Real Estate Financial Modeling Course - Office Development

Explore land and acquisition costs inputs for office development, including location, acquisition date, land price, buildability, real estate transfer tax, broker fee, due diligence, and a minimum IRR check.

Link the date to a month format, extend headers to 120 months with year flags, and merge and center monthly cash flow headers for a dynamic real estate model.

Learn to build the land and acquisition costs section of an office development cash flow, including land purchase price, transfer tax, brokerage, due diligence, and total acquisition costs.

Model development inputs for a 10,000 m² project, detailing €18 million hard costs, 15% soft costs, 5% contingency, leasing costs, and tenant improvements over 18 months.

Model development cash flow by distributing hard costs over 18 months, applying contingency and soft costs, and calculating leasing costs and tenant improvements to determine total investment.

Calculate exit inputs by projecting month 60 net NOI at 100% occupancy, apply an exit cap rate of 4.25% to derive sales proceeds, and estimate 1.5% selling costs.

Learn to model exit cash flow by calculating sales proceeds, selling costs, and net sales proceeds, then determine investment reversion cash flow, preparing for the NOI calculation.

Define operations inputs for the office development model: gross leasable area, rental income with 2.5% yearly bumps, five months free rent, opex at 15% of gross income, and non-recoverable expenses.

Model gross rental income, including free rent, compute net rental income, apply op-ex and recoverable vs non-recoverable expenses, and derive net operating income to determine operations cash flow.

Calculate unlevered cash flow by adding investment cash flow and operational cash flow, then compute contributions and distributions, internal rate of return (irr), equity multiple, and equity peak to evaluate the project.

Correct a sign error in operating expenses within the unlevered cash flow model, turning recoverable expenses positive and revealing IRR gains from 15.7% to 24.4%.

Explore development loan inputs, including 60% loan-to-cost, loan proceeds, equity, 1% arrangement fee, 5.5% interest, and refinance after stabilization in month 24.

Model development loan cash flow by calculating recognised development costs, applying an equity first structure, and tracking loan proceeds, debt drawdown, interest, arrangement fees, and a refinance at month 24.

Develop and input refinance loan inputs by calculating NOI at month 24, applying cap rate to value, determining arrangement fee and loan proceeds, and setting a 15-year term.

Model a refinance loan cash flow by calculating arrangement fees, loan proceeds, monthly debt service, and repayment upon sale within a French amortization schedule.

Compute levered cash flow by adding financing to unlevered cash flow, assess levered IRR and equity multiple, adjust purchase price to hit targets, and preview cash flow and sensitivity tables.

Create an annual cash flow tab for a real estate office development model, integrating cumulative contributions, peak equity, and unlevered and levered returns from monthly data.

Compute yield on cost from NOI over total investment and assess debt service coverage ratio to ensure refinancing viability; adjust assumptions and loan-to-value to maintain positive cash flow.