Intro This case study will focus on building a catch-up waterfall. Catch-up waterfalls will be fairly common throughout your real estate private equity career path. The other common waterfall is promote-based, which we build live in the REPE Starter Kit. Private equity analysts and associates must often model waterfalls, so pay close attention. Keeping it […]
Introduction This is the final installment of the preferred note REPE case study. You should begin at part one, otherwise this section won’t make much sense. But if you’re joining us from part five, we’re going to improve the sensitivity table that we ended with. This sensitivity table looks great, but let’s expand it. I’m
As the old saying goes, expected returns increase as you move up in the capital stack. So why would anybody ever invest anywhere but the top of the capital stack with the highest returns? More specifically, why would the preferred investor accept a 16.3% LIRR when the common would receive 17.8%? The quick answer is
Preferred Note Case Study, Part Five: Sensitivity Tables Read More »
In the prior post, we built the cash flow waterfalls for this preferred note case study. If you’re just coming to this article, I suggest you begin at part one (this is part four). This post will focus on the preferred equity and common equity schedules. These schedules drive almost all of the waterfall logic
Preferred Note Case Study, Part Four: Equity Schedules Read More »
Real estate private equity case studies often ask you to model cash flow waterfalls. To the uninitiated, waterfalls can seem complex and obscure. But really, waterfalls just determine how investors split the pie when the money comes back around. Pay close attention here, because the skills taught in this post will apply to most every
Preferred Note Case Study, Part Three: Distribution Waterfall Read More »
When we model this preferred equity structure, we first need to consider the joint venture. The joint venture is the genesis of the cash flows, after which the preferred and common will split their share accordingly. So what does this joint venture look like? Pay close attention – cash flow modeling is one of the
Preferred Note Case Study, Part Two: Levered Cash Flows Read More »
Introduction This real estate investment case study will challenge your ability to model capital structure and a returns waterfall. With practice, you should be able to complete this category of case study within 30-45 minutes. This post will introduce you to the question and go over some key terminology. At the end, we’ll challenge you
Preferred Note Case Study, Part One: The Question Read More »
Introduction You’ve probably begun to sense a bit of rhyme and reason to my formatting. If it isn’t clear, I’m an absolute nut when it comes to consistent formatting. I am always inventing new tricks on my real estate private equity career path, but I make sure every trick slots into my preferred schema. Models
Introduction This series follows a live case study in which we underwrite the potential acquisition of a $350M 4.0% 2029 notes issuance by Life Storage Inc. (NYSE: LSI), a self storage REIT. If you haven’t yet, I suggest you begin at part one. This post picks up where part four left off: how to figure
Introduction This is part four in a series where we underwrite a live investment opportunity exactly as we would in our real estate private equity jobs. Part one introduced our subject: LSI’s $350M 2029 4.0% Senior Notes. Part two showed you where to find live bond pricing data and explained key terms. Part three demonstrated
Live Case Study #1, Part Four: Mental Math Screening Tricks Read More »