Every offering is described with a handful of return metrics. Here is what each one measures and what it leaves out.
Equity multiple. Total distributions divided by the amount invested. A 2.0x multiple means you received $2 for every $1 invested. It tells you how much you made, but not how long it took.
Internal rate of return (IRR). The annualized return that accounts for the timing of every cash flow. Getting money back sooner raises the IRR. It is the best single measure for comparing investments with different hold periods.
Cash-on-cash return. Annual cash distributions divided by the amount invested. It shows the income an investment produces while it is held, but leaves out the profit at sale.
Preferred return. A priority return paid to investors before the sponsor shares in profits. It is a distribution priority, not a guarantee.
Projected vs. realized. Projected returns are estimates in the offering documents. Realized returns are what investors actually received after the property sold. When you evaluate a sponsor, ask for realized returns on every completed deal. Our Track Record page shows investor IRR and equity multiple for each of the 25 realized investments sourced by CRP.
This article is for informational purposes only and is not an offer to sell or a solicitation of an offer to buy any security. Past performance is not indicative of future results.