Members of the Verivest Sponsor Network have the option of enabling their track record on their Sponsor Profile page. It is important to note that some members may choose to only have us verify a portion of their track record. There may be cases where we create Investment records that display in the Track Record table that we are unable to verify for one reason or another, so it is important to pay close attention to the true completeness of the verification.
There are three types of Investments that we currently verify that make up a Track Record.
One of those three will then be associated directly or indirectly with an Asset where an Asset represents physical property or address. Direct Real Estate and Loan Investments are directly associated with an Asset. LP Investments are associated to an Opportunity. An Opportunity is associated with an Account (legal entity) within our system and that Account can then make an unlimited number of Investments of one of those three types – Direct Real Estate, Loan and LP Investment.
Although this seems a bit complicated, it allows the system to plot a number of pinpoints (Assets) on a Sponsor’s Track Record map that is greater than the number of Investments they have made. For example, a member may make an LP Investment into an Opportunity that has made 20 separate Direct Real Estate Investments. In this case, they would have 20 pinpoints on their map but only one Investment on their Track Record.
Performance Metrics – Direct Real Estate (DRE), Loans, LP Investments
The member provides us with a spreadsheet that lists the specific dates and amounts that capital was invested and the dates distributions of cash were received along with their computed figures for IRR and Equity Multiple. We will then plug the same figures into our Excel template and use the XIRR formula to determine the IRR and compare it to the number they’ve provided. They should agree. If not, we will determine the source of the discrepancy and follow-up with the member.
To validate these numbers, we request a copy of the Partnership tax return for each year of the entity’s existence. This will allow us to confirm the amount Capital Contributed to the Partnership and the total amounts distributed annually over the life of the Partnership. These amounts should agree with the spreadsheet the Sponsor provided to us.
We will also request a General Ledger Detail report for the Equity General Ledger accounts from the inception date to the wind-up date. This will give us further insight into the exact date’s capital was invested and distributions were made.
If the deal went Full Cycle in the current year and the tax return hasn’t been filed yet, we will request bank statements for each month a distribution was made along with the General Ledger Detail report of the Equity General Ledger accounts.
The IRR can be manipulated by moving the distribution dates closer to the date the investment was made so we pay close attention to the frequency and timing of distributions within a given year (e.g., they could claim all of the distributions were made once a year in January rather than on a quarterly basis). If it seems they may be manipulating the distribution dates to increase the IRR, we will request bank statements.
For DRE, Loans and LP Investments, we will verify the returns on a gross basis meaning the returns that the investment generates before fees rather than net of fees.
It is important to note that members may not engage us to perform the verification of the IRR and Equity Multiple on a specific deal but may provide us with the figures anyhow. We will list them in the table for that specific Investment but they will not have the pink check next to them.
Performance Metrics – Funds
For members that are operating multi-asset funds, Verivest may be engaged to calculate the fund level returns for the investment vehicle. In these cases, they will be calculated on a netof fees basis and may be displayed on an annualized basis. These track record results will besaved as a Document on an Opportunity rather than being displayed on the Sponsor’s Profilepage.
LAST UPDATED JANUARY 28, 2021
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Verivest is not registered with the SEC or any similar state agency, is not an investment advisor and does not offer investment advice. Verivest does not (and cannot) recommend any of the sponsors or investment opportunities referenced on this site. All private investments involve risk and uncertainty, including lower than projected returns and a complete risk of loss of invested capital. Investors should conduct thorough due diligence and consult with qualified legal and financial advisors before making any investment decisions.