Evaluating a multi-family deal

What are the main metrics when evaluating a commercial space? Assuming the IRR is above the discount rate... is it important to conduct an MIRR analysis on the property as well?

As an analyst at a firm, what are your main considerations?

Comments (3)

 
  • Analyst 2 in RE - Other
Dec 28, 2020 - 3:47pm

Sounds like you're just asking about return metrics so here are a few: IRR (unlevered and levered), net profit, equity multiple, cash-on-cash, yield-on-cost (stabilized).

I can't say I look at MIRR but we definitely run sensitivities.

Other deal specific metrics to evaluate the feasibility of an investment include: in-place and exit cap rate, discount to replacement cost on ($) value/unit or sf basis, debt yield (in-place and terminal). This also depends on the investment type (ground-up dev., redev., value-add, stabilized) but those are the ones that come to mind for a value add deal.

 
  • Business School in CorpFin
Dec 28, 2020 - 3:51pm
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