It is a very busy week for me with due diligence on two client acquisitions and the blogging muse is not speaking very clearly to me. So I thought I would post on another Excel model. This time I have posted a real estate model. Real estate is not an industry I specialize in, partly because there are so many specialists in the field and also because it is project related rather than an ongoing business.
A few words about the model:
- It was for a town house project in Central America where the new owners buy their properties outright
- In real estate projects the use of proceeds is particularly important in order to clarify when the developer is getting their return (after the lenders being preferred)
- This project has a more involved debt structure than the last model (which was for a startup); there is senior debt and mezzanine debt, which has an interest component and an equity participation component (if it was a business model I would have added a current portion of mezzanine debt to reflect a repayment schedule)
- I hate to rebuild models for new assumptions so I built this model so you could easily change the construction time to build a town house and the time to sell the unit by just changing one cell (G47 and G48 respectively on the Assumptions tab); mostly I was concerned about a slow down in the market affecting sell through
- Cash flow is managed by draw downs and repayments on the debt schedule under the construction loan; personally I find it confusing to use the cash flow statement to manage cash
Download the model by clicking this link. Download real_estate_model.xls
Now I need to get back to figuring out VAT taxes in Central America.