Building models for current investments?
Hey guys I recently started at a small private shop. I’m handling basically everything from acquisitions to AM. I’ve noticed that there really aren’t any models that have been updated since some assets were acquired and was going to start building out some models for AM purposes.
How do I go about this? For example, one asset we acquired in 2015. Do I start my analysis year in current year or build off acquisition in 2015 and just actualize 2015-2021 and model assumptions for the balance of hold period? I have all relevant historicals just don’t know how to go about this.
You’d build a few tabs to stay on top of relevant metrics and use it to forward project 5/10 yr returns out. 1) Rent roll; 2) actual historical to present cash flows down to distributions (use this to track operating cash / reserve levels; 3) return sensitivity (from inception); 4) next years budget; 5) current year actuals / compared to budget
So do I build say an “Actual Investment Cash Flow” which would be form inception to underwritten hold period and then a separate tab as “ Forward CF Projections” which would basically be my analysis start as of today with my Argus projections going out the next 10 years? Basically a CF as if I am buying the asset today at whatever the basis is (appraised value or NPV).
That sounds like a lot of work lol.
How else would you do it?
Just to use an investment from 2015 as example:
I have all historical actuals (operating, contributions, distros). Does my Assumptions page tie to initial investment or do I just model as if I am buying the asset today?
I know this probably sounds basic to some but have been only in Acquisitions before and haven’t experienced creating models from investments that have been occurring for years now lol.
Bump
Do you have the original deal model? The proforma that was used? If so...
So you need(very roughly) several tabs. Proforma, actual, rollup. Have the rollup triggered by month. You can get as granular with this as you want, if you want monthly variance you can do that.
Honestly if you have more pointed questions, happy to help.
No original deal model which is why I’m struggling lol
then you're going to have to do it where it give actual IRR's and EM's. It is not a big deal. Your budget to actual will have to be based on a yearly budgeting process proforma. SO you have your three tabs, which i mentioned previously, and then you need a cover sheet for your monthly/annual budget to actual. A quick way to do it is hardcode your budget on the coverpage and have the inputs come the proforma tab. You will likely have a monthly to monthly projection, with a Fiscal Year End budget to actual. You could also do a period to date and budget period to date to compare how you are faring.
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