Commercial Real Estate Financial Model for Acquisitions

Commercial Real Estate Financial Model presents the case of investment into commercial real estate buildings. The model generates Profit & Loss Statement, Cash Flow Statement, and Balance sheet. Based on this Financial Model, you analyze investments from the perspective of an Equity Investor (owner) in the property and determine whether or not the Equity Investor should invest, based on the risks and potential returns.

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This financial model is an effective and easy-to-use tool for real estate acquisition modeling.

The Step-by-Step Process to Real Estate Financial Modeling:
Step 1: Set up the model Inputs: model currency, model start date (by default it is a 10-years financial projection and the model should start on 1st day of the year), portfolio acquisition assumptions, including those for the size of the property, the purchase price, and the exit (i. e., what is the exit yield of the transaction). Since rents are normally linked to inflation, you have to make an assumption on inflation as well. Generally, bank financing is used for real estate transactions. Therefore, you are able to define acquisition leverage and financing terms (interest rate margin, loan amortization rate, and loan arrangement fee)
Step 2: review calculations that are based on the input sheet. You can add additional assumptions regarding CAPEX investments to each property if needed.
Step 3: Review financial statements and make sure that there are no refs.
Step 4: Review return calculations and risk parameters and make sure that there are no refs.

Based on these financials and return calculations you are ready to make an investment decision. In case there are questions or queries regarding the model, I am able to provide assistance.

Important Notice: Yellow indicates inputs and assumptions that the user is able to change.

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