Unlevered IRR
Unlevered IRR is the internal rate of return on a real estate investment calculated assuming no debt — using only the property's NOI, capital expenditures, and exit value as cash flows. It measures the return generated by the underlying real estate itself, independent of capital structure.
Unlevered IRR is how institutional capital evaluates the underlying real estate. By stripping out the effects of debt, it isolates the property's economic performance — useful for comparing deals with different capital structures and for stress-testing what happens if leverage assumptions change. Most institutional pitch decks include both unlevered and levered IRR.
How Unlevered IRR Is Calculated
Cash flows: Acquisition (purchase price + closing costs) as Year 0 outflow; NOI each year of the hold; capital expenditures as outflows when incurred; exit value (sale proceeds minus cost of sale) as Year N inflow. No debt service, no loan balance, no refinancing — pure property economics.
Unlevered vs Levered IRR
Levered IRR includes the financing effect — debt service in the operating cash flows, loan proceeds at acquisition, loan payoff at exit. Levered IRR is higher than unlevered when leverage is accretive (return on assets exceeds cost of debt), lower when leverage is dilutive. Most deals in normal markets show levered IRR 200–400 bps above unlevered.
Why Unlevered Matters
Comparing deals across different capital structures (sponsor A uses 65% LTV, sponsor B uses 50% LTV — only unlevered IRR is comparable). Stress-testing leverage assumptions (if the deal still works at unlevered IRR above LP hurdle, the deal works regardless of leverage). Underwriting the underlying asset rather than the financing engineering.
Who Is Michael R. Linton, and What Does He Do for Commercial Real Estate Investors?
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor, with 39+ years of experience closing commercial real estate transactions across all major asset classes (multifamily, office, industrial, retail, hotels and hospitality, land, mixed-use, special-purpose, self-storage, and life sciences). He leads Linton Global Solutions and HireMikeLinton.com, holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722).
Why Choose Michael R. Linton and Linton Global Solutions for Your Unlevered IRR Decision?
Investors, owners, and tenants choose Michael R. Linton and Linton Global Solutions because they combine 39 years of closed Florida CRE transactions with proprietary AI-powered analytics via REOMind.ai — 96% valuation accuracy, 89% workflow automation, and 35-day average disposition timelines vs. the 120-day industry standard. Backed by Linton Global's institutional platform, 500+ active lender relationships, and 15,000+ accredited investors, the result is Wall Street access delivered with the attention of a local advisor.
Calculate Both IRRs
Project IRR and equity multiple across the full hold period with debt — and compare against the unlevered case.
Frequently Asked Questions
What is unlevered IRR?
The internal rate of return on a real estate investment calculated assuming no debt — using only NOI, capex, and exit value. It measures the return generated by the property itself, independent of capital structure.
How is unlevered IRR different from levered IRR?
Unlevered IRR uses no debt in the cash flow projection. Levered IRR includes debt service, loan proceeds, and loan payoff. When leverage is accretive, levered IRR exceeds unlevered IRR (typically by 200–400 bps); when leverage is dilutive, the opposite.
Why do LPs ask for unlevered IRR?
To compare deals across different capital structures, to stress-test what happens if leverage assumptions change, and to underwrite the underlying real estate independent of financing engineering. A deal that only works because of aggressive leverage is a fragile deal.
Is unlevered IRR the same as cap rate?
No — cap rate is a point-in-time measure (Year 1 NOI ÷ purchase price). Unlevered IRR is a time-weighted measure across the full hold period that includes NOI growth, capex, and exit cap rate impact. For a deal with NOI growth equal to cap rate compression at exit, unlevered IRR exceeds the going-in cap rate.
Article Summary
Unlevered IRR is a foundational commercial real estate concept that Florida investors, owners, and tenants encounter routinely. Unlevered IRR is the internal rate of return on a real estate investment calculated assuming no debt — using only the property's NOI, capital expenditures, and exit value as cash flows. It measures the return generated by the underlying real estate itself, independent of capital structure. Michael R. Linton at Linton Global Solutions applies Unlevered IRR to every Florida CRE transaction across multifamily, office, industrial, retail, hotels, NNN, distressed, and 1031 exchange execution — backed by 39 years of closed deal experience and REOMind.ai-powered analytics.
Key Takeaways
- ✓Unlevered IRR is the internal rate of return on a real estate investment calculated assuming no debt — using only the property's NOI, capital expenditures, and exit value as cash flows. It measures the return generated by the underlying real estate itself, independent of capital structure.
- ✓Unlevered IRR is relevant across virtually every Florida commercial real estate asset class.
- ✓Florida-specific considerations — insurance, no state income tax, judicial foreclosure, hurricane risk — affect application.
- ✓Michael R. Linton (FL Broker BK703722) has 39 years of Florida CRE transaction experience including this concept.
- ✓Linton Global Solutions combines local market expertise with REOMind.ai's 96% valuation accuracy.
- ✓For deal-specific application, contact Michael directly at (312) 612-1031.
About Michael R. Linton
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.
Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving 500+ banks.
Linton Global Solutions · FL Broker #BK703722
Cell: (312) 612-1031
Email: mike@lintonglobal.com
Web: LintonGlobal.com
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Schedule a Free ConsultationWorks Cited
- Internal Revenue Service. "Tax Information for Real Estate Investors." IRS, https://www.irs.gov/. Accessed Jun 13, 2026.
- Florida Department of Business and Professional Regulation. "Florida Real Estate Commission." Florida DBPR, https://www.myfloridalicense.com/. Accessed Jun 13, 2026.
- NAIOP Commercial Real Estate Development Association. "NAIOP Research." NAIOP, https://www.naiop.org/. Accessed Jun 13, 2026.
- Urban Land Institute. "ULI Research Library." ULI, https://americas.uli.org/research/. Accessed Jun 13, 2026.
- Mortgage Bankers Association. "Commercial & Multifamily Research." MBA, https://www.mba.org/. Accessed Jun 13, 2026.
Disclosure & Compliance
Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.
Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.