Construction loan - how to get interest back into total dev costs- help me?!

I’ve searched high and low and cannot figure out how to fix this. This is basically the first pro forma I’ve had to make from scratch so I’m struggling.

I’ve built out my cash flow with all my development costs, created lines for loan funding, calculated the interest on loan along with upfront fee & unused commitment fees. I am now wanting to plug all these loan fees back into the development costs section, then have it flow thru the loan and equity portion. I get hit with #Ref immediately when I try to add in the finance fees to the total project costs line.

Example: my project costs are 72M, I calculated 4M of interest/fees, and need to include the 4M in my project costs so that it’s 76M.

I have looked at a few partner’s pro formas and they all seem to be doing this somehow? I reduced iterations to 100 but that didn’t do anything. How are people calculating the interest/fees and flowing it back into the total dev costs?

Also - I need 65% LTC. Is the “loan” of the LTC considered loan+interest or literally just the loan? I currently am using goal seek to get to a loan amount so that loan+interest=65%.

Does anyone have any solutions ? Or a model or video that will give me any form of help here?

 
Most Helpful

On the circular reference issue, our models usually cheat with a hard code the equity required and loan fees/interest reserve and self iterate until it's close (probably not the best solution, but it works though the model has to be set up to allow that to happen too).

As far as the 65% LTC, it should be on the total costs of the project including loan interest and fees. So if I have a deal that cost 100 to build with 3 in interest costs and fees, my loan at 65% LTC would be 67. 

If you want to PM me I can help take a look if you'd like.

 

Update: I think I finally got it! I created a separate line “dev costs including interest and fees”, which for some reason worked fine. Then I got rid of the circular reference by creating a “total dev cost” plug which is just manually typing the subtotal of my “dev cost w interest”line. That plug is then used in the loan calculations. Literally wasted so many hours to get to this solution

 

Deserunt accusamus aut sint delectus ea voluptatum error. Ullam itaque nobis commodi qui et quia explicabo quas. Voluptas laborum magnam fugit tenetur voluptas.

Repellendus autem dolor tenetur aut rerum sit quia necessitatibus. Ducimus ex quia et totam eveniet perferendis. Et quaerat eaque nam incidunt ratione excepturi velit.

Modi totam eum necessitatibus voluptates enim. Consequatur esse possimus in ea ratione. Libero itaque quia quod qui nulla cupiditate magni reiciendis. Aut unde unde dolorem sapiente. Corrupti dignissimos dolor nihil et dolorem delectus doloremque.

Rerum hic vitae dolores ea autem impedit rerum ex. Dolorem nihil nihil dolor quasi. Aut aliquam ut modi aperiam reiciendis. A aperiam ducimus est aut tempora fugit labore. Hic reprehenderit earum rem saepe quidem voluptas. Magnam ut rerum ducimus quidem praesentium quia dolorem.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
DrApeman's picture
DrApeman
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”