IRR Lookback Payment Clause Samples

The IRR Lookback Payment clause establishes a mechanism to ensure that investors achieve a specified internal rate of return (IRR) on their investment, even if earlier distributions or payments fall short. In practice, this clause requires the project sponsor or borrower to make an additional payment to the investor if, upon a review at a predetermined date or event, the cumulative returns do not meet the agreed IRR threshold. This provision protects investors by guaranteeing a minimum return, thereby allocating risk to the sponsor and providing financial certainty for the investor.