This article will explain each type of Metric currently available on the InvestNext platform and break down the definition and/or calculation.
Definition: The amount of accrued and unpaid interest due on a promissory note on a specific date according to its terms and any previous activity.
Accrued Preferred Return
Definition: The amount of accrued and unpaid preferred return due to a held equity position on a specific date according to the terms of the project operating agreement.
Calculation: This calculation will be based on the preferred return hurdle in the most recently created distribution plan (for each class).
y is the number of years invested using an actual/actual day count convention
This calculation is made so that when a 0% return is reached, the investor has recouped the initial investment.
Capital Balance (Capital Account)
Definition: For a given equity position, the capital balance consists of the original capital contribution associated with that equity, minus any return of capital distributions made on that equity.
Calculation: (Original Capital Contribution - Return of Capital Distributions)
Definition: This is going to be the sum of the Return of Capital distributions made over the lifetime of the investment.
Definition: Cash-on-cash return measures annual cash flow against the original contribution amount. Or put another way, it's the equity multiple divided by years elapsed.
Definition: Cost basis is the original value or purchase price of an asset or investment for tax purposes.
Definition: Deductions are going to be one-off line items from a distribution, for a specific investment, that reduces the total cash paid to the investor. The most common example that we currently see are tax withholdings.
Calculation: (Distribution - Deduction) = Net Distribution/Cash
Definition: Sum of all distribution allocations to an investor, regardless of the type of distribution (e.g. return of capital, preferred return, dividends etc)
Definition: The rate of return based on the total net profit and the equity investment, also referred to as EM.
Calculation: Equity Multiple = (Total Distributions / Total Contributions)
IRR (Internal Rate of Return)
Definition: IRR is solved by setting the value of the net present value (NPV) equation to zero and solving for the rate of return. InvestNext uses an actual/actual day count convention in this calculation as opposed to Excel's XIRR function which uses actual/365.
Definition: Sum of all capital contributions made over the lifetime of an investment.
Definition: The value expected to receive at a specific point in time for which the property/shares could be sold at.
Calculation: Market Value = (Number of Units * Current Class Price)
Definition: A preferred return is a profit distribution preference whereby profits, either from operations, sales, or refinance, are distributed to specific classes.
Calculation: Total Preferred Return = (Investment * Preferred Return Rate)
Definition: The total amount of distributions received minus the return of capital transactions.
Profit Distributions = (Total Distributions - Return of Capital)
Distributions = (Preferred Return + Dividends)
Realized Gain & Unrealized Gain
Definition: An unrealized gain is an increase in the market value of an asset that has yet to be sold for cash. It is a theoretical profit that exists on paper. A gain becomes realized once the position is sold for a profit.
Realized Gain = Sold Price - Investment
Unrealized Gain = Market Value - Investment
Definition: Specific type of transfer transaction (not a distribution), also known as a “Transfer to Treasury Account”. The transaction will reduce the total outstanding units in a Project.
Definition: A Share/Unit is a measure of ownership in a Project, determined by the total contribution amount and class price.
Calculation: Units = (Total Contributions / Class Price)