Research guide

Delaware Statutory Trust Returns: How to Read IRR and Equity Multiple Together

By Sequoia ResearchPublished Read as Markdown

What Is This Article About?

This article explains why IRR and equity multiple can give different impressions of the same DST cash history. It uses invented payment schedules to separate the amount received from the time it took to receive it. You will also see how fees, estimated values, and later costs change the comparison. The aim is to read both measures from one complete cash record without treating either as a promise or a ranking.

Table of Contents

What IRR and Equity Multiple Measure

Equity multiple compares money received with money invested under a stated definition. IRR adds the timing of the cash flows. Reading them together helps you see both the size of the result and how quickly cash came back.

For the completed cash-only examples here, equity multiple means total investor cash received divided by total investor cash paid. A 1.50× multiple means $1.50 came back for each $1 paid. It includes recovery of the original dollar. The gain is $0.50, before any cost or tax excluded from that particular calculation.

IRR stands for internal rate of return. It is the rate that balances the money paid with the present value of the money received. Present value expresses later cash as a value at an earlier date using a chosen rate. FINRA describes IRR as the discount rate that makes the net present value of the cash flows equal zero. FINRA's IRR explanation

That definition can sound abstract. For a simple one-year investment, paying $100,000 and receiving $110,000 one year later produces a 10% IRR. The cash-only multiple is 1.10×. The two numbers describe the same $10,000 gain from different angles.

With payments spread across several years, the relationship is less obvious. An early receipt has a different place in the IRR calculation than an equal receipt years later. Equity multiple adds both amounts the same way.

Neither number states how risky the investment was. Neither proves that the cash came from rent, that debt was modest, or that the original forecast was reasonable. The SEC advises readers to examine how performance claims are calculated and which factors they include. SEC performance-claims bulletin

The definitions in a particular report may differ. A reported multiple can include estimated remaining value. A reported IRR can use project cash before some investor costs. Read the method before comparing the headline figures with the cash-only, investor-level measures used below.

Build One Cash Record for Both Measures

Start with a dated list of money leaving and entering the investor's account. Use negative numbers for cash paid and positive numbers for cash received. Keep a description and source beside each entry.

For an actual DST review, the record might draw from purchase confirmations, account statements, distribution notices, and final sale records. Reconcile notices with cash received. A declared payment is not automatically a received payment on the declaration date.

Decide the scope before doing the math. Is this one investor's full ownership period, one class of interests, or a property-level result? Are fees included? Does the last entry represent an actual cash settlement or an estimate of something still owned?

Use the same scope for both measures. If the IRR includes a fee but the multiple excludes it, the two numbers are not describing the same investment cost. If one calculation includes a remaining value and the other does not, label that difference rather than leaving the reader to guess.

All schedules in this article are invented. They are mathematical illustrations, not forecasts, market averages, actual DST results, or suggested returns. Unless a section says otherwise, they use equal one-year periods, one initial payment, and only the listed receipts. They exclude personal taxes, inflation, and earnings from investing the receipts elsewhere.

There is no hidden final return of principal. If a schedule lists $150,000 as the final receipt, that is the complete cash settlement for the modeled interest. Adding the original $100,000 again would count principal recovery twice.

A simple control helps: total the negative entries, total the positive entries, and subtract the first total from the second. That gives the nominal dollar gain or loss on the stated scope. Then calculate the multiple and IRR from that same record.

Preserve the raw entries even if several payments are combined for a chart. A chart can make the explanation easier to follow, but it should not replace the dates needed to reproduce a reported result.

The Same Equity Multiple Can Produce Different IRRs

Two investments can return the same total dollars and still have very different IRRs. Payment timing creates the difference.

Schedules A and B each begin with a $100,000 payment. Schedule A returns $30,000 at each of five year-ends. Schedule B returns nothing in years one through four and $150,000 at the end of year five. Both modeled interests end after the last receipt, with no remaining value or further cash due.

Cash date Schedule A Schedule B
Start −$100,000 −$100,000
End of year 1 $30,000 $0
End of year 2 $30,000 $0
End of year 3 $30,000 $0
End of year 4 $30,000 $0
End of year 5 $30,000 $150,000
Total received $150,000 $150,000
Nominal gain $50,000 $50,000
Cash-only equity multiple 1.50× 1.50×
Annual-period IRR About 15.24% About 8.45%

Schedule A's higher IRR reflects earlier receipts. It does not mean that A paid more total cash. Schedule B's lower IRR reflects the longer wait for every dollar received.

