Overview

 Mixed-use real estate simply means a property that has different sections or square footage rented out for different purposes. For example, a common setup is something where there are commercial and residential units. Within the commercial, there could be food places, offices, or what have you and residential may have separate types that need to be accounted for as well.
This financial model runs for a period of up to 10 years and allows the user to account for up to 7 separate uses and build all financial aspects of the deal. Input sections include:

  • Development costs per month for each use (22 slots per use)
  • Unit count / average rent per unit / rent growth / occupancy / occupancy change per use
  • Operating expenses per use type and annual growth therein
  • Exit month / exit cap rate / selling fees per type

On a global level, there are controls for leverage and joint venture options. The leverage configuration is sophisticated and in-depth as far as how all the amortization and loan inputs/outputs are concerned. It includes up to 3 facility types if leverage is chosen (yes/no selector). If ‘yes’ then any negative cash flows (mainly from acquisition / development costs) will flow into an interest-only loan as a draw. Interest expense starts calculating based on that and it can be accrued or paid monthly until the term ends.
When the interest-only term ends, the balance rolls to a standard p+i loan with its own terms and that debt service then flows to cash flow. Finally, the user can select (yes/no) to have a refinance done at some month in the future. On the month of refinance, a defined cap rate and LTV will be applied to the aggregate net operating income at that month and populate a refinance proceeds amount. That will then have new p+i payments until the defined exit month.
For the joint venture waterfall, all final cash flows populate here. A simple percentage contribution is defined for the LP / GP (investor / sponsor) to calculate how much each has to contribute. There are then 3 hurdle rates (IRR hurdles) that define how the available distributions are split between the LP/GP. Final exit IRR and equity multiples are displayed.
The entire output of this model is an annual Executive Summary that shows rental revenues, operating expenses, all cash flow items, and a final cash flow and dash distribution in each year.

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