Updated · Part of the CRE investment glossary
How TVPI works
TVPI is a private-equity metric that real estate funds and multi-asset sponsors also report. It answers one question at any point in an investment’s life: if the remaining assets were worth what they are marked at today, how many dollars would investors have for each dollar they paid in?
It has two parts. DPI (distributions to paid-in) counts cash already returned. RVPI (residual value to paid-in) counts the value still held, usually the net asset value (NAV) of the investors’ interests. TVPI is the sum. Early in a fund’s life most of TVPI is RVPI; by the end it is all DPI.
The denominator is paid-in capital: the amount investors have actually contributed, not their total commitments. Uncalled commitments are not in the ratio.
The formula
TVPI is a ratio of dollars, so it has no time element. A 1.5x after three years and a 1.5x after ten years look the same.
TVPI = (cumulative distributions + residual value) ÷ paid-in capital = DPI + RVPI
- Cumulative distributions: all cash paid to investors to date, including return of capital.
- Residual value: the current NAV of investors’ remaining interests. A net TVPI also deducts accrued promote and fees.
- Paid-in capital: contributions actually called, not commitments.
Worked example: how TVPI turns into DPI
A fund calls $20,000,000 from investors in year 1 and calls nothing after that. The table shows its reported figures at four points. In year 6 the last property is marked at $4,000,000, but it sells in year 7 for $3,000,000, so the final TVPI falls from 1.50x to 1.45x.
Two things change between rows. Cash moves from the NAV column to the distributions column as properties sell, and the marks themselves change. Only the last row is fully realized.
| Year | Distributions to date | Residual value (NAV) | DPI | RVPI | TVPI |
|---|---|---|---|---|---|
| 2 | $1,000,000 | $21,000,000 | 0.05x | 1.05x | 1.10x |
| 4 | $6,000,000 | $22,000,000 | 0.30x | 1.10x | 1.40x |
| 6 | $26,000,000 | $4,000,000 | 1.30x | 0.20x | 1.50x |
| 7 (final) | $29,000,000 | $0 | 1.45x | 0.00x | 1.45x |
TVPI vs DPI, MOIC, equity multiple and IRR
These metrics overlap. The differences are the numerator, the basis (gross or net) and time:
- DPI: the cash-only part of TVPI. Investors cannot spend RVPI, so LPs often read DPI first once a fund is a few years old.
- MOIC: total value over invested capital, often quoted gross at the deal level, before fees and promote. TVPI is usually quoted net to investors.
- Equity multiple: the syndication term. At the exit of a single deal, the realized equity multiple equals the final DPI and TVPI, measured on the same basis.
- IRR: an annualized return that reflects when each cash flow happened. Report TVPI and IRR together; a high multiple over a long hold can still mean a low IRR.
What to watch for
A TVPI is only as good as its marks and its definitions. Check:
- Gross vs net: a gross MOIC next to a net TVPI is not a like-for-like comparison.
- How NAV is set: appraisal, broker opinion, cap-rate mark or cost. Unrealized value can move a lot before a sale.
- Accrued promote: if the GP would earn a promote on a sale at the marked value, a net TVPI should deduct it from NAV.
- Fees and recycling: whether capital called for fees counts as paid-in, and whether recalled distributions are added back.
- Age: compare TVPI only with funds of a similar vintage and strategy. Early in a fund, fees and closing costs can hold TVPI near or below 1.0x.
General information, not legal, tax or investment advice. Your operating agreement, offering documents, counsel and CPA govern your deal.