Institutional Real Estate investing - cash flow model
Hi! I am looking for someone who is familiar with institutional real estate investing in the Commercial Real Estate space.
In the last days I have spent some time to find how deal structures look like in that segment. Especially how the refinancing of such an invesment is structured (I undertand there is always huge refinancing). So I hoped someone here could help me to build a small CF model based on the following assumptions:
- The investor: is an institutional investor who intends to sell the property after 5 years
- Purchase: Acquisition of an office building for EUR100mn
- Rent: is initially 5% of the purchase price p.a. (supposed to increase by 2% p.a.)
- Capital Value: is supposed to increase by 2% p.a.
- LTV: is 60%
- Tenor: of the loan is 5 years
- Interest: 5-year swap is 1.5% + margin is 2.5% = 4%
My questions are: 1. How does the loan amortisation TYPICALLY look like (interest only or is there a repayment schedule? And if a repayment schedule is there, is it 1% from the original credit amount p.a. or 1% of the year-end figure of every year (so degressive) 2. What would be typically the refinancing amount after the 5-year period when the investor seeks the exit? 3. How do I calculate administration, maintainance and rental loss risk? Is there a reasonable % of rental income to model these costs?
What be nice someone could help me... Regards
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