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Fund IRR Calculator
IRR measures time-weighted fund performance.
Approximate IRR %
0.11%
Total distributions
$18,000,000
Multiple
1.8
How the math works
IRR solves for discount rate where NPV of cash flows = 0.
$10M → $3M Y3 + $5M Y5 + $10M Y7 = 1.8x multiple, ~14% IRR.
How to Use
- Enter year 0 investment.
- Enter year 3 distribution.
- Enter year 5 distribution.
- Enter year 7 final distribution.
- Read approximate irr %.
Frequently Asked Questions
IRR fund benchmarks?
Core RE fund: 7–10% net IRR target. Value-add: 12–16% net IRR. Opportunistic: 16–22%+ net IRR. Cambridge Associates Q4 2024: median PE buyout 14–16% net IRR, top-quartile 22%+. PME (public market equivalent): compares fund IRR to passive index over same period. Current dollar method (American waterfall) inflates IRR vs European. Vintage matters: 2009–2014 vintages outperformed; 2018–2021 vintage TBD given recent rate environment.
How does this fit fund/portfolio analytics?
Fund managers use this calculator alongside NAV reporting, distribution coverage, asset-level reforecasts, and LP investor reporting. ILPA reporting standards expect transparency on fees, expenses, and waterfall mechanics. AVAR, MOIC, IRR, and DPI metrics tie back to underlying asset performance. This calculator provides one component of fund-level performance attribution.
Promote and waterfall mechanics?
Standard PE real estate waterfall: 8% pref to LP, 50/50 catch-up to GP, 80/20 split above pref, sometimes second-tier 70/30 above 15%. American (deal-by-deal) vs European (whole fund) waterfalls produce materially different GP timing and risk. Catch-up and lookback provisions critical to LP. GP commitment (5–10% of fund) aligns interests.
Cap calls and distribution coverage?
Capital calls during construction/value-add phases, distributions from stabilized cash flow + dispositions. Coverage ratio: distributions / cap calls. Healthy fund > 1.5x in years 3–7. Distribution waterfall flows through LP pref → GP catch-up → split. LP investor expectations: 15–22% net IRR, 1.6–2.2x MOIC for opportunistic; 8–12% net IRR, 1.4–1.7x for core+.
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