Test Taker First Name: Test Taker Raj Kumarrajshuri98@gmail.

com8826277145
Last Name: Test Taker Email:
Test Taker Phone Number:

Instructions:
1. Answer all the que
2. Once you finish m

1. Our client is a real estate private equity company that focuses on multifamily acquisitions. A property we
What is the cap rate?
5.33%
Test Taker Answer:
2. The same client was told by a broker that one of his listings is selling for roughly $55,000,000 at a 6% ca
What is the rough estimate of the NOI of the property?
$3,300,000
Test Taker Answer:
3. The property acquisition price is $45,500,000. The bank is lending the acquirer $25,000,000.
What is the LTV?
54.95%
Test Taker Answer:
4. Describe what a promote structure is (also known as a waterfall) for sponsors and investors in real estate
It is a way to allocate the investm
Test Taker Answer: ent returns or capital gains among the L
5. Please describe the relationship between debt and equity in real estate.
In a real estate capital structute
thTest Taker Answer: e equity ranges between (20%-40%) of
6. What is the difference between levered and unlevered cash flows?
Levered cashflows are cashflows
Test Taker Answer: to equity investors , whereas unlevered
7. What are the two main types of "capital events" or "exits" in real estate ?
The two main capital events in
rea
Test Taker Answer: l estate would be Annual cashflow pro
stions below
ake a simple DCF model and debt amortization schedule with the assumptions provided
are looking at has a net operating income (NOI) of $567,678. The asking price is $10,650,567.
p rate.
?
P & GP.
which sponsors investment is 5%-15% and outside investment is 85%-95%. The Debt ranges between 60%-
cashflows are cashflows to all investors or we can say to the firm. Levered cashflows are cashflows after the
motes and exit sale promotes. Annual cashflow promotes are waterfall structures in place for yearly cashflows
80% which is for most part a secured loan.
financial obligations are met an unlevered cashflows are the free cashflows before the payment of any finan
, based on beating some sort of annual cash on cash return. Exit sales promotes are based on final exit of th
cial obligation.
e investment( through sale or refinancing). The return metric exit promote is usually based on is the IRR.
Assignment:
1. Determine the Net Operating Income (NOI) for each year
2. Determine the cash flow for each year
3. What is the Acquisition Cap Rate?
3. Determine the cash on cash return for each year
4. What is the IRR?

Property Details:
Asset Type:
Units:
Purchase Price:
Vacany:
Exit Cap Rate:
Rent Assumption (Gross Income):

Operating Expense Assumptions:

R&M Cleaning
Utilities - Electricity Utilities - Water/Sewage Utilities - Gas/Trash Marketing
Payroll RE Taxes Insurance
Property Management Fee
RUBS

Debt Assumptions Loan to Value (LTV) Interest Rate

Amortization

Further Modeling Assumptions

Rental Annual Increase Expense Annual Increase

Create a simple Discounted Cash Flow Analysis (DCF) for 10 years and a debt amortization table. Then within the DC
Multifamily 354
$24,000,000
 $200
$215
$115
$215
$500
$125
$1,200
$900
$400 5%
$200

65%
4.50%
25

2%
2%
 Instructions:
1. Answer all the que
2. Once you finish m

focuses on multifamily acquisitions. A property we

tings is selling for roughly $55,000,000 at a 6% ca

k is lending the acquirer $25,000,000.

waterfall) for sponsors and investors in real estate

ent returns or capital gains among the L

ity in real estate.

e equity ranges between (20%-40%) of

cash flows?

to equity investors , whereas unlevered

ts" in real estate ?

l estate would be Annual cashflow pro

with the assumptions provided

678. The asking price is $10,650,567.

ment is 85%-95%. The Debt ranges between 60%-

the firm. Levered cashflows are cashflows after the
re waterfall structures in place for yearly cashflows

the free cashflows before the payment of any finan

rn. Exit sales promotes are based on final exit of th

etric exit promote is usually based on is the IRR.

ar

s/Trash Marketing

years and a debt amortization table. Then within the DCF

Multifamily 354
$24,000,000
 $200
$215
$115
$215
$500
$125
$1,200
$900
$400 5%
$200

65%
4.50%
25

2%
2%
 Create Model Below Here
$67,797 per unit

per unit
Mn FY1

Potential Gross Income $36,108,000

Vacancy and collection loss $3,610,800
Effective gross income
EGI Margin(%) Operating $32,497,200
expense Net operating 90.00%
Income Acquisition Cap rate $19,094,760
Amortization
Finance costs PBT $13,402,440
Tax 55.84%
Cash Flows $624,000
Cash-on-cash return
$702,000
$12,076,440
-
$12,076,440
25.14%
IRR 52.30%
-$24,000,000 $12,090,480
per unit per unit per unit per unit per unit per unit per unit per unit per unit
of gross income
per unit

