As Spencer and I continue to flesh out the Adventures in CRE Glossary of Commercial Real Estate Terms, we thought it would be fun and useful to provide some of our readers who are just starting out in the industry with some practice flashcards. We hope you can use this as a tool to test […]
(Updated August 7, 2019 to include a Watch Me Build video and Downloadable file) Commercial real estate lenders commonly calculate loans in three ways: 30/360, Actual/365 (aka 365/365), and Actual/360 (aka 365/360). Real estate professionals should be aware of these methods if they want to understand the real interest rate as well as the total amount of interest […]
Welcome to the A.CRE Hotel Valuation Model‘s Tutorial Page. On this page you will find all the tutorials for the A.CRE Hotel Valuation model in Excel. There is a lot to learn within this model and over time, I’d like to show you both how to use it as well as how I built it. […]
I am excited to introduce our new Hotel Valuation (Acquisition) Model to underwrite both stabilized and value-add hotel opportunities. This hotel pro forma is designed to allow users to do everything from a quick back of the envelope exercise to a fulsome and detailed underwriting exercise in which the user can get into the weeds […]
After posting the construction draw module that demonstrates how to calculate the true LTC of a development loan, I decided that since we have yet to publish a condo development model, to build upon that module to create one. This condominium model has a lot of really great functionality that will allow the user to get a […]
The internal rate of return is one of the most commonly used return metrics to value real estate investment opportunities. Simply put, the IRR is the anticipated project determined discount rate an investor is expected to earn over the life of the investment if the investment performs as projected. An example of how it works […]
Investing in and developing an unentitled site, broadly speaking, is one of the riskiest, yet rewarding, endeavors in the commercial real estate industry. The entitlement process, in particular, is fraught with the potential for setbacks and even failure, all while significant money needs to be spent and put at risk long before any revenue can […]
This is a 3-tiered debt module that will allow the user to add one to three tiers of debt to his or her real estate DCF model. Includes the option to layer in senior debt, secondary debt, and mezzanine debt; calculate interest on either a 30/360, actual/360, or actual/365 basis; and model additional proceeds (i.e. […]
The Letter of Intent – Legal Issues The letter of intent is a critical document that is written up at the beginning of a potential real estate transaction between either a prospective buyer and seller or a prospective tenant and landlord. The LOI contains preliminary understandings between both parties about major points of interest and concerns […]
Hotels are a unique asset in the commercial real estate world and are underwritten differently as a result. Probably the most obvious difference is the duration of the ‘lease term’ of the tenant, which is usually daily to weekly. Another major difference is that hotels are more operating intensive and typically contain other complimentary services […]
I’ve built a new acquisition model that I am excited to share with our readers. This is a back-of-the-envelope (BOE) valuation model that can be used for retail, office, and industrial properties. The goal was to create a sleek and clean look to the model that would enable a third party to easily understand what […]
Ever since Spencer wrote his post about why he chose to do an MRE as opposed to an MBA or a dual Master’s degree, I have been asked a lot by our readers about why I chose to go for both an MBA and MRE. Below I will discuss my rationale and thoughts and provide […]
In this post, we are going to take a deeper look into capital expenditures. What it is and how we account for it in cre underwriting. Capital expenditures, commonly referred to as Cap Ex, are expenses that occur outside of normal operating expenses. They are items that ownership either needs to or decides to pay […]
Part 2: The XIRR (Click here for Part 1 where we cover the IRR) This is Part 2 of our A.CRE Deep Dive – 2-part mini-series on the IRR and XIRR return metrics and functions in Excel. As stated in Part 1, these are some of the most commonly used functions and return metrics in […]