Internal Rate of Return (IRR)
IRR is the discount rate that makes the net present value of a stream of cash outflows and inflows equal to zero. It is widely used in investment analysis because it expresses return as an annualized rate derived from cash-flow timing.
- Where it applies
- Generally, not specific to New York
- When it comes up
- Underwriting; performance reporting; fund analysis
- Property types
- All investment real estate; funds and portfolios
In practice
IRR is highly sensitive to timing of capital calls/distributions; in fund contexts it can be influenced by subscription-line usage and reporting conventions.
Related terms
Investment Metrics
- Adjusted Funds From Operations (AFFO)
- Cost of Capital
- EBITDAre
- Funds From Operations (FFO)
- Net Present Value (NPV)
- Total Return
General information, not legal, tax or financial advice.