How to approach this RE case study question?
Hi All,
I have a case study to complete and wanted to ask for your opinions on your approach to the question. I have a typical tenancy schedule and the usual comps which are given however the case study is presented in the following way.
"Company X is considering a property investment in New York. Company X could invest on a 50/50 JV basis if the investment meets the required returns. If it were to invest, Company X would act as the asset management partner and will earn an annual fee." The outputs ask for a project level IRR and Company X level IRR.
How would you tackle this question, in particular the JV side of the deal? Should i model the property outright first and then look at Company X returns with the asset management fee? Furthermore, there is no mention of the distributions of profits, would this require a waterfall payment structure by making my own assumptions?
Thanks.
If no distribution assumptions were given I would assume that profits are to be split 50/50. Find the project level returns first, then solve for Company X's IRR inclusive of the asset management fee.
Praesentium non aliquid amet autem ut at. Nihil enim dolores et quibusdam. Esse in reiciendis quo accusantium. Quisquam at nihil assumenda dolor eos sed reprehenderit. Temporibus molestias omnis ea accusantium velit animi.
Natus in magnam natus excepturi quasi quia. A qui non alias architecto odit voluptatum laboriosam. Consequatur provident distinctio dolor.
Numquam asperiores doloremque optio qui. Est consequatur consequatur eligendi aut aspernatur velit. Voluptatem aut placeat optio quia at cupiditate corporis.
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...