The structure decides the answer
A property can perform exactly as projected and still pay an LP far less than the headline, once the debt, the preferred return and the promote have taken their turn.
Real Estate Investor Returns Analysis
IRR, equity multiple and cash-on-cash for the deal and for every party in it — run through the waterfall you actually agreed, so the number you put in front of an investor is the number they will get.
The Stakes
The Return You Promise Is the One You'll Be Held To
Investors remember the number in the deck. If the distributions do not match it, you find out at the worst possible moment — at a capital call, or on the first payout, in front of the people whose money it is. And it is rarely the property that caused it.
And the model rounds it off
An annual split applied to a year-end total, a promote hard-coded as one percentage. Close enough to look right, wrong enough to matter when it is real money.
So the two answers disagree
The deal-level IRR says one thing, the investor summary another, and nobody in the room can say which one is correct.
Set It Up Once
Describe the Deal the Way You Actually Agreed It
Enter the structure as it really is — no simplifying to make the maths easier — and every number after it follows from that rather than from an approximation.
The debt
Sized on LTV or DSCR, across as many loans as the deal has — senior, mezzanine, supplemental, seller paper — each on its own terms.
Who put in what
Your LPs, your co-invest, anyone else on the cap table, in the proportions you actually agreed.
The order of payment
Preferred return, return of capital, then the splits — your waterfall as the operating agreement describes it, not a simplified version.
The costs
Acquisition and financing costs and reserves, so the equity number is the real one.
What You Can Show
Returns for the Deal, and for Each Investor
Every figure comes out of the distributions themselves, so the headline and the per-party numbers always agree.
IRR
For the deal and for each class of investor, because they are rarely the same story.
Equity multiple
What a dollar in becomes — the number that holds up over a long hold better than IRR does.
Cash-on-cash
Year by year, not averaged into one figure that hides a thin year three.
DSCR and debt yield
Per year, against each loan, so a covenant that tightens in year three is visible before you sign.
When It Moves
See Who Absorbs It Before You Sign
Rates move, lease-up runs slow, the exit softens. Change the assumption and the cash flow, the loan schedule and every distribution update together — so you can see not only that the return dropped, but which party took the hit and whether your promote survives it. That is a conversation worth having in advance rather than in year four.
The Payoff
Answer the Follow-Up in the Meeting
"What happens to my preferred if we hold an extra year?" is the question that ends a lot of investor calls with a promise to come back. Here it is a change and a look. And because the whole thing rests on the proforma built from figures you approved out of the deal's own documents, you can trace any of it back to the page it came from.
FAQ
Questions About Investor Returns
What is an equity waterfall?
It is the agreed order in which money comes back. Usually the limited partners receive a preferred return first, then their capital, and only then is the remainder split with the sponsor — often on a promote that steps up as return hurdles are cleared. The order is what decides who actually earns what: two deals with identical property performance can pay very differently.
Can Cygni model a preferred return and a promote?
Yes — including multiple tiers, several classes of investor, and distributions at the frequency you actually pay them rather than annually. If your operating agreement describes it, you can model it.
Will these numbers match what my investors are shown?
They are the same numbers. The returns are worked out from the distributions themselves, so the deal-level figure and the per-investor figures cannot disagree — which is exactly the discrepancy that tends to surface in front of the people you least want it to.
What do I need before I can see returns?
A cash-flow projection, the debt, and the distribution terms. Returns come last because they are the consequence of everything above them — which also means changing an assumption upstream updates them without anything being re-entered.
Check It Against a Deal You've Already Paid Out On
Enter the structure from a deal you have distributed on, and compare the schedule against what actually went out the door.