Leveraged IRR in property development finance UK measures the annualised return to equity investors after accounting for debt financing. By including borrowing costs, leveraged IRR shows how leverage can amplify both profits and losses compared to unlevered IRR, which excludes debt effects. It is essential for UK property developers using a combination of equity and loans to assess a project’s risk and reward. Understanding leveraged IRR helps developers and industry professionals evaluate the true profitability of developments funded through mixed capital structures, making it a key metric in property development finance decisions.
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 Unlevered IRR, as both are closely related measures used to assess similar aspects of performance or risk.
View glossary entry