For B, the math is especially simple: $100,000 growing at about 8.45% for five equal years reaches $150,000. For A, each $30,000 receipt is discounted from its own year-end. The rate that makes those five present values total $100,000 is about 15.24%.

Do not call A's $30,000 annual payment a 30% annual investment return. The payment stream includes recovery of the original investment within the complete modeled receipts. The schedule has no extra $100,000 principal payment at the end.

Nor does this table establish that A is safer. An actual earlier payment could come from operating cash, saved cash, borrowing, or asset sales. Its source needs separate review. The mathematical comparison holds the total receipts fixed only to isolate timing.

When a report shows a strong IRR and a modest multiple, ask to see the early receipts. When it shows a larger multiple with a lower IRR, ask how long the money remained invested. These questions explain the difference more directly than treating the measures as conflicting grades.

A Larger Multiple Can Have a Lower Annual Return

A larger total payoff may require more time. A multiple shows the added dollars per dollar invested; it does not tell you whether the wait was short or long.

Compare Schedule B with an independent Schedule C. C also starts with $100,000, but it pays nothing until a complete $180,000 settlement at the end of year ten. Its multiple is 1.80× and its nominal gain is $80,000. Its annual-period IRR is about 6.05%.

That compares with B's 1.50× multiple, $50,000 gain, and roughly 8.45% IRR over five years. C pays $30,000 more in total, but the complete payment arrives five years later.

These numbers do not settle which path fits a real investor. B ends earlier, leaving another five years in which the investor could hold, spend, or reinvest its proceeds. C's ten-year record says nothing about what B's owner would do during those later years.

To compare final wealth at year ten, you need an explicit second-stage assumption for B. You cannot assume another five-year investment with the same return will be available. You also cannot ignore its proceeds after year five. State where the cash goes and what it earns before presenting a common-horizon comparison.

For example, B's $150,000 would need to become $180,000 over the next five years to match C's final cash. With no withdrawals or added money, that requires 20% total growth, or about 3.71% compounded annually. This is a break-even calculation, not an available investment or an expected return. Any costs or taxes in that second stage would need consistent treatment. If B's proceeds instead earn zero and remain untouched, they are still $150,000 at year ten. The second-stage assumption changes the comparison without changing B's original five-year result.

Avoid dividing total gain by years and calling the result IRR. B's 50% total gain divided by five is 10% per year as a simple average. Its actual annual compound rate for this one-final-payment schedule is about 8.45%. FINRA's return guide explains that a simple average does not account for compounding. FINRA's return-calculation guide

The same limitation applies to C. Its 80% total gain divided by ten is 8%, which differs from its approximately 6.05% IRR. Showing the holding period beside the multiple prevents a large lifetime number from looking like a yearly result.

Read Early Distributions Without Inventing Extra Wealth

Earlier receipts give the investor access to cash sooner. They do not automatically create earnings from a second investment.

In Schedule A, suppose each $30,000 receipt is kept in a separate account earning zero. At the end of year five, the five receipts total $150,000. That is the same amount B pays at that date. A's IRR remains about 15.24%, but the saved receipts did not grow at that rate outside the investment.

If the owner instead spends the first four payments, only the last $30,000 remains as cash from the schedule at year five. The owner also had the use of the earlier $120,000. The investment record still includes all $150,000 of receipts. A household wealth report must also show what happened to those receipts after they arrived.

FINRA warns that reinvesting distributions at a reported IRR may be unrealistic. Keep that warning in mind when converting an investment rate into a claim about future wealth. The cash-flow equation alone does not document an available reinvestment opportunity. FINRA's IRR discussion

This distinction matters when reviewing a partial sale or a large early capital return. Such a payment can raise IRR by bringing money back sooner. Ask what remains owned, what obligations remain, and whether the later receipts include the full settlement of that remaining interest.

A distribution notice may describe part of a payment as returned capital. That classification does not create a second cash entry. Count the actual receipt once in the investment record. The legal or tax label belongs beside it for the relevant separate analysis.

For an ongoing investment, an early payment also does not prove that the remaining capital is safe. The final result still depends on later receipts, costs, and the value ultimately realized. A high interim IRR can change when the last large cash assumption changes.

