Waterfall Distribution Calculator

Real estate partnerships split proceeds through a waterfall — capital first, preferred return second, promote on profits above the hurdle. This calculator runs a simplified three-tier waterfall so you can see LP and GP take-home at a total distribution level and compute each side's equity multiple.

Total distribution

LP invested capital

GP co-invest capital

Preferred return to LP

Hold period (years)

GP promote above pref

LP total distribution

$4,600,000

GP total distribution

$400,000

LP capital returned

$4,000,000

Preferred return paid

$600,000

LP share of profit

GP promote

LP equity multiple

1.15

GP equity multiple

How the math works

This simplified three-tier waterfall pays: (1) pro-rata return of capital, (2) preferred return on LP capital, (3) promote split to GP above the pref. Real deals layer additional hurdles (IRR-based, catch-ups, multiple tiers) — this is the baseline.

LP equity multiple = total LP proceeds ÷ LP capital. A 1.6x multiple over 5 years implies a ~10% IRR. Promote meaningfully lifts GP returns above pro-rata and is the core LP-GP alignment mechanism.

How to Use

Enter total distribution proceeds (sale + operating cash).
Enter LP and GP invested capital.
Enter preferred return and hold years.
Enter GP promote percentage above the pref.
Read LP and GP distributions and equity multiples.

Frequently Asked Questions

Catch-up vs straight promote?

A catch-up gives GP 100% of distributions until the overall split matches the promote — skipping this here. Straight promote (as modeled) simply splits every dollar above pref per the promote ratio.

European vs American waterfall?

European pays pref and capital back fully before any promote. American can pay promote on each deal — distributions aren't fully pooled. This calc models a single deal European-style.