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European Waterfall Distribution Calculator
European waterfalls return all invested capital before GP earns promote.
LP distribution
$72,727,273
GP promote
$7,272,727
LP IRR %
0.08%
How the math works
Tier 1: return of capital. Tier 2: pref. Tier 3: split by promote.
$55M capital + $25.9M pref return + $19.1M profit × 80/20 = $63.5M LP + $3.8M promote.
How to Use
- Enter LP capital contributed.
- Enter GP capital contributed.
- Enter total distribution available.
- Enter preferred return %.
- Enter promote %.
- Read LP and GP distributions.
Frequently Asked Questions
European vs American?
European (fund-level): all LPs get capital back + pref before GP gets promote. Conservative for LPs. American (deal-by-deal): GP gets promote on each profitable deal, even if overall fund loses money. LP-friendly European; GP-friendly American.
Typical structures?
Fund-of-funds/institutional: European standard. Syndicators/individual deals: American common. Real estate funds: mixed; newer funds trending European as LP negotiating power grows. Read LPA carefully — structure hugely affects economics.
Mechanics?
Tier 1: return of capital pro-rata. Tier 2: preferred return (8% typical) pro-rata. Tier 3: GP catch-up (if applicable). Tier 4: split thereafter (80/20 LP/GP typical). Some funds have multiple promote tiers at higher hurdles.
How often should I rerun this?
Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.
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