Unlevered internal rate of return (IRR) measures the annualised return of a property development project in the UK before accounting for any debt or financing costs. This figure reflects the pure performance of the asset itself, independent of leverage, highlighting the project’s underlying profitability. It is calculated by discounting all expected cash flows from the development to their present value, ignoring loan repayments and interest charges. Unlevered IRR is essential for developers and investors seeking to assess the viability of a property development finance opportunity based solely on the asset’s fundamentals.
This sits beneath IRR Hurdles & Pref Returns, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Leveraged IRR, as both are closely related measures used to assess similar aspects of performance or risk.
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