Equity Multiple

Equity multiple is the total cash an investor receives back from a deal — all distributions during the hold plus net proceeds at sale or refinance — divided by the total equity they put in. A sponsor who invests $1,000,000 of equity into a $5,000,000 property, collects $400,000 in cash flow over a five-year hold, and nets $1,800,000 at sale after paying off the loan, has returned $2,200,000 on $1,000,000 invested: a 2.2x equity multiple. Unlike IRR, the multiple says nothing about how long the money was tied up — a 2.2x earned in three years and a 2.2x earned in eight years are the same multiple but very different investments.

For a borrower who is also raising equity to complete the capital stack — filling the gap between loan proceeds and the purchase price or renovation budget — the equity multiple investors will see is set almost entirely by how much debt the deal can carry. A bigger loan means less equity to raise, which mechanically boosts the multiple on whatever equity remains; sponsors routinely underwrite the same deal at 65% LTV and 75% LTV just to see how many points of leverage move the number they’re pitching to investors. The tension is that the same leverage that flatters the equity multiple is exactly what tightens DSCR and narrows the lender pool, so a sponsor chasing a 2.0x target can price themselves out of the loan terms that make the deal financeable in the first place.

We don’t track equity syndications directly, but the loan proceeds and leverage terms a lender is actually quoting — captured in each profile’s observed lending terms — are the input every equity multiple pitch deck is built on, which is why sponsors raising capital alongside a loan tend to shop lenders and investors in parallel rather than lining up equity first.