Reference no: EM133121297
Worksheet - Waterfall Distribution and Impact of Sponsor Promote (Please show all work)
Case Problem - Belmont Real Estate Fund II
Belmont Real Estate Fund II (BRE II) is an opportunistic real estate fund that invests in all five real estate sectors - Industrial, Office, Apartments, Retail and Hotels. The Fund invested $400 million in equity. BRE II was projected to return a 20%+ IRR and a 4.0x+ equity multiple. The fund terms are as follows:
- European Waterfall
- LP Preferred Return of 10%
- Catch up is 50/50
- Carried Interest split is 80/20
- Management Fees are outside the commitment (they do not need to be paid back before carried interest is paid)
The Fund was a 10-year fund and was fully liquidated after Year-10 for total proceeds of $1,700 million.
Question 1. After Year-10, calculate the fund's value based on the hurdle (10%) that must be achieved before the GP participates in any carried interest.
Question 2. At the Catch-up of 50/50, both the GP and LP get 50% of the following amount, which equals what?
Question 3. Now that the 80/20 split of profits has been achieved what are the remaining profits to be split 80/20? What is the LP portion and what is the GP portion?
Question 4. What are the total dollars and percentage of the LP and GP profits?
Question 5. What is annualized return of the BRE II?
Question 6. What is the Breakeven IRR on BRE II (the IRR that gets GP to full 20% carried interest)?
Question 7. What is the annualized return for the LPs?
Question 8. What is the impact of the sponsor promote on the gross return of BRE II?
Question 9. What is the gross equity multiple (TVPI -Total Value to Paid In) for BRE II?
Question 10. What is the net equity multiple for BRE II?
|
Margin required on the short sale
: You sell short 200 shares of Doggie Treats Inc. that are currently selling at $25 per share. You post the 50% margin required on the short sale. What is your in
|
|
Impact of delta and gamma
: Suppose a stock is currently trading at $47, for which there is a FEB 50 Call option selling for $2.0 with a Delta = 0.4 and a Gamma = 0.1.
|
|
Considering financial decision alternative
: 1. High cash flow is generally associated with a higher share price whereas higher risk tends to result in a lower share price.
|
|
Risk management strategy that uses futures
: Please identify a corporation which could benefit from a risk management strategy that uses futures. Please include the following items.
|
|
Waterfall distribution and impact of sponsor promote
: Belmont Real Estate Fund II (BRE II) is an opportunistic real estate fund that invests in all five real estate sectors - Industrial, Office, Apartments, Retail
|
|
What is the discount rate
: Suppose a stock currently has a price of $ 21. per share, with earnings per share next year expected to be $2.10. If earnings are growing at 5% per year, what i
|
|
How much money do you have to deposit
: Your daughter just turned 4 years old. You anticipate she will start University when she turns 18. You would like to have funds in a registered education saving
|
|
Motives of a firm to transition
: Briefly explain any one (1) of the motives of a firm to transition from being a purely domestic firm to become a multinational firm
|
|
How would you invest in a spac
: How would you invest in a SPAC? As an individual investor. how would you perform fundamental analysis prior to your investment in a SPAC?
|