Glossary definition
Equity Multiple
A metric that measures the total cash returned to an equity investor as a multiple of their original investment — for example, a £500,000 equity contribution that returns £1,000,000 represents a 2.0x equity multiple. Unlike IRR, the equity multiple does not account for the time value of money, so it is typically used alongside IRR to give a complete picture of investment returns.
Definition
A metric that measures the total cash returned to an equity investor as a multiple of their original investment — for example, a £500,000 equity contribution that returns £1,000,000 represents a 2.0x equity multiple. Unlike IRR, the equity multiple does not account for the time value of money, so it is typically used alongside IRR to give a complete picture of investment returns. In UK development finance joint ventures, equity investors typically target multiples of 1.3x to 2.0x depending on the risk profile and duration of the project.
See also
Closely related terms.
IRR (Internal Rate of Return)
The annualised rate of return at which the net present value of all cash flows from an investment equals zero, used to compare the profitability of different development opportunities on a time-adjusted basis.
Equity
The developer's own capital contribution to a project, sitting at the top of the capital stack and bearing the highest risk but also receiving the residual profit.
Hurdle Rate
The minimum rate of return that a project must achieve before an investor will commit capital, used as a benchmark in investment decision-making.
Profit on Cost
A measure of development profitability calculated by dividing the projected profit by the total development costs and expressing it as a percentage.
Further reading
Guides that touch this term.
Guide
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 min read readReadGuide
Mezzanine Finance vs Joint Venture Equity: How to Choose
Both mezzanine and JV equity reduce the cash you need to invest. But they work very differently and suit different situations. This guide helps you decide which is right for your project.
4 min read readRead
Where it shows up
Finance products using this term.
Ready to apply
Knowing the term is one thing.
Getting it on your term sheet is ours.
Send us the outline. We come back with indicative pricing from the right lenders inside a working day.