Equity Multiple
In commercial real estate, the equity multiple is defined as the total cash distributions received from an investment, divided by the total equity invested. Essentially, it’s how much money an investor could make on their initial investment. An equity multiple less than 1.0x means you are getting back less cash than you invested. An equity multiple greater than 1.0x means you are getting back more cash than you invested. For instance, an equity multiple of 2.50x means that for every $1 invested into a CRE project, an investor could be expected to get back $2.50.
Equity Multiple Formula
Equity Multiple = Total Cash Distributions / Total Equity Invested
Related Terms
Additional Reading
- The Yin and Yang of Equity Multiples and IRR
- Decoding Real Estate Return Metrics
- View the Equity Multiple performance of deals that have realized on our Marketplace
