Carpathian Capital says exit cap rate assumption drives most private real estate IRR risk

Carpathian Capital Management flagged exit cap rates as the main driver of projected private real estate IRRs in sponsor models. Example model used USD 1 million NOI, a USD 17 million cost, USD 12 million interest-only debt at 6%, a five-year hold. An exit cap rate shift to 6% from 5.5% cut investor proceeds to USD 6.1 million from USD 7.6 million. The projected IRR fell to 4.4% from 9.5%; a 5% exit cap rate implied a 14.6% IRR. Analysis warned leverage amplifies cap-rate moves; urged sponsor sensitivity tables for a 0.5-point higher exit cap rate. Disclaimer: This news brief was created by Public Technologies (PUBT) using generative artificial intelligence. While PUBT strives to provide accurate and timely information, this AI-generated content is for informational purposes only and should not be interpreted as financial, investment, or legal advice. Carpathian Capital Management published the original content used to generate this news brief on October 13, 2026, and is solely responsible for the information contained therein. (C)