Daniel Lebret is a senior lecturer in real estate finance at the Cornell Nolan School of Hotel Administration. He has been at Cornell University since he received his Ph.D. in 2008, and his teaching responsibilities have included undergraduate and graduate courses on real estate finance, real estate financial modeling, real estate statistical modeling, urban economics, securitization, and structured finance, along with coaching teams of students for real estate finance case competitions.
Equity Waterfalls in
Joint VenturesCornell Course
Most commercial real estate deals succeed or break down around a simple concept: Does the ownership have what it takes to make it happen? The dilemma, then, that most investors contemplate is whether to be the sole investor and own all risks and profits or to partner with someone in a joint venture.
In this course, you will discover how to analyze these options for a variety of investment scenarios, balancing the right incentives for each partner to perform at their best while avoiding conflicts of interest. You will examine examples of incentives, including profit-sharing rules, assessing the options when it comes to profit distribution and the variables involved, such as the timing and proportions of this disbursement.
You will then gain experience applying the most common profit-sharing rules at the joint-venture level by building an equity waterfall from the ground up that includes four layers of distribution. By the end of this course, you will have more context and experience with joint ventures and the variables behind successful deals in the marketplace.
You are required to have completed the following courses or have equivalent experience before taking this course:
- Discounted Cash Flows in Real Estate
- Unlevered Real Estate Acquisitions
- Real Estate Debt Financing and Scenario Analysis
- Real Estate Development Financing
Key Course Takeaways
- Define and evaluate the partnership terms to gain a conceptual understanding of the equity waterfall structure
- Use common variables related to equity cash flows to determine the profits available to split at both the property and fund levels
- Demonstrate the different ways the equity waterfall will function using performance metrics
- Evaluate and select the optimal investor opportunity for the project
How It Works
Who Should Enroll
- Acquisition and asset managers
- Financial analysts
- Real estate investors
- Real estate development professionals
- Individuals looking to invest in commercial real estate
- MBA students
- City and regional planning professionals