Use Actual Dates When Payments Are Uneven

Equal-period IRR assumes that the entries occur at evenly spaced times. Actual investor records rarely arrive in such a tidy pattern.

A dated method, often called XIRR, uses the dates of the cash flows. Its year-length convention should be stated. In the simple examples here, a dated rate uses actual elapsed days divided by a fixed 365-day year. Other methods or software settings need their own explanation.

Consider a separate two-payment example. The owner pays $100,000 on January 1, 2026 and receives $121,000 on January 1, 2028. That span is 730 days, exactly two 365-day years. The dated annual rate is 10%, and the multiple is 1.21×.

Now move the $121,000 receipt to July 1, 2027. The elapsed time becomes 546 days. Under the stated day convention, the annual rate becomes about 13.59%. The multiple remains 1.21×, and the gain remains $21,000.

The higher annual rate is a timing effect. It does not turn the $21,000 gain into a larger dollar gain. This is another reason to keep the multiple, nominal gain, and dates visible beside the rate.

Before challenging a small difference between two reported IRRs, compare their date conventions. One may use quarter-end buckets, while the other uses bank receipt dates. One may include a final fee paid after closing. The two records must be aligned before the results can be compared fairly.

Do not replace a missing date with a convenient year-end without labeling that choice. An estimated date produces an estimated timing result. Preserve both the known amount and the unknown date so the limitation does not disappear inside a calculator.

For cash on the same date, aggregation can be useful, but retain the gross records. A $10,000 receipt and a $1,000 fee can become a $9,000 dated net entry for IRR. The fee treatment for a multiple still depends on the chosen definition, which should remain explicit.

Keep Net Returns and Gross Returns on the Same Basis

Fees can affect both the cash paid and the cash received. A meaningful comparison uses the same cost scope for IRR and multiple.

Return to Schedule B, which paid $100,000 initially and received $150,000 at year five. For this section only, assume those figures exclude two specific investor charges: an added $5,000 cost at entry and a $3,000 cost withheld from the final receipt. All other modeled cash stays the same.

The owner now pays $105,000 and receives $147,000. The nominal gain is $42,000. Under the cash-only definition, the net multiple is 1.40×. The annual-period IRR is about 6.96%.

The original figures were 1.50× and about 8.45%. Comparing the net IRR of 6.96% with the old multiple of 1.50× would combine two cost scopes. Present the two net measures together and describe the charges that changed them.

These fee amounts are invented. They are not standard DST charges. The SEC's July 2025 fee bulletin explains that transaction and ongoing fees reduce investment returns and points readers to fee disclosures and account records. Use those records to establish actual charges. SEC fee bulletin

Do not subtract a cost again if it is already included in the cash received. If a final statement shows $147,000 after the $3,000 charge, taking another $3,000 out would understate the result. Likewise, confirm whether the initial $100,000 already included an acquisition-related charge before adding it separately.

Some reports define invested equity apart from separately paid account costs. That may explain a different multiple without proving an error. Ask for the definition and then calculate a clearly labeled all-in owner view if the records permit it.

Even two records with the same cost coverage can organize the cash differently. The 1.40× result above uses the $147,000 net receipt and $105,000 initial payment. A gross-flow presentation might instead record $150,000 received and a separate $3,000 expense on that same final date. Its total positive cash divided by total negative cash is $150,000 divided by $108,000, or about 1.3889×.

Both presentations have the same $42,000 gain. Both have the same IRR because the simultaneous final entries net to $147,000. The different multiple comes from how the numerator and denominator treat the charge. It is not evidence that one owner had a different economic outcome.

Use one convention consistently across the comparison, and show the bridge when a source uses another. Preserve the separate fee detail even when the displayed return uses a net receipt. That lets the next reviewer reproduce the figure without changing its meaning.

Personal taxes and inflation are also separate layers. Calling a return “net” does not establish that it includes either. State the costs included rather than relying on the label to carry more meaning than the calculation supports.

Separate Paid Cash From Estimated Remaining Value

An ongoing DST can have a reported IRR or multiple that depends heavily on a value estimate. That estimate must not be presented as cash already received.

Consider another invented record. An owner pays $100,000 and receives $6,000 at each of five year-ends. At the end of year five, the interest remains unsold and is estimated at $100,000. Actual distributions total $30,000.

