Most fund-modeling tools — including the aggregated “Run the Numbers” view here — collapse a multi-year hold into one gross-multiple-at-exit and pour all the cash through the waterfall in one shot. That collapse hides almost everything that drives LP outcomes: when pref catches up, when the GP first earns carry, what a mid-hold refi does to the math, and how the IRR develops over time. Time-series mode breaks the cash flow apart year by year so the timing dynamics become visible.
What changes when you add time
A single-shot waterfall has one input: gross proceeds at exit. A time-series waterfall has three inputs per year:
- Operating cash
- Distributable cash from the property's operations during the hold — net rental income after debt service and property-level fees. Typically pays current pref and may distribute residual to LPs.
- Refinancing proceeds
- Cash distributed when the property is refinanced mid-hold — typically a return of some portion of LP capital plus any unpaid pref. Most LPAs do notpay the GP promote on refi proceeds, since the property hasn't been sold and the “profit” isn't realized.
- Sale proceeds
- Cash from the terminal asset sale (or partial sale). This is the only source that runs the full waterfall — return of remaining capital, true-up on accrued pref, GP catch-up, and the residual carry split.
Each of those sources flows through a different sequence of tiers, and the engine threads state across years (unreturned capital, accrued pref balance, cumulative promote) so a refi in year 3 actually shrinks the pref-accrual base for years 4 onward, the way it does in real life.
The accrued-pref snowball
The single most useful chart in the time-series view is the accrued pref balance over time. Sponsors typically hand-wave through this number — “don't worry, pref is current at exit” — but it tells you a lot about how the fund actually performs:
- If accrued pref grows monotonically through the hold, the fund isn't generating enough operating cash to cover its own pref, and the LP is fully reliant on the terminal sale to make them whole. That's a higher-risk profile.
- If accrued pref stays flat at zero, the fund is paying pref currently — the LP is getting their pref-yield in cash throughout the hold, and the IRR drag of waiting is much smaller.
- If accrued pref grows then drains during a refi year, you're seeing the LP get caught up at a recapitalization event. That's the structural argument for paying attention to refi assumptions.
Why timing changes the IRR even at the same multiple
IRR is a time-weighted measure: a dollar in year 2 is worth more than a dollar in year 7. Two scenarios with the same exit multiple of 2.0× can produce LP IRRs ten percentage points apart depending on when the cash arrives:
- Front-loaded: heavy operating yield in years 1–2, smaller terminal sale. High IRR (cash returned early), modest multiple tail.
- Back-loaded: thin operating cash, big terminal sale. Lower IRR (LP waits), same total multiple.
- Mid-hold refi: refi at year 3 returns 60% of capital tax-free and resets the pref-accrual base. The LP's capital recycles, the IRR jumps materially even though the gross multiple is unchanged.
The aggregated view can't represent any of these — it only knows the total. The time-series view shows them all explicitly, including the running LP IRR by year overlaid on the chart.
The catch-up tier in time
The GP catch-up is a tier that fires “100% to GP until GP receives their target % of the cumulative pref + catch-up.” In the aggregated view, this happens once at exit. In the time-series view, the question is: whendoes it fire? The default convention (and the one this tool uses) is “at sale only” — operating distributions pay current pref but don't trigger catch-up. That matches how most LPAs read in practice, but it's worth checking yours.
Where the modeling stops
A few things this tool intentionally doesn't model:
- Tax characterization. Refi distributions are typically tax-deferred returns of capital; sale distributions can mix ordinary income, depreciation recapture, and long-term gains. The tool shows pre-tax cash; an investor's after-tax outcomes require a separate model.
- Capital calls beyond t=0. The tool assumes 100% of LP capital is invested at year 0. Real-world drawdown structures spread calls over the investment period, which improves IRR mechanically.
- Distribution timing within a year. Operating cash is treated as if it arrives end-of-year. Quarterly distributions would slightly improve IRR.
How to use it
Open any fund's “Run the Numbers” page and switch to the Year-by-year tab. The grid auto-populates from the slider inputs using a curve preset (Balanced, Front-loaded, Back-loaded, or Mid-hold refi) — pick whichever shape matches the sponsor's pitch, or click any cell to override. The KPI strip and chart update live; clicking any year opens the cascade for that year alone, so you can see exactly how the cash flowed through the tiers in (say) year 3 vs year 7. Save the scenario when you have a shape you want to come back to — saved time-series scenarios round-trip via the same Compare and Share flows as the aggregated ones.