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The American Waterfall & Clawback

Split three distributions arriving in three different years the way a US deal-by-deal JV actually does: a preferred return account that compounds on unreturned capital, IRR hurdles carried as accrual accounts instead of closed-form watermarks, a promote paid mid-life rather than at exit, and the whole-fund European lookback that computes what the GP has to hand back. Proceeds link to a property model's exit equity, not a typed number.

REPE · VP Level · about 85 minutes · 35 guided steps

Lesson outline

Source Models — Where Each Distribution Comes From

  1. Step 1: Value-Add Exit Equity

Distribution Events

  1. Step 2: Years Since Last Distribution
  2. Step 3: Distributable Proceeds

Capital & Preferred Return Accounts (carried forward)

  1. Step 4: Preferred Return Account — Opening
  2. Step 5: Preferred Return Account — Accrued to Date
  3. Step 6: Unreturned Capital — Opening
  4. Step 7: Preferred Return Owed
  5. Step 8: Tier 1a: Preferred Return Paid
  6. Step 9: Tier 1b: Return of Capital
  7. Step 10: Preferred Return Account — Closing
  8. Step 11: Unreturned Capital — Closing
  9. Step 12: Cumulative Preferred Return Paid

IRR Hurdle Accounts (carried forward)

  1. Step 13: Hurdle 2 Account — Opening
  2. Step 14: Hurdle 2 Account — Accrued to Date
  3. Step 15: Hurdle 2 Account — Closing
  4. Step 16: Hurdle 3 Account — Opening
  5. Step 17: Hurdle 3 Account — Accrued to Date
  6. Step 18: Hurdle 3 Account — Closing

Promote Tiers — Applied As Each Distribution Occurs

  1. Step 19: Tier 2: GP Catch-Up
  2. Step 20: Cumulative GP Catch-Up Paid
  3. Step 21: Tier 3: Hurdle 1 → Hurdle 2 Pool
  4. Step 22: Tier 4: Hurdle 2 → Hurdle 3 Pool
  5. Step 23: Tier 5: Residual Pool

LP / GP Split By Event

  1. Step 24: LP Distribution
  2. Step 25: GP Distribution
  3. Step 26: Total Distributed (Check)
  4. Step 27: Event Tie-Out

Fund Totals, European Lookback & Clawback

  1. Step 28: Fund Totals
  2. Step 29: Lookback: Whole-Fund Pref & Catch-Up
  3. Step 30: Lookback: Hurdle Watermarks
  4. Step 31: Lookback: GP Promote by Tier
  5. Step 32: Lookback: Total GP Entitlement
  6. Step 33: Clawback
  7. Step 34: Distributions After Clawback
  8. Step 35: LP & GP MoIC After Clawback