Capital Accounts, Valuations, Fees, Carry and What the Numbers Actually Say
Julian R. Sterling
Four Excel workbooks. The first rebuilds the complete reporting pack of Appendix A so
that its twelve reconciliations are formulas rather than assertions. The second works the five cases of
Appendix C. The third turns Appendix D into calculators for a fund of your own. The fourth is
the ninety-minute reading sequence and the eighty questions, as documents you can fill in. Each ends
with a checks sheet setting the book’s figure beside what the workbook computes.
Free to download. No sign-up, no email address, nothing to fill in.
Everything described below is inside it, with the read-me.
The four workbooks
Appendix A
The Harbourgate reporting pack
Appendix A prints a complete pack for one fictional fund at one date, and says of it: every
figure is invented, and every figure also ties. This is that pack rebuilt so the ties are formulas.
Balance sheet, schedule of investments, operations, changes in net assets with both partner columns,
cash flows, the capital account issued to one investor, and the notes — then a reconciliations
sheet running the twelve checks the appendix lists, each returning “ties” or the amount it
is out by. Change Brackwell’s fair value from 61,200 to 55,000 and watch how much of the pack
moves, and which reconciliation stops tying. That failure is the sheet telling you a mark cannot be
edited in isolation. Fifty-two figures checked against the appendix; fifty-one reproduce exactly.
Harbourgate_Reporting_Pack.xlsx · XLSX · 34 KB
Appendix C
The five worked cases
Each case self-contained, its data as blue inputs and its solution as formulas. Case 1 is the
exit that looks like a write-down: a realised gain of 26,500,000 beside a negative change in
unrealised of 27,200,000, which decomposes into an exit that added 3,500,000 and a markdown of
4,200,000 elsewhere. Case 2 rebuilds a capital account that is deliberately not a clean
percentage of the fund and accounts for every unit of the 40,000 divergence. Case 3 recomputes a
reported 8.7 per cent and 1.28 times and finds, on the same data, 7.4 per cent and 1.23 times —
neither an error, both choices, both running the same way. Case 4 unlevers a subscription
facility: 654 basis points added to the reported rate, a tenth of a turn of multiple taken out of
investors’ pockets. Case 5 prices an accrued carry and shows why it cushions a fall.
Five_Worked_Cases.xlsx · XLSX · 28 KB
Appendix D
Rebuild your own account
Empty tools with one realistic example already in the blue cells. Rebuild your own capital account
from the fund’s aggregates and decompose the divergence from a flat percentage into named
economic events. Recompute your multiples and your rate on three dating and carry bases, and unlever a
subscription facility. Price the management fee on all four bases an agreement might use — the
same fund, the same year, a 62 per cent fall from one base change — then apply the offset with
its carried-forward credit. Run the hypothetical liquidation behind an accrued carry, with the check
that tells you whether the catch-up has cleared, and the clawback test with its tax limitation. Each
calculation carries the common error the appendix attaches to it, printed beside the formula.
Rebuild_Your_Own_Account.xlsx · XLSX · 22 KB
Chapter 20 · Appendix B
Ninety minutes, and eighty questions
The reading sequence as nine timed steps — what to extract, the check to run, the trigger
that turns it into a question — built so that an interruption after forty minutes still leaves
you the forty that mattered, with a separate table for how the allocation shifts between a
fund’s early years, its middle years and its wind-down. Appendix B’s eighty questions
as a checklist, each with what a weak answer sounds like, and columns for the answer, the date and
last year’s answer, so that three weak answers in the same area become visible rather than
remembered. And the standing one-page summary: same fields, same order, one column a year.
Fund statements are in thousands and capital accounts in whole units, exactly as the book presents them.
On the checks sheets
Ninety-four figures are checked against the book across the first two workbooks. Ninety-three reproduce
exactly. One differs in the last displayed digit: the appendix prints a 13.6 per cent uplift on the
Eastvale sale where the exact figure is 13.586.
Multiples are compared to six thousandths of a turn and rates to six hundredths of a basis point —
deliberately tighter than the book prints. Where Appendix C shows 0.47x the exact figure is 0.4667,
and where it shows 16.66 per cent the exact figure is 16.663; both are inside the band, and both are a
printing convention rather than a difference. Nothing is smoothed until it passes, because a check that
widens its own tolerance is not a check.
Opening the files
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. They use no macros
and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks to update links on
opening, decline — there are none.
The book these files come from
How to Read a Private Fund's Financial Statements by Julian R. Sterling. The workbooks reproduce the worked examples in the
chapters; the book is where the reasoning behind them is set out. It is not yet on sale —
these files are published ahead of it.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.
These files accompany How to Read a Private Fund's Financial Statements. The book is on Amazon.
If this book helped — or didn’t — a few lines on Amazon are worth more than they look: they are what the next reader goes on. Write a review. The workbook stays free either way.