Institutional/REPE models
Can anyone share institutional shop or smaller middle market repe models? Currently not on the principal side and don’t have any real visibility into what analysts/associates are modeling deals out of everyday. Doing case studies and modeling tests but don’t see how close these exercises resemble actual day to day modeling at principal side shops at more junior levels. I’ve looked through some A.CRE models but have no clue the legitimacy or level of detail these are compared to ones actually used by repe shops regardless of size/AUM
Based on the most helpful WSO content, it seems that the level of detail and complexity in REPE models can vary significantly depending on the firm, deal type, and market focus. For junior-level roles at institutional or middle-market REPE shops, the models are typically less complex than LBO models but still require a strong understanding of real estate fundamentals.
Key points to consider:
Cap Rate Valuation: REPE models often revolve around cap rate valuation, where asset value is determined by dividing the forward 12-month NOI by the exit cap rate. This is a fundamental concept in real estate modeling.
Market-Specific Adjustments: Cap rates and assumptions differ by location and product type. For example, core markets like NYC or SF have lower cap rates due to perceived stability, while secondary/tertiary markets have higher cap rates due to higher risk.
Waterfall Structures: Junior-level analysts often work on modeling waterfall splits, which can range in complexity. These structures determine how returns are distributed among equity investors and are a critical part of REPE modeling.
Operational Inputs: Many REPE models require sourcing inputs like capex, architectural features, and other operational details from third parties. This can make the process more operationally technical.
A.CRE Models: While A.CRE models are a good starting point, they may not fully replicate the level of detail or customization seen in actual REPE models. Institutional shops often have proprietary templates tailored to their specific investment strategies.
If you're looking to bridge the gap between case studies and real-world modeling, consider focusing on: - Building a strong understanding of NOI, cap rates, and market-specific assumptions. - Practicing waterfall modeling and understanding IRR/EM-driven structures. - Reviewing real-world deal case studies to see how assumptions and inputs are applied.
Unfortunately, sharing proprietary models is not common due to confidentiality, but resources like A.CRE and networking with professionals in the industry can provide valuable insights.
Sources: Development vs. REPE, Real Estate Private Equity Technical Qs, What are the Roles within Real Estate Private Equity?, REPE vs REI, What do REPE and Developers look for in IS analysts/associates?
Bump
“Can someone please share highly sensitive financial models? I have nothing to share in return. Thanks”
Nobody is going to send you their firm's model template. A.CRE models are fine. Every shop's models are going to have some level of nuances that you will have to learn but worry about that when you get there. The difference between modeling tests and modeling on the job are the assumptions. Nobody is going to tell you the market rent or what exit cap to use - other than whatever absolute fluff piece the broker puts out but that gets immediately thrown in the trash anyway.
They’re just cash flows
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