Real Estate Ventures

• The differences between IRRs and preferred returns
• Allowing the promote hurdle balance to go negative when there is a surplus vs. not doing so
• In effect, using continuous compounding vs. discrete compounding with simple returns between compounding
• When discrete compounding is used, employing separate compounding periods for each cash flow vs. using fixed compounding periods for all cash flows
• Using timing conventions, such as, assuming all cash flows occur at the beginning or end of a period

Presented in a straightforward format, the book begins with background on the topic and summarizes the basic issues and concepts related to promote hurdles in four parts:

• Part A: Accessible, question-and-answer presentation of the basic issues and highlights about the topic, including the differences between preferred returns and IRRs
• Part B: Summary of the basic issues and concepts relating to promote hurdles, as well as a more detailed treatment of the differences between preferred returns and IRRs, a discussion of soft hurdles, and of recycling profits, one of the key potential differences between IRR and preferred return/return of capital hurdles
• Part C: General background and analysis of the differences between preferred returns and IRRs
• Part D: In-depth chapters address issues related to "multiple IRRs" and "effective rates," and a practical solution to avoid multiple IRRs in the context of multiple promote hurdles