Lenders - What Do Their Models/Proforma Look Like
Are lenders building out a full 21 line proforma (GPR to Levered IRR) if they get just a RR from a broker? Or are they building from GPR down to NOI, assuming construction costs and debt to get to DY, DSCR, and YoC for ground up projects?
Or are they building out a full proforma (21 lines) with 5-10 years of cashflow after development and looking at the metrics above? I assume they're looking at it from a conservative viewpoint, but not as familiar with lenders UW so if anyone can give a somewhat comprehensive overview and what a model may look like for a deal that would be really helpful.
What the fuck is this 21 line convention
Lol like line items on a proforma (GPR, EGR, NOI, Purchase Price, Debt, CF Before and After DS, Unlevered/Levered Returns and Cashflows, etc add up to 20+ line items). Basically from a Lenders perspective are they building all of that out to get their DY/DSCR. I am assuming so, but I wanted someone that works at a Lender to let me know.
Debt side for half my career and I've only seen it where we calc to NOI or NCF after reserves to arrive at DY and DSCR. However at my current shop we're also looking at YOC through sponsors pro forma as well as our base and downside case. We'll calc IRR/EM on what our investment generates, not yours, however if we use leverage we'll calc both unlevered and levered returns.
Thank you, great response. I sent you a PMd with a specific question I had.
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