Loan Sizing - Calculating Loan Sizes (Draws + Reserves) for Capital Stack w/ Equity, Mezz, and Construction Loan
Right now I am working on a development model with a capital stack of equity, mezzanine loan, and construction loan.
I am trying to set up a Draw Schedule to accurately calculate the loan draws and interest reserves for both the mezzanine loan and construction loan. The model needs to be reconfigured such that the total mezz loan (draws + reserves) amounts to 20% of the capital stack and the total construction loan (draws + reserves) amounts to 65% of the capital stack. At this point, I am not working on the issue of the accrued and current interest, and just need to first size the loans correctly.
The Draw schedule was originally configured with only equity and a construction loan, and it still works correctly when there is no mezz. The model does not work when there is mezz, however. I’m finding it tricky sizing both loans correctly when each one has an iterative interest reserve that must account for the other loan as well. In particular, the total draws from the mezzanine loan must be limited such that the draws + interest reserve amount to 20% of the capital stack.
Would any good monkeys out there be willing and able to help me adjust the formulas to size these loans? I imagine that if you have done this before, it would only take a few minutes to help out. I understand the concepts, I just need help specifically with the formulas, I believe primarily for the formula I am using for the mezzanine loan draw.
And while having two iterative loans slows the model down a bit, my computer can handle it and I need this functionality in the model so I am not going to hard code any of the loan amounts.
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