Four Tier Equity Waterfall Model

When I finished my graduate real estate studies at Cornell, I felt entirely prepared for the new side of real estate I was going into. Nonetheless, there were still areas where I felt weaker than others. Modeling equity waterfall structures was one of those areas. Now don’t misunderstand me. I took classes where we had opportunities to study and model waterfalls, and graduated with a full grasp of the intuition. However, while I understand and could explain the concept, I wasn’t entirely proficient in putting it into an accurate Excel model.

This weekend, I decided to change that. I spent the better part of eight hours reviewing the different types of equity waterfall structures used in the industry, looking through several waterfall models, and ultimately building an equity waterfall model on my own from scratch. I feel pretty good about the final product, and have shared the model at my blog. Feel free to download a copy for yourself if you’d like.