Get in Touch

Real Estate Project Appraisal and Portfolio Model

Home / Case Study / Real Estate Project Appraisal and Portfolio Model

A US-based property investment fund looking to create an appraisal model for a multifamily residential development project, as well as a portfolio model for fundraising purposes and reporting on portfolio performance to investors.

Problems

The existing model had:

  • Scattered inputs – few on the calculation sheet and others on the Input sheets,
  • Inaccurate capital calls amount as it ignored re-investing excess proceeds from projects.
  • Incorrect debt sizing calculations for refinancing of the existing debt,
  • Manual phasing of the construction and post-construction costs restricting users’ ability to modify start and end dates for different phases. Additionally, there were periodic inaccuracies in the calculation of funding requirements at the portfolio level due to errors in spreading the costs.
  • No easy way to include or exclude any asset from the portfolio.
  • Hurdle rate and performance fee functionality at the first level of LP and GP only.
  • Circular reference issues leading to inaccurate model outputs.

Solution

FAB delivered a robust and flexible monthly financial model with;

  • Reorganised inputs in one place with proper headings and key model outputs next to them for impact analysis after changing any input assumption.
  • Capital calls corrected to reinvest recycled capital generated from investments,
  • Dynamic project phasing ability driven by start and end dates that also resulted in correction of equal spreading of costs,
  • Switch to include or exclude any real estate asset from the portfolio reporting,
  • Multi-level hurdle functionality – first between LP, GP and second GP1, GP2,
  • Circularity break functionality to fully recalculate and optimise the model outputs,
  • Partners summary report to provide a comprehensive overview of the investments, preferred returns, distributions, IRR, Money on money (MoM) multiple, and other relevant metrics categorised by partner types such as LP, GP, GP1, and GP2.
  • Payment priority / Cash waterfall for the fund and individual assets.

Client Benefits

  • A highly effective and easy-to-use tool for investment appraisal and portfolio reporting and analysis.
  • Best in-class and professionally built financial model that received praise from all stakeholders.
  • The advantage of having a committed team that provides modelling support on an ongoing basis.

Client Testimonial

“I had very good interactions with the FAB team despite time zone challenges. The team was highly responsive and was able to understand our requirements. I found the quality of service and technical knowledge to be excellent.

All in all, I am a very happy customer and will highly recommend FAB Analytics to others.”

President, Investment Fund

Problems