Modified Internal Rate of Return (MIRR) is an equity return metric widely used in UK property development finance to offer a clearer measure of project profitability than the traditional IRR. Unlike IRR, which assumes reinvestment of interim cash flows at the project’s own rate, MIRR assumes reinvestment at a more realistic cost of capital or finance rate. This makes MIRR more reliable for developers, lenders, and investors assessing returns, especially in complex financing scenarios. MIRR is often considered alongside Net Present Value and Loan to Value ratios in development finance decision-making.
This sits beneath Equity-Based Returns, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Real IRR, as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Modified IRR (MIRR) is most commonly encountered in connection with Preferred Return Based on IRR Hurdle within the property development capital stack.
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