Excel - question on dev model when fees are reimbursed to GP & tenants pay some expenses

Hey guys I'm putting together a development model for a project on the West Coast - this is for a formal interview due in a week. Some assumptions have been given like fees reimbursed to GP and tenants pay for xyz exp (a type of net lease). I'm confused where these would be exactly on the line items for cashflows - I have (acq & other fees given) all before NOI and to reimburse them I show them as a negative then have another line where they're all added. I also have similar setup for the Tenants.

Ex:

Fee ($10,000)

Property Expense ($5,000)

Reimbursement $10,000

Tenants Pay $5,000

NOI $0

This my Unlevered and Levered IRR are very high (30%+ unlevered and levered). Let me know what you think.

 
Most Helpful

Is the fee a development or construction management fee to the GP? If so it would be a part of your construction cost. If it's a property management fee for after the project is complete, then it's a part of your operating expenses and can be lumped in with the rest of them.

Tenant recoveries (what the tenants pay in terms of expenses) may or may not even need to be included - if the property (i.e. tenants) reimburses 100% of the GP fees and OPEX you really don't need to show them and can just have base rent less vacancy and structural reserves. However, for the sake of being thorough I'd just show a line for CAM & Tax Recoveries and have it equal to whatever % of the total operating expenses the tenant pays.

 

Great comment thanks, seems so obvious I think I have it structured similar but will confirm. It's development, acquisition, mangement, and leasing fee to GP. 

 

That's REALLY strange that they are blending all fees together like that... Typically your acquisition fee would be blended into the land cost from an investor's perspective, then development fee (and leasing fee if GP is vertically integrated) would be part of construction proforma, and property management fee would be OPEX.

Frankly, if they're blending them all into a single fee I'd think you have to include it as part of OPEX, but it's stupid and in practical terms makes no sense.

 

Dolor expedita laborum delectus dolorem commodi. Est dolorum cumque ipsum et. Similique iste deleniti quasi et dolorum. Rerum ipsam animi est deleniti et reprehenderit quod. Quibusdam sed sunt odio enim quibusdam facilis illo laborum.

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...”