The 11.2 percent net after two debt repricings and no capital call is a better result than the headline makes it look. The assumption doing the most work in that comparison to the 14 percent target is the cost of the repricing events: if senior debt got adjusted twice during a 38-month hold, the carried interest structure and waterfall almost certainly absorbed real drag to protect LP principal. Getting out flat plus 11 percent under those conditions means the operator managed the capital stack, not just the construction.
The part worth examining is the unit count slip from 152 to 147. Five units on a 7-story building sounds minor, but that is roughly 3.3 percent of projected revenue gone before the first tenant signed a lease. If the original underwrite modeled stabilized yield on 152 units, the IRR compression started at the structural report, not at the debt repricing. The two events compounded. That is the sequence worth understanding before you go back into the structure.
The risk you did not mention is entitlement and policy dependency. Columbus has been relatively supportive of office conversion, which helped this deal. The next fund position in a different market may face a jurisdiction that has not updated its parking minimums or residential floor-plate standards, and that policy gap can kill feasibility after capital is committed. That exposure does not show up in IRR calculations until it is already a problem.
For a preparing-stage position in something this technical, getting full principal return plus 11 percent net while the operator managed two debt events without a capital call tells you more about operator quality than the IRR gap does.
What was the LP fee structure on this fund, and did the carried interest have a preferred return hurdle that the repricing events ate into?
