JV Distribution Waterfall

Extracted from Real Estate Project Strategic Financial Management Handbook: A Practical Guide · Appendix D JV Term Sheet
Hypothetical example based on the structure of Appendix D: LP THB 300 million, GP THB 100 million, Preferred Return of 8% compounded annually for 3 years, 50/50 catch-up and 80/20 profit split

Investor equity (LP)THB million

Developer equity (GP)THB million

Total distributable cashTHB million on sale or exit

Investment periodyears

Preferred Return% per year, compounded annually

Share of catch-up going to the GP Promote% must be higher than the Promote share

GP Promote% of profit above invested equity

GP Promote (the developer's special profit share)–

Distribution order (THB million)
Step	LP	GP (equity)	GP Promote	Total

Results are calculations for learning purposes. The figures entered are hypothetical examples, not real project data.

Distribution order (following the Term Sheet in the handbook)

Return 100% of LP equity, then pay the LP's Preferred Return
Return GP equity, then pay the GP's Preferred Return
Catch-up: the next tranche of cash is allocated to the GP Promote in the specified proportion until the Promote equals the Promote share of all profit distributed above equity
The remaining profit is split in the agreed proportion, e.g. 80/20, with the 80% divided among investors in proportion to their equity

Calculated as a single lump-sum distribution at the end of the period. IRR is approximated from the multiple
Actual agreements may use a non-compounding pref, multiple distributions or several hurdle tiers, so calculate according to the wording of the agreement
Dividend tax and management fees are not yet included