Commercial real estate financial metrics

@@ -82,6 +82,27 @@ IRR is the total return measure for a time-limited investment, expressed as an a
rate. It is sensitive to the timing of cash flows and to the assumed exit capitalisation
rate at disposition.

**Compound annual growth rate (CAGR)** — The single, smoothed annual rate at which a
beginning value would have to compound, once per year with no interim cash flows, to
reach a given ending value over a stated number of years: (ending value ÷ beginning
value)^(1 ÷ number of years) − 1. CAGR describes only the two endpoints of a holding
period; it assumes one constant rate applied evenly across the full period and takes no
account of any distributions, capital calls, or other cash flows that occurred between
them.

**IRR vs. CAGR** — The two metrics are both expressed as annualised percentages, but they
answer different questions and can diverge materially even when the beginning and ending
values are identical. CAGR is a point-to-point growth rate: it compares only the starting
and ending value and assumes a single smooth compounding rate in between. IRR is the
discount rate that sets the net present value of the entire realized cash-flow stream —
every interim distribution and capital call, plus the terminal value at disposition —
equal to zero, so it correctly weights when those cash flows occurred. An investment that
returns capital earlier carries a higher IRR than an otherwise identical investment that
returns the same total capital later, even though the two would show an identical CAGR;
CAGR cannot see that difference because it does not look inside the holding period. CAGR
is the right tool for describing simple point-to-point appreciation; IRR is the right tool
for evaluating a time-limited investment with cash flows moving in and out along the way.

**Multiple on invested capital (MOIC)** — Total cash returned to the investor divided by
total cash invested. A MOIC of 2.0× means the investor received $2.00 back for every $1.00
invested over the holding period. MOIC does not account for the time value of money; a 2.0×