REPE Modeling Test Example

Saw a lot of posts on RE Modeling Tests & Case Studies and thought I'd give a shot on how I structured mine for interviews (on-site/take home) with anywhere between 30 mins to 1 hr of time allotted. The model enclosed typically takes ~30 mins to build (incl. formatting) with an extra ~5-10 for sensi's. To note, this is the exact model I sent in for a case study for an REPE MF (passed).

Link to Model:
REPE Modeling Test Example

Link to Image of Model:
https://ibb.co/KVtmLRy

*Simplified a lot of it (bells and whistles as well as P&L) but flexible for the time allotted
**Keep in mind Case Study had certain assumptions/objectives (Ex. all expenses reimbursed incl. vacancy loss), one size does not fit all. I wanted to provide a basic structure
***Missing waterfall but will make future post with one (Fees, Preff & Promote with IRR/EM Hurdles)

Let me know what you think and feel free to PM me with any questions (Also, have other models/case studies I could share). Would be interested to see other people's approaches too.

 

Glad you guys like it, I'll try to add the case studies sometime this week to this post. Hope you all find the model helpful and feel free to reach out with any questions.

 

Thanks for sharing. Is there any reason why you're not using the IPMT formula to calculate interest? As simply multiplying the rate by outstanding balance increases the total debt service over time (arguably not by much but still)

 

Great question, it honestly was just a preference and got you in the same ballpark range which is pretty much the goal of these models.

In an actual model, I tend to make my debt dynamic (fixed (0) vs floating (1)) and combine a rate/spread in combination with 1-mo FWD Libor. I do the same, where I calculate interest on BOP Balance. For me, easier to model floating rate debt + other terms and run sensi's off of.

Hope that was helpful

 

I noticed that you applied your acquisition fee to the Total Costs to lever against - said another way, the 70% LTV was the purchase price and the acquisition fee.

Does this logic apply when you have debt origination fees, IS broker fees, etc.? I know the money has to come from somewhere, so it makes sense to loop them in.

 

Thank you for sharing. i was doing a modeling ex. earlier & encountered some difficulties.. would be grateful if someone could give me some insights!

    • 10-year quarterly cash flow with rent roll that drive the top line of the cash flow (what does it "rent roll that drive the top line of the cash flow" mean ?)
  1. Leased-up Schedule: Leased to 4 tenants at future market rent; 25% of the area to each tenant; 3-year lease terms; Tenancy starts 3, 6, 9 and 12 months from acquisition in June 30, 2014; Tenant renewal probability 50%. Downtime for new leases 3 is months. (how to model the tenant renewal probability ?)

thank you so much

 

Apologies for the late response, made a different account. Due to circumstance, I am not allowed to share the case study prompt.

Was pretty basic, a NNN industrial deal with some rollover/growth assumptions. Gave financing, cap rate, etc.

Asked you calculate Unlevered & Levered IRR, ROE, EMx, and Sensitivities.

 
Most Helpful

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

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

 

I'd like to practice off of these assumptions but I don't see the T12 financials and operating expenses that are referenced in the post. are you able to provide those? or whatever documents were provided to you by the company that administered this excel test? thanks.

 

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Regards, 007
 

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