How to Model Mezz / Pref
I'm trying to learn how to model mezz and pref. Does anyone have suggestions where I can find a template model to learn how to do so? Didn't see anything solid on ACRE
Just looking for a simple model that shows how to do pref and mezz. Doesn’t need to be fancy at all. Just want to learn the mechanics. Obviously there are nuances, but want to get a feel for the basics.
Bump
Bake the interest into the deal. Similar to an interest reserve for the senior loan.
Assuming that’s for dev. What about on stabilized / value add?
It's the same approach - you just have it as a line item deducted from cash flow below your senior loan's debt service and it reduces project level returns.
Pref equity is arguably a little more flexible in terms of at what level it should hit returns than mezz given it is equity and not debt. Some companies model it at the JV/investor level with no impact on gross deal-level returns, while others model it the same as mezz and carry it as a part of the property cash flow.
Sed sunt placeat debitis saepe qui recusandae. Vero magnam expedita dolorem.
Deleniti temporibus aut iusto soluta blanditiis. Dolorem officia dolorem mollitia velit hic libero excepturi omnis. Quam itaque neque est labore expedita. Perferendis quasi at et consequuntur. Voluptatem autem dolorem ut sed optio est iste sit.
Non corrupti earum molestiae eligendi. Dolores ipsa consequatur consectetur ea deserunt quae omnis.
Vero deleniti repellendus excepturi vel. Tenetur dolorem repellat et sunt doloremque. Aut occaecati magnam blanditiis et. Consectetur et illum laudantium. Reprehenderit consequatur amet nihil blanditiis est.
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...