Let's say we were looking at a resi or industrial deal as a MD/Director. What sort of things or metrics would you look out for (besides cap rate/stabilized RoC) to quickly gauge if it was a good deal or not?
It depends if it's a development deal or not. Development: yield on cost, cost basis per SF and per unit, project/LP IRR and whole dollar nominal profit expectations are generally most important. For operating assets it really depends on the investor and what their objectives are. It could be any combination of basis, IRR, cash-on-cash, equity multiple...really just depends.
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Sales/rent Comps. If the rents don’t check out, you either have to come up with a story or pass on the deal.
pencils down/Decline Analysis a lev fin Term Loan B deal standpoint:
then more Company/Industry specific stuff
It depends if it's a development deal or not. Development: yield on cost, cost basis per SF and per unit, project/LP IRR and whole dollar nominal profit expectations are generally most important. For operating assets it really depends on the investor and what their objectives are. It could be any combination of basis, IRR, cash-on-cash, equity multiple...really just depends.
For what it's worth, Zell used the ask relative to the replacement cost as a quick test
For value-add / opportunistic / development = untrended RoC is the first barometer.
RoC is static so you'll need to think about how the timing of the opportunity affects all-in returns.
Tough to articulate but you kinda just know when you know.
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Praesentium dolores recusandae laborum iste. Non ipsa et dolorum quo id nobis. Eum veritatis ut veniam dolorum ipsum. Possimus officiis id velit est est aliquam repellat aut.
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