REIT Modeling Test

Here is a modeling test for Equity Residential REIT, they give 90 minutes to complete.

REIT interviews are similar to REPE ones- you are asked about cap rates, NOI's, thoughts on current trends, etc.

Salary is way lower, 75k with 10% bonus quoted in Chicago.

ANALYST CANDIDATE EXCEL EVALUATION

An opportunity exists to acquire a hypothetical 478-unit multifamily property in suburban Maryland. The property was built in 1999 and is fully stabilized. Build a dynamic real estate acquisition, operation, disposition, and financing model to evaluate the opportunity. Please provide an annual cash flow summary formatted to print.

General Assumptions:

• ●  Acquisition Date: 4/1/2015

• ●  Purchase Price: $110,000,000

• ●  Stabilized Occupancy: 95%

• ●  Rental Rate: See T-12 Financials Provided

• ●  Revenue Growth: 4% annually

• ●  Operating Expenses: See T-12 Financials Provided

o Management Fee = 2.5% of Total Income
o Tax's Reassessed at Purchase: $1,600,000 Year 1, 3% growth thereafter o Replacements: $350/unit per year

• ●  Expense Growth: 2.5% annually

• ●  CapEx - $600/unit per year

• ●  Hold Period: 10 Years

• ●  Exit Cap Rate: 6.25%

• ●  Sales Costs: 2.75%

  Senior Mortgage

• ●  65% Loan to Cost

• ●  Origination Fee: 45 bps

• ●  Interest Rate: 3.5%, Fixed

• ●  Amortization: 30 Years

  Please provide a summary that includes the following metrics:

• ●  Unlevered IRR

• ●  Unlevered IRR Sensitivity Table (analyst choice of most relevant variables)

• ●  Unlevered Return on Cost

• ●  Levered IRR