{"concept_id":"ALTSS-RE-013","slug":"equity-multiple","canonical_name":"Equity Multiple","aliases":[],"kind":"metric","authority":"industry","facets":["MET","PRF"],"domains":["REAL-ESTATE"],"display_title":"Equity Multiple","search_aliases":["what is equity multiple","equity multiple formula","equity multiple vs irr","equity multiple real estate meaning","good equity multiple real estate","equity multiple vs moic","equity multiple real estate"],"one_sentence_definition":"The equity multiple is the total cash returned to equity investors divided by the total equity they invested; a 1.8x multiple means each dollar invested returned $1.80, with no adjustment for how long that took.","plain_english":"Add up everything the investment has paid out to its equity investors and divide by everything they put in. Above 1.0x the investors made a profit; below it they lost money. The multiple says how much, not how fast, so it is always read alongside a time-based measure such as IRR.","parent_concepts":[],"child_concepts":[],"related_concepts":["irr","moic","tvpi","dpi","cash-on-cash-return","net-irr","promote","real-estate-private-equity"],"comparison_concepts":[],"not_the_same_as":[{"slug":"irr","distinction":"IRR is an annualised, time-sensitive rate; the equity multiple is a ratio with no time dimension."},{"slug":"moic","distinction":"MOIC is the private equity term for the same ratio, usually gross and at deal level; equity multiple is the real estate term and may be gross or net."},{"slug":"tvpi","distinction":"TVPI is the fund-level net ratio of distributions plus NAV to paid-in capital; INREV's net equity multiple uses the same construction."},{"slug":"cash-on-cash-return","distinction":"Cash-on-cash is a single year's cash flow over equity; the equity multiple covers every cash flow over the life of the investment."}],"formula_ids":["F-RE-013-realised-equity-multiple"],"worked_examples":[{"title":"Illustrative five-year hold","paragraphs":["Investors contribute $10m. The deal distributes $0.5m a year for five years and $14m from the sale at the end of year 5: $16.5m in total. The equity multiple is **1.65x**, a profit of 65% of the equity."],"calc":{"fn":"equity_multiple","inputs":{"total_distributions":16.5,"equity_invested":10},"expected":{"equity_multiple":1.65},"tol":0.0005}},{"title":"The IRR of that hold","paragraphs":["The same cash flows, −10 at the start, +0.5 in years 1 to 4 and +14.5 in year 5, give an [IRR](/glossary/irr) of **11.4%**."],"calc":{"fn":"irr","inputs":{"flows":[-10,0.5,0.5,0.5,0.5,14.5]},"expected":{"irr":0.11375},"tol":0.0005}},{"title":"Same multiple, slower plan","paragraphs":["If the business plan takes eight years, with $0.5m a year for seven years and $13m in year 8 ($0.5m of cash flow plus a $12.5m sale), the investors still receive $16.5m: **1.65x**. The IRR falls to **7.4%**. Same multiple, very different annual return."],"calc":{"fn":"irr","inputs":{"flows":[-10,0.5,0.5,0.5,0.5,0.5,0.5,0.5,13]},"expected":{"irr":0.074017},"tol":0.0005}},{"title":"An interim, NAV-inclusive multiple","paragraphs":["A fund has drawn $12m, distributed $6m and reports NAV of $9m. INREV's net equity multiple is ($6m + $9m) / $12m = **1.25x**, the same figure as TVPI; only 0.50x of it is realised ([DPI](/glossary/dpi))."],"calc":{"fn":"fund_multiples","inputs":{"paid_in":12,"distributions":6,"nav":9},"expected":{"tvpi":1.25,"dpi":0.5},"tol":0.0005}}],"sections":[{"heading":"Where the equity multiple is used","paragraphs":["In real estate, the equity multiple is reported for individual deals, joint ventures and funds, usually alongside IRR. Sponsors use projected multiples in offering materials and investment committee papers; investors use realised multiples to judge track records. For a fund, the multiple can be computed on investors' cash flows (net) or on the fund's investments (gross)."]},{"heading":"Gross and net","paragraphs":["A gross multiple is measured before fund-level fees, expenses, taxes and promote; the gross equity multiple that the European Association for Investors in Non-Listed Real Estate Vehicles (INREV) defines for a vehicle's realised investments uses that basis. A net multiple is measured on what investors actually paid in and received. The gap between the two grows with fees, the [promote](/glossary/promote) and any joint-venture promote paid to operating partners, so only compare gross with gross and net with net."]},{"heading":"Equity multiple, MOIC and TVPI","paragraphs":["These are the same arithmetic applied to different scopes. [MOIC](/glossary/moic) is the private equity term for value over invested capital, usually at deal or portfolio level and usually gross. [TVPI](/glossary/tvpi) is the fund-level investor measure on paid-in capital, including fees, and is net. A real estate equity multiple can be either, which is why the scope and the inclusion of NAV need stating."]