Math Behind Financial Aspects of Partnership Distribution Waterfalls
16 Pages Posted: 6 Nov 2014
Date Written: October 20, 2014
This report reviews the basic financial concepts that apply to provisions commonly used in real estate partnership waterfall distributions. It discusses how those provisions are susceptible to other interpretations and often include superfluous and potentially confusing language. It concludes with specific recommendations for improving the definitional portion of distribution waterfalls.
Keywords: Partnership, profit allocation, distribution waterfall, time value of money, IRR, XIRR, net present value, future value, internal rate of return, hurdle rate
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