I heard this term recently about a build up rate. Apparently its the combination of each risk associated with an RE investment, expressed as a percentage. Including the risk free rate (~10yr tb) in the calculation. I can't find anything online regarding the term and it's significance though. Only one website that basically lists the same definition I used above.
Anyone know anything about it?
| +55 | New Comp Database - Google Form (Now with Data Validation) | 24 | 3h | |
| +52 | Leave brokerage to be GP | 12 | 2d | |
| +26 | Real Estate = complicated + underpaid | 24 | 2s | |
| +24 | Spreads over SOFR/UST | 11 | 1h | |
| +24 | Seeking Career Guidance in Real Estate Development Post-Graduation | 3 | 4d | |
| +23 | Going out on your own | 4 | 3d | |
| +22 | REPE/Development GPA | 15 | 5d | |
| +21 | High achiever that doesn’t want to work weekends | 12 | 22h | |
| +18 | Stocks - What are People Buying? | 10 | 4s | |
| +17 | Fisher Brothers | 6 | 3d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
So a "build up rate" would just be the overall rate that goes into a deal. This build up rate when lending out to a developer is typically the US Treasury 10 year [Or whatever is the index rate] + The company rate spread + Forward Contract Premium.
Why this is important to know from an equity point of view is because a lender typically won't change their spread or the forward contract premium (unless there's a driving reason to). The only item that would change is the US Treasury 10 year. If you think rates are going to go down next week, then you can wait a few days to lock in a rate to recieve a discount.
Velit expedita quam nobis soluta doloremque sit eius. Nam quasi quia fuga sapiente non iste quam.
Velit dignissimos rerum non dolorem ea reprehenderit et. Qui sed quis quia quam reiciendis ea. Earum maxime hic assumenda vel. Laboriosam est eum corporis provident rerum. Recusandae sit facere omnis repellendus ipsum iusto ratione saepe.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...