The IRR Ate My Capital!

How IRR Hurdles in Real Estate JVs May Cannibalize Contributions Made After Promote Distributions

Daniel B. Guggenheim
Commercial Property Executive
April 21, 2015

Real estate ventures commonly use one or more internal rate of return (IRR) hurdles to allocate profits between the sponsor and investors. When contributions are made after an initial IRR hurdle has been satisfied, however, typical IRR formulas may result in the investors receiving less than expected because...(read the entire article here).