Key Takeaways
- Development models require monthly draw schedules—construction interest carry is often 10-15% of total budget.
- Fund fees switch base from committed to invested capital, and waterfall style (European vs. American) significantly affects GP/LP economics.
- Monte Carlo provides probability-of-achievement metrics unavailable from scenario analysis.
- Post-disposition variance analysis is the highest-value learning tool for improving future underwriting.
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Test Your Knowledge
1.During a fund's investment period, management fees are typically calculated on what base?
2.What distribution type is best for modeling exit cap rates in Monte Carlo simulation?
3.In performance attribution, what does "alpha" represent?