Comments (17)

 
Jan 14, 2018 - 10:49pm

Thanks! I'm doing a real estate case comp for school so this part will definitely be helpful.

Array
 
Apr 9, 2018 - 11:14am

Appreciate the tutorial. You should caveat that this is an extremely basic scenario demonstrating the mechanics of calculating a capitalized interest reserve line item for a construction loan.

Some lenders will not let you realize expected operating cash flow as a reduction to your capitalized interest. Additionally, construction loans are generally floating with a floor and ceiling and not fixed.

Also, I think best practice is to show an operating cash flow reduction as a separate line in a sources and uses statement.

 
Apr 9, 2018 - 11:15am

Help Modeling a Construction Loan w/ Two Components (Originally Posted: 04/30/2017)

Would someone be willing to show me how they would model a construction loan with a senior and junior components, with junior funding first? It seems to be much more complex than the basic construction loans I have looked at. I would be willing to pay $50 for someone to show me how they would set this up, and if they can help me with a few questions. PM me if you are interested. Thanks

 
Apr 9, 2018 - 11:21am

Junior gets funded first so the senior has the maximum amount of subordination from the time their first dollars are funded into the deal. The interest rate the senior receives is reflective of the reduced risk relative to the mezz/sub debt. Note that all of this is being done behind the scenes, so from a borrower's perspective, none of this matters as they are paying a single interest rate.

 
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Apr 9, 2018 - 11:26am
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