Years
Debt Schedule
Mn

Repayment Rate

Opening Balance

Principal Repayment
Closing Balance

Interest Expense
te Model Below Here
52.30%

nit per unit per unit

Debt Schedule
$24,000,000.00
FY2 FY3 FY4 FY5 FY6 FY7
$36,830,160 $37,566,763 $38,318,098 $39,084,460 $39,866,150
$3,683,016 $3,756,676 $3,831,810 $3,908,446 $3,986,615
$33,147,144 $33,810,087 $34,486,289 $35,176,014 $35,879,535
90.00% 90.00% 90.00% 90.00% 90.00%
$19,476,655 $19,866,188 $20,263,512 $20,668,782 $21,082,158
$13,670,489 $13,943,899 $14,222,777 $14,507,232 $14,797,377
56.96% 58.10% 59.26% 60.45% 61.66%
$599,040 $575,078 $552,075 $529,992 $508,793
$673,920 $646,963 $621,085 $596,241 $572,392
$12,397,529 $12,721,857 $13,049,617 $13,380,999 $13,716,193
- - - - -
$12,397,529 $12,721,857 $13,049,617 $13,380,999 $13,716,193
25.60% 26.05% 26.49% 26.92% 27.35%

$12,411,007 $12,734,796 $13,062,038 $13,392,923 $13,727,640

FY1 FY2 FY3 FY4 FY5

4.00 4.00 4.00 4.00 4.00

$15,600,000 14976000.00 14376960.00 13801881.60 13249806.34

624000.00 599040.00 575078.40 552075.26 529992.25

14976000 14376960.00 13801881.60 13249806.34 12719814.08

702000.0 673920.0 646963.2 621084.7 596241.3

15180121.4
$15,600,000
-419878.60013
FY6 FY7
$40,663,473
$4,066,347
$36,597,125
90.00%
$21,503,801
$15,093,324
62.89%
$488,441
$549,496
$14,055,387
-
$14,055,387
27.77%

$14,066,377
FY6

4.00

12719814.08

508792.56

12211021.52

572391.6
 FY8 FY9 FY10 Terminal Period

$41,476,742 $42,306,277 $43,152,402 $43,152,402

$4,147,674 $4,230,628 $4,315,240 $4,315,240
$37,329,068 $38,075,649 $38,837,162 $38,837,162
90.00% 90.00% 90.00% $1
$21,933,877 $22,372,555 $22,820,006 $22,820,006
$15,395,191 $15,703,095 $16,017,156 $16,017,156
64.15% 65.43% 66.74% 5.00%
$468,903 $450,147 $432,141 $432,141
$527,516 $506,415 $486,159 $486,159
$14,398,771 $14,746,532 $15,098,856 $15,098,856
- - - -
$14,398,771 $14,746,532 $15,098,856 $15,098,856
28.19% 28.60% 29.01% 29.01%

$14,409,322 $14,756,660 $15,108,580 $15,108,580

FY7 FY8 FY9 FY10 FY11

4.00 4.00 4.00 4.00 4.00

12211021.52 11722580.66 11253677.43 10803530.33 10371389.12

488440.86 468903.23 450147.10 432141.21 414855.56

11722580.66 11253677.43 10803530.33 10371389.12 9956533.56

549496.0 527516.1 506415.5 486158.9 466712.5

FY12

4.00

9956533.56

398261.34

9558272.21

448044.0
FY13 FY14 FY15 FY16 FY17

4.00 4.00 4.00 4.00 4.00

9558272.21 9175941.33 8808903.67 400 384.00

382330.89 367037.65 352356.15 16.00 15.36

9175941.33 8808903.67 8456547.53 384 368.64

430122.2 412917.4 396400.7 18.0 17.3

FY18

4.00

368.64

14.75

353.89

16.6
FY19 FY20 FY21 FY22 FY23 FY24 FY25

4.00 4.00 4.00 4.00 4.00 4.00 4.00

353.89 339.74 326.15 313.10 300.58 288.56 277.01

14.16 13.59 13.05 12.52 12.02 11.54 11.08

339.74 326.15 313.10 300.58 288.56 277.01 265.93

15.9 15.3 14.7 14.1 13.5 13.0 12.5