Real Estate Private Equity Excel Test Help

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I have an interview next week with a real estate private equity firm for an analyst position in their acquisitions department. The HR guy said the exam would be a basic excel model (take no longer than an hour) with a list of questions to answer. Could anyone provide me with some sample excel interview models that they had to build for their company or practice models to prep for these types of interviews. Much appreciated!

Comments (37)

 
Best Response
Sep 27, 2011 - 1:25am

If its not going to take you longer then an hour, i doubt its going to be a full modeling test. Most likely they are testing your familiarity with basic excel functions and real estate concepts. For example, set up a cap rate sensitivity matrix - they will give you or you will have to calc NOI, then set up a pricing table with a range of cap rates in whatever increments, very basic and easy stuff. Honestly, i could construct a test for you in under an hour, i do it for our candidates.

Are you an undergrad or experienced hire?

Man made money, money never made the man
 
Sep 27, 2011 - 9:15am

I took a test that was a condo development where you roughly had to amortize certain development costs over say a 12 month development period while drawing on a loan facility for 70% of the hard costs. Then sell off the different units based on a PSF sale price where 80% of proceeds pays down the loan (until loan is paid off), 10% pays a royalty fee and 10% gets distributed. The idea was to grasp the concepts of a loan facility, amortization, ratable sales, stabilization period, sensitivity tables etc.

 
Oct 26, 2016 - 1:56am

How complex do REPE modeling tests get? (Originally Posted: 08/30/2015)

Hello everyone,

So I am preparing to interview with a couple of firms and I was curious as to how complicated the modeling tests get. Will it be a pretty simple acquisition model or will the schedules required get complicated, such as rent rolls, gain on book basis, debt waterfalls and IRR waterfalls? I have not been through the process yet so I am a bit unsure as to much to prepare.

Also, how often are we required to use ARGUS in modeling tests? Especially if it's for a multi-family focused fund?

Appreciate all your help and guidance.

 
Oct 26, 2016 - 1:57am

They will typically ask you for a basic cash flow model (apartments and hotels are most common) either by giving you a handful of assumptions, or simply handing you an OM. It is pretty common for PE firms to make sure you can do a simple IRR waterfall so I would recommend knowing how to build one out.

If the fund you are interviewing with has previously done office investments (regardless of what their focus is), ARGUS is fair game.

 
Oct 26, 2016 - 2:01am

I do basic waterfalls when I'm asked but I just run the cash flow through a waterfall model that I have been progressively creating for over a year now. If you gave me a blank excel sheet, I'm not entirely sure I could recreate what I have in my office. What are your thoughts on that? I'd think a lot of people are in the same boat. I created something that is flexible and easily "dumpable" when it comes to CF data and changing the prefs and promotes. I'd like to think I wouldn't have to create a waterfall model from scratch in an interview. That being said, I'd like to think a lot of things.

Thoughts?

 
Oct 26, 2016 - 1:58am

From my experience, the priority for REPE modeling tests is to see how quickly you can do a back of the envelope type analysis and get all the key metrics to get a general understanding of the deal, and less about how technical you get. So the assumptions they give you are pretty straightforward and just be able to get IRR, DSCR, and basic waterfall as mentioned above.

 
Oct 26, 2016 - 2:00am

I don't even know how I'd model a multifam project in Argus and I use Argus every day. Always just do the base rental income myself and take it from there within excel. Anyone who does this want to shed some light for me? What would you put into the rent roll section of argus? What if a 200 unit apartment building has 200 different units with different sf?

 
Oct 26, 2016 - 2:05am

I highly doubt ARGUS will be tested. It's basically a black box that spits out cash flows and there's no way you would be expected to model something so complex as to require it anyways (e.g., an office complex with 50+ tenants). If it's a remote test there's 0% chance you will be tested on it as it's subscription based.

The test will likely consist of modeling cash flows for an office / industrial / hotel and calculating IRR and multiples. Make sure you know how to build up to unlevered and levered IRR and make it dynamic.

Rev less expenses = NOI
NOI less Capex / TI / LC = Unlev. CF
Unlev CF + debt proceeds - debt service - payoff = Lev. CF

Model this out monthly and use XIRR over the stream of cash flows. Maybe throw in some sensitivity tables for good measure and you'll be all set.

 
Oct 26, 2016 - 2:10am

REPE Modeling Test-Extra Models? (Originally Posted: 08/31/2014)

Hey WSO,

I have some excel tests coming up for PE groups and was wondering if anyone had some real estate modeling tests that they could share. i only found one and its a ground up development. i want to get more comfortable with what the "excel test" could look like by seeing different examples. thanks for the support

 
Oct 26, 2016 - 2:14am

Real Estate private equity interview: expectations, technical questions, modeling test? (Originally Posted: 03/21/2013)

I am about interview for a Real Estate Private Equity firm and am not entirely sure what to expect. I worked as an analyst for a REIB. What type of technical questions will I be asked? What will the modeling test be like?

 
Sep 29, 2011 - 2:31am

generally speaking I think the above comments are correct... if you're an analyst who's not coming out of a bank, etc, it's not going to be that complicated. Just make sure you're familiar with the appropriate real estate terminology (NOI, Cap rates, etc.).... I doubt they're going to ask you to model in a profit distribution waterfall or anything like that if you haven't been in the business

 
Oct 25, 2016 - 6:49pm

For my interview with a RE PE firm they actually had me model a simple waterfall with a preferred return and a promote. I couldn't get all the way through it (actually thought I failed) but I showed that I could build a basic model and that's all they needed to hire me for an associate position

 
Oct 26, 2016 - 2:15am

Without knowing any more specifics about the company you should focus on: NOI, Cap Rate, depending on your position you might want to familiarize yourself with legal documentation in real estate like subordination agreements, titles, deed of trust, warranty deed, promissory notes, mortgage. Get yourself a free copy of Argus Dcf (you can use it for free for a month, after that it's like a couple thousand dollars to buy) and just play around with it to familiarize yourself with the tools.

 
Oct 26, 2016 - 2:17am

I can do everything I need to do in Argus and a ton in excel (have been working with them for several years)... I am more concerned with the implication of it being private equity... Are specific PE metrics or models that I will be expected to know? Or is REPE still very similar to your standard RE investment firm? The fund will be both real estate (property) oriented and financially oriented as with real estate operating co's etc.

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