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Case Study #1 – Presidio (Case + Solution, Updated May 2024)

This is the first in a series of commercial real estate case studies shared by A.CRE. These case studies are meant to help you practice to master real estate financial modeling. Presidio puts you in the role of an acquisitions professional needing to assess the viability of a value add apartment acquisition opportunity.

Practice makes perfect!

Each case study shared in this series mirrors real world situations, either in terms of the types of deals you will look at in various roles or the types of modeling tests you’ll be required to perform as part of the interview process. You can browse this and other case studies in the A.CRE Library of Real Estate Case Studies.

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Presidio – The Background

You are an acquisitions professional working for Presidio Real Estate Partners, a regional apartment operator based in California. Presidio’s investment strategy typically involves acquiring poorly managed class A and B apartment projects across the United States, reposition the assets through some combination of capital improvements and management improvement, and then hold the assets for up to seven years. 

Presidio targets a minimum levered IRR of 15% on its investments.

Presidio – The Details

You’ve recently been presented with an opportunity to acquire Franklin’s Tower, a 150-unit, luxury apartment building with 150,000 gross square feet and 120,000 net rentable square feet.

The property is currently 60% occupied due to mismanagement with comparable properties fully, or almost fully occupied. Presidio is looking to purchase the property for $315k/unit with all equity, lease up the remaining units, refinance at stabilization, and sell in 7 years from acquisition. In-place rent in year 1 is anticipated to be an average of $3.75 per square foot per month for occupied units and operating expenses are anticipated to be $2MM for the year and both operating expenses and rent growth are projected to be 3% per annum. Please assume 5% vacancy upon stabilization and closing costs of $200k.

The proposed strategy is to lease up the property at 5 units per month and refinance at the end of year 2. The debt terms are as follows:

At the end of year 7, Presidio will sell the properly at a going out cap rate of 5.5% with $200k in fees.

Presidio – The Task

Please calculate the levered and unlevered internal rate of return and equity multiple. Based on your analysis, does this investment meet Presidio’s target return?

Presidio – Extra Credit

Presidio brings in a Limited Partner (“LP”) and they agree on an equity contribution at a 90/10 split for the LP and Presidio, respectively. They will split distributions pari-passu until the LP achieves a 9% preferred return. Presidio then receives a 20% promote and the partnership splits the remaining proceeds pari-passu. Build a waterfall model to demonstrate the partnership cash flows. 

Please calculate the rate of return and equity multiple for the Presidio and the LP.

Try Another Case: In the same way that A.CRE has made publicly available over 60 institutional-quality real estate models, we're now on a mission to build the largest library of free real estate case studies. Browse the library today.

Create Your Own Case Study

This case study of Presidio offers a view of the strategic decisions involved in real estate acquisitions. As you apply the provided data and strategies in your financial models, you’ll gain insights into optimizing asset value and ensuring investment criteria are met, key skills for any CRE professional. For those looking to deepen their expertise, our Real Estate Case Study Creator provides a platform to test and enhance your modeling skills in a controlled, realistic setting. This GPT creates completely custom real estate case studies from scratch and allows users to craft case studies to simulate scenarios they are interested in or expect to encounter in their professional lives. This customization allows users to focus on particular areas of interest or challenge, making the practice sessions as relevant and effective as possible. We encourage both seasoned practitioners and newcomers to use this resource to refine their approach and decision-making in commercial real estate investments.

  • Note: As of release, a ChatGPT Plus (i.e. paid) membership is required to use custom real estate GPTs like this Real Estate Case Studies Creator.

Download the Case PDF + Solution XLS

In addition to the web-based case, we’ve created a PDF version to download and use offline. Additionally, we’ve added a solution created by Spencer and Michael. Note that the solution may contain errors – if you spot an error, please let us know and we’ll roll out an update.

As with our real estate financial models, this case study and solution are offered on a “Pay What You’re Able” basis with no minimum (enter $0 if you’d like) or maximum (your support helps keep the content coming). Just enter a price together with an email address to send the download link to, and then click ‘Continue’.

We occasionally update these cases and solutions (see version notes). Paid contributors will receive lifetime access to the case, solution, and all updates.

Version Notes


  • Initial release