Real Estate Acquisition ("Buy-Hold-Sell") Financial Model (Excel XLSX)

BENEFITS OF DOCUMENT

1. A professional financial model developped to private equity and investment banking industry standards
2. Extremely flexible and versatile in terms of inputs and assumptions
3. Produces granular and accurate outputs to make an investment decision

DESCRIPTION

This product (Real Estate Acquisition ["Buy-Hold-Sell"] Financial Model) is an Excel template (XLSX), which you can download immediately upon purchase.

A real estate investment project (office, warehouse, retail) starts with acquisition of an existing property.

At this stage you have to consider the amount of investment, timing (usually a one-off payment when buying an existing property). Even an existing property might require some renovation capex.

The project is often financed by a combination of debt and equity, and for the debt portion there can be different LTV assumptions, interest rates, repayment conditions, loan fees.

To bridge any gaps in funding, you can take a mezzanine loan. Usually this loan is relatively small and has a higher interest rate.

Once the property is renovated, it is leased out to tenants and starts generating rental revenues. There are many operating parameters to take into account: lease terms (rental rates, rent indexation), vacancy rate, void periods between tenants, operating costs, non-reimbursable expenses ("opex leakage"), brokerage fees etc.

A stabilized property has a more conservative risk profile. This means you can draw financing for it at lower interest rate, so you refinance your initial acquisition/construction loan with a new one, under better conditions.

The amount of new loan can be the same as the old one, or you can borrow more money (as much as refinancing LTV allows) and distribute ("cash out") the excess between the shareholders. In either case the new loan terms will include the date of refinancing, interest rate, timing of repayment, fees and commissions.

Finally there comes the time to sell it to a new investor. A capital gain can be achieved owing to increased profit and expansion of multiples (compression of cap rate). If the project is made in partnership, there will be distributions of profits in line with agreements ("waterfall") which can also be modeled upfront.

I have developed this model to analyze real estate investments considering the above parameters. The model can be used for virtually any real estate project. It produces cash flow statements at asset and investor levels and calculate key profitability metrics (IRR, equity multiple, gross return, peak equity requirements) for every investor.

The model findings are illustrated by professionally designed magazine-quality charts.

Source: Best Practices in Integrated Financial Model, Real Estate Excel: Real Estate Acquisition ("Buy-Hold-Sell") Financial Model Excel (XLSX) Spreadsheet, Andrei Okhlopkov