What to expect in Analyst modeling test?

For an analyst-level role at a top REPE firm, here's what you can expect based on the most helpful WSO content:

1. Modeling Test Structure:

   • Most modeling tests for entry-level roles focus on building a model from scratch or modifying an existing one.
   • Common scenarios include value-add multi-family or hotel assets, where you'll be given base assumptions (e.g., current occupancy, rents, stabilization timeline) and asked to solve for metrics like levered IRR or purchase price.

2. Key Components to Prepare:

   • Property-Level Cash Flow Statement: Be comfortable projecting revenues, expenses, and net operating income (NOI).
   • Debt Amortization Table: Understand how to model debt schedules, including interest and principal payments.
   • Sources and Uses Table: Know how to structure the capital stack for a deal.
   • Equity Waterfall: While not always required for entry-level roles, some tests may include a basic 2-tier equity waterfall. This involves distributing cash flows between partners based on preferred returns and IRR hurdles.
   • Return Metrics: Be ready to calculate IRR, cash-on-cash return, and equity multiple.

3. JV Structure and Waterfall Modeling:

   • For entry-level roles, it's less common to see a detailed JV structure or complex waterfall modeling unless you're interviewing at a highly institutional shop. However, it's not impossible, especially if the firm emphasizes technical skills.
   • If a waterfall is included, it will likely be a straightforward structure with 1-2 tiers (e.g., preferred return and promote).

4. Time Management:

   • With 2-3 hours, the test will likely focus on your ability to build a clean, functional model rather than overly complex structures. Ensure your formulas are accurate and your layout is logical.

5. Preparation Tips:

   • Practice creating simple equity waterfalls with IRR hurdles and preferred returns.
   • Review templates from resources like Adventures in CRE, BIWS, or REFM, which are highly recommended for learning waterfall structures.
   • Focus on understanding the concepts behind the math, as many candidates struggle with this aspect.

In summary, while a JV structure and waterfall modeling might not be the primary focus for an entry-level test, it's worth preparing for a basic version just in case. Prioritize mastering the fundamentals of property-level cash flows, debt schedules, and return metrics to ensure you're well-prepared.

Sources: Real Estate Modelling Test Practice, Real Estate Modelling Test Practice, Case Studies & Modeling Tests: How Exactly Are They Administered?, Real Estate Private Equity Case, REFM Review - Real Estate Financial Modeling Courses 1-3