Mixed-use development: equity waterfall rebuilt, IC approval in one pass
A 120-unit mixed-use scheme where the sponsor's waterfall paid promote before the preferred return was fully caught up.
- levered IRR, base case
- 17.8%levered IRR, base case
- through investment committee
- 1 passthrough investment committee
- peak equity sized
- $22Mpeak equity sized
What we found
The original model computed promote on a cumulative basis without testing whether the preferred return had actually been met in each period, which overstated sponsor economics and would not have survived investor counsel.
What the engagement covered
- Monthly development cash flow rebuilt with a proper draw schedule
- Capitalised construction interest tied to the draw, not to a flat assumption
- Four-tier waterfall with per-period catch-up testing
- Sensitivity across exit cap, rent, cost overrun and a six-month delay
Outcome
The revised underwriting went to investment committee once and was approved without a resubmission.
Client names are withheld under confidentiality. Every engagement is described with the client's agreement.
Real estate models
Underwriting that survives a lender's credit committee and an equity partner's IC memo.
from $3,500 · 2–4 weeks
View the service →Two ways to start
Book the call, or start with the checklist.
If you know what you need, book the scoping call. If you are still deciding, take the checklist investors effectively run your model against and see where it stands.
Book a 30-minute scoping call
Thirty minutes on what exists, what it needs to do, and who has to be convinced. A fixed-scope proposal follows within 48 hours.