Hotel Development JV Equity Waterfall Model: JV equity waterfall with pref, catch-up, IRR hurdles and promote
Full description
For investors, developers, asset managers and financial controllers who negotiate or audit a hotel development joint venture. A 12-year mini pro forma (development budget, loan to cost, opening ramp-up, NOI, interest and a sale at the end of Year 12) produces the equity cash flow. The waterfall then splits each year's cash: return of capital plus a preferred return paid pro rata (annual compounding or simple), an optional GP catch-up, up to three LP IRR hurdles each with its own promote, and a residual tier. Every hurdle is tracked with an LP capital account that grows at the hurdle rate and falls with each LP distribution, so the IRR hurdles hold without circular references or macros. The model reports distributions by tier and party, LP and GP IRR from IRR(), equity multiples, promote earned and the GP share of profit, and runs three term sets side by side on the same cash flow.
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What is inside
- Hotel_JV_Equity_Waterfall_Model.xlsx: 10 tabs, 2,820 formulas, 3 native charts, 13 integrity checks, a Method tab with 15 calculation notes.
- Sample project (illustrative): 150-key hotel, 12-year cash flow, development in Years 1 and 2, a ramp-up capital call and a sale in Year 12.
- Waterfall engine: 47 visible calculation rows per year, from contributions to LP and GP net cash flow, plus hand-check NPVs at each hurdle.
- Three structures (default: three hurdles; pref with full catch-up; simple pref with one hurdle), each a full run of the waterfall, compared side by side.
- Dashboard: 10 KPI tiles, a check tile, a cumulative distributions chart, a distributions-by-tier chart and the structure comparison.
- Hotel_JV_Equity_Waterfall_Guide.docx and Hotel_JV_Equity_Waterfall_Guide.pdf: 8-page guide with the vocabulary, the engine step by step, the method in plain equations, a worked example on the sample results, how to check the waterfall by hand, negotiation points, limitations, a checklist and a glossary.
- README.txt and LICENSE-and-Terms.txt.
How it works
- Enter the project inputs and the LP equity share, and set the ramp-up on the pro forma.
- Enter up to three sets of JV terms and pick the live one.
- Read each year's tiers, capital accounts and LP and GP cash on the Waterfall tab.
- Compare the three structures and read the Dashboard.
- Confirm the Checks tab shows ALL OK and use the guide's hand checks.
Details
- Formats: XLSX workbook, DOCX guide, PDF guide.
- Language: English.
- Software: Excel 2016 or later, or LibreOffice Calc. No macros, no data tables, no add-ins.
- Annual periods, 12-year hold, one LP and one GP, any currency.
- Delivery: instant download.
Good to know
- Sample data is illustrative and does not describe any market.
- Not investment, legal or tax advice. JV agreements define tiers, pref and catch-up in different ways: read yours.
- No clawback, fees or taxes are modelled. Verify local requirements.
- Single-user license.
FAQ
Are the hurdles measured on project IRR or LP IRR?
On the LP's own cash flows. Each hurdle has an LP capital account that grows at the hurdle rate, so a zero balance means the LP has reached that IRR.
How is the promote applied inside a tier?
The GP takes the promote % of the tier cash first; the rest is split pro rata by equity share. The guide shows how to convert an LP / GP split quoted on the whole tier.
Does it need circular references or macros?
No. Each account uses last year's closing balance and this year's cash only, so the workbook recalculates at once in Excel and LibreOffice.
Can I use my own project cash flow?
Yes. Paste your equity cash flow into the pro forma's equity cash flow row as values and the waterfall runs on it.
How do I know the split is right?
The Checks tab runs 13 tests, including NPV tests at each hurdle and a check that LP plus GP cash equals the cash distributed every year. The guide walks through one year by hand.
