Real Estate PE Model
O
(Baboon, 143
Points)
on 2/2/12 at 8:41pm
Can anyone share a real estate pe model, or a good spot to find one? Thanks





''Breaking Into Wall Street"
''Breaking Into Wall Street" has a set of real estate modules that are useful if you've never seen one... focuses on modeling development projects, etc... you've got to buy it though.
anyone got any free ones?
anyone got any free ones?
there is no standard REPE
there is no standard REPE model. sure you have to understand the underlying cash flows of the asset which will be different for office, retail, residential, student housing, self-storage, hotels etc. to be honest we use argus to get office, retail and industrial property level CFs done and export to excel. for more operationally focused assets there are standard ways to model them (i.e. look at HVS hotel reports to see the standard pro forma for a hotel asset).
once you have the property level cash flows it depends on what you are investing in - debt, equity, mezz, development, a recapitalisation/restructuring, LBO, JV etc. i've not seen one model that does all of these and it is not that difficult to model out each of these scenarios if you understand what they are.
I agree with RE_Banker on
I agree with RE_Banker on this... For REPE, make sure you understand the asset level DCF first, then add, debt and partnerships/corporate structures as appropriate.
The ''Breaking Into Wall Street" modules look good. Focus on the asset level first.
relinquis... Killing the GMAT this December; Over/Under set at: 725 GMATs.
Thanks t everyone for
Thanks t everyone for constructive replies. I was expecting to get flamed
Relinquis wrote: I agree with
I agree with RE_Banker on this... For REPE, make sure you understand the asset level DCF first, then add, debt and partnerships/corporate structures as appropriate.
Second (or third) this. For a beginner, it doesn't have to be related to private equity in any way - for simplicity's sake, what would it look like if I just bought a hotel, held it for X yrs, and sold it?
quick example found with google https://www.reoworkout.com/pdf/property/info119_4.pdf (scroll to pg 25-27)
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For a good overview of the
For a good overview of the valuation techniques for hotels read this chapter:
http://www.hvs.com/Bookstore/HotelValuationTechniq...
Great to see other active real estate people here.
relinquis... Killing the GMAT this December; Over/Under set at: 725 GMATs.
Received this related
Received this related question recently via PM:
Have u ever seen the damordan RE Model? If so is it fairly accurate to work off of? http://pages.stern.nyu.edu/~adamodar/New_Home_Page...
Marked "Other Assets - reval.xls"
That model is decent as an overview and for the key concepts... most actual RE investing is done on an IRR basis to target a certain return on equity, so you'll have the actual debt terms modelled out (with fees and repayment schedule) and cash flows to equity more prominently displayed.
The biggest difference in real world modelling is that the actual leases terms would be modelled to get to the rental revenue figure and the reimbursements as they will differ lease by lease, then market assumptions for roll-overs at the end of the leases and for any vacant space that's leased up (usually this will be done in Argus for large properties with several tenants). You'll also have deductions for landlord's contribution to Tenant Improvements and Leasing Commissions (TIs & LCs) in addition to Capex in the line items before you get your Net Cash Flow.... Also, one would deduct brokerage commissions/sales transactions costs from the terminal value calculation.
Also, people don't usually have beta and stuff in their models if they're just buying a building.
relinquis... Killing the GMAT this December; Over/Under set at: 725 GMATs.
Thank You that is good info
Thank You that is good info Relinquis. Appreciate all the thoughtful responses in the thread.
I am going to echoe the
I am going to echoe the advice already given - there is no standard for modeling RE and its much more important to understand finance in the context of an RE investment (that means know going-in/terminal cap rate and un/leveraged IRR).
For an entry-level candidate, I dont expect much. I also recommend getting familiar with Argus, as it is the industry standard for projecting cash flows. Complex reimbursement methods wil be over your head, but you could at least find an offering memo off the 'net (usually from an investment broker) and try to model that in Argus for practice (that's what I used to do). Create an 11 yr run, export to Excel and play with it. You will get to see what an operating statement looks like. I wouldnt worry too much about partnership distributions and construction modeling yet.
My firm actually paid to send me to a ULI class for Excel modeling and I learned Argus on my own time.
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These should get you
These should get you started.
http://www.docstoc.com/docs/68190435/Commercial-Mo...
http://www.finance30.com/group/realestate/forum/to...
Real Estate Investment Analysis -Reworked.xls
To be effective, you really need to combine the two. The first for tenant info (see relinquis' comment) and the second for the rest. They both do a poor job of modelling individual tenant economics, but should get you in the general place for retail/office valuations. Keep in mind that these models tend to have a focus on a RE investing (talking balloon payments, etc) which may or may not fit your needs.
They are both xls files. Scroll down 2-3 posts in the forum to see the file on the second one. Feel free to post questions, but keep them in the thread (no pm).
Good stuff sk8247365. Thanks
Good stuff sk8247365. Thanks guys keep it coming!
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Three out of four RE PE
Three out of four RE PE modeling tests I've seen have used a hotel as the base asset. This is because it's just not practical to have a candidate model leases without Argus in an interview setting. Getting down to operating cash flow is fairly straightforward, just know the main line items (e.g. ADR, Occupancy, RevPAR, F&B, FF&E Reserve, etc.).
Two or three complexities that are normally worked in are (1) debt sizing (be able to size debt by debt yield, LTV, and fixed charge coverage), (2) development budget (option to add additional rooms / square footage for a given cost), and (3) partnership waterfall. This last part is fairly important because it is relatively unique to real estate and can make or break a candidate. The two most common promote structures are a multi-tiered promote (where the GP's split of cash flow ratchets up based on IRR to the LPs) and a three-phase "catch-up" promote (where the cash flow is generally split pari passu until the LPs receive a target IRR, then the GP gets, say, 50/50 until it has received 20% of the profits, and then 20% thereafter).
Anyone have any suggestions
Anyone have any suggestions for templates on how to input a "catch-up" promote? I'm having a lil trouble making my promote page in the model flexible depending on different property level IRRs or changing the exit cap rates
The top-line input to the
Thanks for the response
I think I agree with your
I have a question. When
Thanks for the feedback
jec wrote: [...] is the real
relinquis... Killing the GMAT this December; Over/Under set at: 725 GMATs.
re-ib-ny wrote: Three out of