The most junior, highest-risk layer of the capital stack; it absorbs first losses but captures all residual upside after debt and preferred equity are paid.
Related terms
- Core
A low-risk strategy targeting stabilised, well-let assets in prime locations.
- Core-plus
A moderate-risk strategy on largely stabilised assets with some upside from light improvement.
- Distribution waterfall
The contractual order in which cash is split between investors and sponsor — typically return of capital, then a preferred return, then a catch-up, then a prom…
- Diversification
Spreading capital across assets, sectors, or geographies whose returns do not move together to reduce portfolio risk without a proportional cut in expected ret…
- DPI
Distributions to paid-in capital: cash actually returned to LPs divided by capital they have contributed — the realised, cash-in-hand measure of fund performan…
- Due diligence
The investigation of an asset legal, physical, and financial condition before purchase.
- Equity multiple
Total cash returned divided by total cash invested over the hold period.
- Exit strategy
The planned method and timing for realising value from an investment, usually sale or refinance.