alternate investment

1. Invested Capital: This is the money that was initially put into an investment, like buying a property or a company.
2. Distributions: These are the profits or money that the investors receive from their investment over time. For example, if you invested in a company, the money you get back from that investment when the company makes a profit is a distribution.
3. Residual Asset Values: These are assets that haven’t been sold yet but still have value. For example, if you invested in real estate and haven’t sold a property, that property still has value, and that value is considered in this calculation.
4. Multiple: This is just a fancy word for a number that you get when you do some math.

So, what this statement is saying is that private equity and real estate managers use a simple calculation: They add up all the money they got back from their investment (distributions) and the current value of assets they still have (residual asset values). Then, they divide this total by the initial amount of money they put into the investment (invested capital).

If this ratio is high, it means the investment has done well. It means they’ve made a lot more money than they initially put in. This ratio helps them understand how profitable their investment has been.