Real Estate Private Equity model questions
I've been working through a few REPE modeling tests and had a few questions regarding structure
1) Is a standard sources and uses required / common? About 50% of the models I have seen have them but they don't seem to a necessary step. Coming from more corporate modeling its a habit to include one.
2) When looking at debt financing fees, is there a correct way to view the payment of these fees? I've traditionally viewed it as additional required equity (or paid via cash on BS but I have also seen models that just net out the gross proceeds against the financing fees. Both make sense, so is it just personal preference?
3) Not model related but thoughts on Argus experience for REPE interviews? Coming from IB so don't work with it at all
1) include sources and uses on assumptions/transaction summary tab 2) capitalize financing costs 3) some look for experience with argus, while others don't. it is great for large office.
Not gonna get a better more concise answer than that. Yes you can do debt fees either way, but no one will really argue about simply capitalizing them.
Re Argus, depends on the team and industry. Most MF shops dont use it as it does restrict your modeling in a lot of ways. Obviously development doesn't use it either. However, large PE/AM firms look favorably on it, in my opinion, because it is so universal and can answer 95% of your modeling needs, 100% if you really know how to use it. Put yourself in a VPs shoes...whenever a new analyst, etc joins the team, would you rather have to lose a few months while they master the excel model, or be able to come in day 1 and be on the same page as the rest of the group?
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