},{"heading":"Reading it with IRR","paragraphs":["The multiple ignores time, so a long hold can produce a high multiple with a mediocre annual return, and a quick sale can produce a high IRR on a small profit. Investors read both: the multiple shows how much wealth the deal created per dollar, and IRR shows how efficiently it did so. A short hold with a high IRR and a multiple near 1.2x leaves the investor needing to redeploy the cash; a long hold with a high multiple ties capital up."]},{"heading":"What counts as a distribution or a contribution","paragraphs":["Refinancing proceeds distributed to investors count as distributions. They raise the interim multiple and IRR, but they also add debt that the sale must repay, so they are not profit. Additional equity calls for capital spending, cost overruns or debt paydowns belong in the denominator. Fees and closing costs paid from investor equity are contributions. Recallable distributions should follow the actual capital account."]}],"classification_rules":[],"calculation_rules":[],"common_mistakes":["Comparing multiples of deals with different hold periods without looking at IRR.","Mixing realised-only multiples with NAV-inclusive multiples.","Comparing a gross deal multiple with a net fund multiple.","Treating refinancing distributions as profit.","Leaving later equity calls for capital spending out of the denominator.","Reading 1.65x as a 165% profit. The profit is 65% of the equity."],"edge_cases":["Early in a fund's life the NAV-inclusive multiple is often below 1.0x because fees and costs are paid before value is created (the J-curve).","A cash-out refinancing reduces the equity at risk and raises the interim multiple without any sale.","Where distributions are recalled and reinvested, the multiple depends on whether recalled amounts are netted or counted as new contributions."],"external_standard_mappings":[{"standard":"Global Definitions Database","reference":"D0151 Equity multiple (Net) (INREV)","relation":"equivalent","source_id":"SRC-INTL-INREV-GDD","note":"NAV-inclusive vehicle-level definition."},{"standard":"Global Definitions Database","reference":"D0155 Gross equity multiple of vehicle realized (INREV)","relation":"related","source_id":"SRC-INTL-INREV-GDD"}],"source_ids":["SRC-INTL-INREV-GDD"],"citations":[{"source_id":"SRC-INTL-INREV-GDD","pinpoint":"D0151; D0155","supports":"Net equity multiple formula including NAV; gross realised multiple before vehicle-level fees, taxes and carried interest","source":{"source_id":"SRC-INTL-INREV-GDD","title":"Global Definitions Database (GDD)","publisher":"INREV (hosted); entries attributed to INREV, NCREIF or NCREIF PREA","document_type":"glossary","url":"https://www.inrev.org/definitions/EN/all","publication_date":"Per-entry versions and dates (entries opened 2026-10-01)","jurisdiction":"intl","status":"current","last_verified":"2026-10-01"}}],"faq":[{"q":"What is a good equity multiple in real estate?","a":"It depends on the strategy and the hold period. Judge a multiple together with its IRR, its time to realisation and whether it is gross or net; a generic target is not meaningful."},{"q":"Is equity multiple the same as MOIC?","a":"The arithmetic is the same. MOIC is the private equity term and is usually gross at deal level; real estate uses equity multiple for both deal and fund figures."}],"seo":{},"first_published":null,"last_reviewed":"2026-10-01","last_modified":"2026-10-01","content_version":"2.0.0","url":"https://altss.com/glossary/equity-multiple","json_url":"https://altss.com/reference/concepts/equity-multiple.json","title":"Equity Multiple","formulas":[{"formula_id":"F-RE-013-realised-equity-multiple","concept_id":"ALTSS-RE-013","label":"Realised equity multiple","plain":"equity multiple = total distributions to equity / total equity contributed","latex":"\\mathrm{EM}=\\frac{\\sum_t D_t}{\\sum_t E_t}","variables":[{"symbol":"D_t","meaning":"cash distributed to equity in period t: operating cash flow, refinancing proceeds and sale proceeds"},{"symbol":"E_t","meaning":"equity contributed in period t, including later contributions for capital spending, costs and fees"}],"convention_note":"For deals still held, practice adds the current equity value (NAV) to the numerator. INREV's net equity multiple for vehicles is (total return of capital + total income distributions + NAV) / total capital drawn down, which is the same construction as TVPI. State whether the figure is realised only or includes NAV, and whether it is gross or net of fees and promote.","implementation":"equity_multiple"}],"sources":[{"source_id":"SRC-INTL-INREV-GDD","title":"Global Definitions Database (GDD)","publisher":"INREV (hosted); entries attributed to INREV, NCREIF or NCREIF PREA","document_type":"glossary","url":"https://www.inrev.org/definitions/EN/all","publication_date":"Per-entry versions and dates (entries opened 2026-10-01)","jurisdiction":"intl","status":"current","last_verified":"2026-10-01"}]}