The cash received to date divided by cash paid is 0.30×. This is a cash-recovery measure, not a completed investment outcome. It excludes the still-owned interest.

Adding the estimated $100,000 remaining value to the $30,000 of cash gives a total-value measure of 1.30×. If the IRR calculation treats that estimate as a year-five terminal value, its annual rate is 6%. The year-five input is $106,000: the actual $6,000 payment plus the separate $100,000 estimate.

Only $6,000 of that year-five input was paid in cash. The estimate is not a second distribution. If someone later adds a real sale receipt, the old estimate must be removed or replaced for that same interest. Keeping both would count the remaining investment twice.

FINRA notes that IRR for unsold holdings requires an estimate of their remaining value and that such estimates can depend on subjective assumptions. That is a reason to inspect the valuation date and method, not a reason to treat every estimate as worthless. FINRA on remaining-value estimates

Ask whether the value is before or after debt, selling costs, and other claims. A property's estimated gross price cannot simply be inserted as the investor's terminal cash. Confirm the ownership share and the route from property value to the value of the interest.

Also state what is unavailable. If there is no supportable remaining-value estimate, a complete current total-value result may be unavailable. You can still show verified cash received and paid. Do not set an unknown remaining value to zero unless the analysis explicitly tests a total-loss scenario.

Handle Later Payments and Unusual Cash Patterns

Later outflows can change the relationship between IRR and multiple. Include them when they belong to the defined investor cash record.

Consider two separate cost-timing illustrations. In the first, the owner pays $110,000 at the start and receives $165,000 at year five. The multiple is 1.50× and the IRR is about 8.45%.

In the second, the owner pays $100,000 at the start, pays a separate $10,000 charge at year two, and receives $165,000 at year five. Total cash paid is still $110,000. The multiple is still 1.50×, and the nominal gain is still $55,000. The IRR becomes about 8.75% because part of the money leaves the owner later.

This is a defined cash experiment. It does not assert that a particular DST can demand new capital or offer deferred fees. The actual legal rights, fee terms, and ownership structure would need separate review. The calculation only shows why the dates of all included costs matter.

More unusual cash patterns can make IRR ambiguous. A mathematical example pays $100 at the start, receives $230 one year later, then pays $132 at year two. Both 10% and 20% solve the IRR equation for those three entries.

At 10%, the $230 receipt has a present value of about $209.09 and the later $132 payment has a present value of about $109.09. After the initial $100 payment, the net present value is zero. At 20%, the matching values are about $191.67 and $91.67, again leaving zero.

The cash-only multiple is $230 divided by $232, or about 0.9914×. The nominal result is a $2 loss. Reporting one of the positive IRRs as a straightforward profitable annual return would hide the cash pattern and the second solution.

A spreadsheet's displayed answer is therefore not always the whole answer. When cash signs change more than once, inspect the pattern and the solution method. Report ambiguity rather than choosing the more attractive root. Some cash records have no usable IRR under a tool's defined bounds.

Compare Dollar Scale and Combined Results

IRR and multiple are ratios. They do not show the size of the investor's dollar gain unless the cash amounts are also provided.

Suppose one separate investment costs $25,000 and pays $37,500 at the end of year five. It produces a 1.50× multiple, a $12,500 gain, and about 8.45% IRR. Another costs $250,000 and pays $325,000 at the same date. It produces a 1.30× multiple, a $75,000 gain, and about 5.39% IRR.

The smaller investment has the higher rate and multiple. The larger one produces six times the dollar gain. This does not establish which investment is preferable, because the amounts committed and risks may differ. It establishes why all three measures belong in the comparison.

If the same owner makes both investments on the same dates, combine the cash before calculating the joint result. Total initial cash is $275,000. Total final cash is $362,500. The combined gain is $87,500, the multiple is about 1.3182×, and the annual-period IRR is about 5.68%.

The simple average of the two multiples is 1.40×, which does not represent the combined cash. It gives the $25,000 investment the same weight as the $250,000 investment. The simple average of their IRRs is also not the combined IRR.

With different start dates and payment dates, pool the dated cash records at the stated portfolio level. Do not average headline rates and assume that timing has been handled. Preserve fees and any remaining-value estimates on the same basis across the records.

