A Weighted IRR Hurdle is a property development finance UK metric that determines the minimum internal rate of return required across different capital contributions, such as senior debt, mezzanine loans and equity. It blends the return expectations of each investor or lender according to their proportion of total capital, providing a single threshold for project viability. Developers use this measure to assess whether a development meets combined financing costs and investor return targets. Weighted IRR Hurdles are critical in structuring the capital stack, setting performance benchmarks and guiding distribution of profits or preferred returns.
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 Promote Participation Ratio, as both are closely related measures used to assess similar aspects of performance or risk.
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