations, refinance, and sale) into the BLUE Monthly Cash Flows section. This can be a formula reference or hard coded
  6. Save your monthly cash flow model. This model will now be compatible for future uploads of any deal
  7. Drag that file into the section called “Upload a CRE Suite enabled file.” OR click “Browse” and select the file you have saved to your computer

  1. Download the deal you would like to view from the CRE Suite Excel Add-In
  2. Save that file to your desktop on your computer
  3. Drag that file into the section called “Upload a CRE Suite enabled file.” OR click “Browse” and select the file you have saved to your computer

  1. Save your CRE Suite compatible model to a folder on your computer
  2. Navigate to the waterfall application online
  3. Drag that file into the section called “Upload a CRE Suite enabled file.” OR click “Browse” and select the file you have saved to your computer

  1. Verify your ARGUS Enterprise reports are on a monthly basis. - You may need to change your report settings by setting "Print Amounts per Area", "Print Annual Totals", and "Print Final Totals" to "No"
  2. Select the Sources and Uses report and copy all data in the report - If you are on a PC you can use "CTRL + A" to select all and "CTRL + C" to copy
  3. Navigate back to the CREModels Waterfall Calculator and locate the Cash Flows tab
  4. Once you are on the Cash Flows tab locate the Import Data text box
  5. Click in the text box and paste your data - If you are on a PC you can right click then select paste or use "CTRL + V"
  6. Click the blue Import button to import the data

  1. Export monthly cash flows from your underwriting software into Microsoft Excel®
  2. Find the MONTHLY levered cash flows row. The first value MUST be the initial equity amount with the following value being the first month of the analysis with the last value being the sale month (This can either be in a single row OR a single column)
  3. Highlight all monthly values and press "CTRL + C" to copy
  4. Navigate back to the CREModels Waterfall Calculator and locate the Cash Flows tab
  5. Once you are on the Cash Flows tab locate the Import Data text box
  6. Click in the text box and paste your data - If you are on a PC you can right click then select paste or use "CTRL + V"
  7. Click the blue Import button to import the data

Here are the cash flows you have imported. Confirm they look like you expect and the next step is to set assumptions.

The above chart shows the annual cash flows (based on investment year) that have been imported to the model.

200/200
Equity Contribution
GP: $1,500,000
$8,500,000 :LP
Preferred Return Options
Catch-Up Percentage
0%

Investment Tier Options
Compounding Frequency
First, pay the Preferred Return...
Add Tier 2
Then, split cash flows at Tier 2... Remove Tier 2

Add Tier 3
Then, split cash flows at Tier 3... Remove Tier 3

Add Tier 4
Then, split cash flows at Tier 4... Remove Tier 4

Finally, follow the residual split...

Property Info

The Sundial
Retail Acquisition
153 2nd Avenue North
St Petersburg, FL 33701
Investment Summary

8% Simple Interest Pref and Return of Equity to Cash Investor. GP earns a 20% promote until the LP hits a 10 IRR%; 30% promote until LP hits a 12% IRR; 40% promote until 15% IRR; then GP splits 50/50.
Project Cash Flow 
CREModels Services
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CRE Suite
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Project Returns

Profit 

$44,484,715

IRR 

22.68 %

Multiple 

5.45x

Cash-on-Cash 

2.48 %

Investor Returns

Profit 

$24,002,289

IRR 

18.58 %

Multiple 

3.82x

Cash 

$32,502,289

General Partner Returns

Profit 

$20,482,427

IRR 

34.53 %

Multiple 

14.65x

Cash 

$21,982,427