Nor should borrowed property dollars be added to the investor's equity contribution merely to make the denominator larger. A property-level return and an owner-equity return answer different questions. Include borrowing and repayment in the level where they occur, and explain how that level connects to the investor's cash.

Use the Two Measures in a DST Research Review

Begin with a compact result line that names the scope. For a completed investment, show cash paid, cash received, gain or loss, holding period, multiple, and dated IRR. For an ongoing investment, show paid cash and estimated remaining value separately.

Then ask whether the figures are actual or projected. A projected IRR and multiple describe a forecast cash schedule. Correct formulas do not make those future payments certain. The SEC's performance bulletin specifically distinguishes hypothetical targets from actual performance. SEC performance-claims bulletin

Test a few changes with the same record. Move a large receipt later while keeping its amount fixed. Reduce the final receipt while keeping its date fixed. Add a documented excluded cost. This reveals which part of the reported result depends on timing, dollars, or cost scope.

A loss case helps show the two measures' shared direction in a simple pattern. Pay $100,000 initially and receive a complete $90,000 settlement five years later. The multiple is 0.90×, the loss is $10,000, and the IRR is about −2.09%. The annual loss rate differs from the 10% total loss because the horizon is five years.

For a one-outflow, later-positive-receipts record, the basic measures are usually easier to read than the sign-changing example above. Still, inspect the last receipt. A large unsupported terminal value can dominate both measures even when early payments are fully documented.

Keep liquidity outside the performance score. A historical five-year exit does not give a current owner a five-year redemption right. The SEC's private-placement bulletin warns about limited resale opportunities and potentially long holding periods. An IRR calculation cannot create a buyer. SEC private-placement bulletin

The final review should explain what the two measures reveal, what drives them, and which cash records remain uncertain. That provides a firmer basis for a discussion than selecting whichever headline number looks strongest.

FAQ

What does a 1.50× equity multiple mean for a DST investor?

Under this article's completed cash-only definition, it means total receipts were one and a half times total cash paid. Paying $100,000 and receiving $150,000 produces a $50,000 nominal gain. The multiple includes recovery of the original investment. Check whether another report includes estimated remaining value or excludes some investor costs before using the same interpretation.

Is a 10% IRR the same as a 10% annual distribution?

No. IRR uses the timing and amounts of the entire defined cash record. An annual distribution rate describes payments relative to a stated base over a stated period. It does not by itself include the final recovery of capital or establish the value still owned. A distribution can also include cash from sources other than property earnings.

Can two DSTs have the same multiple and different IRRs?

Yes. In the invented five-year examples, both schedules pay $150,000 after a $100,000 investment. One pays $30,000 each year; the other pays the full amount at the end. Both have a 1.50× multiple. Their annual-period IRRs are about 15.24% and 8.45% because the receipt dates differ.

Does a higher multiple always mean a better investment?

It means more included value or cash per included dollar invested under that definition. It does not establish a shorter wait, lower risk, better liquidity, or a larger dollar gain at a different investment size. Check the time horizon, costs, cash sources, and amount of any unrealized value before drawing a broader conclusion.

Should an unsold DST's estimated value count as a distribution?

No. Show it separately. A total-value multiple or interim IRR may include a supported estimate, but cash paid remains a different figure. Label the valuation date and method. When the interest is later sold, replace the estimate with the actual applicable cash record rather than adding both for the same ownership interest.

Why does my spreadsheet show a different IRR from the report?

Compare the complete input records first. Differences may come from exact dates, period spacing, omitted costs, an estimated terminal value, or a payment entered twice. Unusual sign-changing cash flows can also have more than one solution. Record the method and investigate the difference instead of assuming either displayed percentage must be correct.

Are these return measures after tax?

Only if the defined cash record and method include the relevant tax effects. The examples here do not. A label such as “net investor return” may include certain fees while excluding personal taxes. Confirm that scope, and keep any tax analysis separate until the investor's actual facts and applicable treatment are established.

About Sequoia Research

Sequoia Research, LLC provides independent research on DSTs and other real estate investment offerings. This educational library helps readers examine financial claims, understand calculations, and identify the evidence needed for a useful investment review.

Sources

Sources inspected October 17, 2026. All numerical schedules are original hypothetical examples. They are not historical sponsor results, investment forecasts, or market return benchmarks.