Simple Acquisition Model for Office, Retail, Industrial Properties (Updated Dec 2020)
A few years back, on a sleepy Saturday afternoon while my kids were busy eating Halloween candy, I decided to create a simple real estate acquisition model in Excel for office, retail, and industrial deals.
Since then, I’ve made various updates, including error fixes and functional improvements. The model calculates returns at the property and partnership level, on an unlevered and levered basis. The operating cash flow module is very basic, but the tool still serves as a decent first pass acquisition model.
As of v4.0, the model includes time-driven growth and vacancy assumptions, the ability to add sponsor fees, operating history inputs for enhanced underwriting, square feet and square meter inputs, IRR plus Equity Multiple hurdles, and other changes. See the changelog at the bottom of this page for more details.
Important Note for Excel for Mac users: This model may not be compatible with your version of Excel for Mac.
A Little About this Simple Acquisition Model for Office, Retail, and Industrial Properties
To build the model, I started by using my portfolio acquisition model as a framework. I added in a basic DCF module to model the operating cash flows before financing, and simplified the layout to make it more user friendly.
Over the years, this model has been updated numerous times to add new features, fine-tune existing features, and fix bugs. As of version 4.0, it includes a robust yet simple operating cash flow section. A partnership waterfall with IRR, Equity Multiple, or IRR+Equity Multiple hurdles. An IRR matrix to analyze hold period. As well as a full discounted cash flow module with dynamic analysis period between one and 15 years.
What this model lacks in sophistication, it makes up for in speed. All inputs are housed on three tabs (Property Summary, OS DCF, and Partnership Returns), and the limited number of inputs means taking a quick look at an acquisition opportunity is simple with this model.
Needing something more robust? Check out our All-in-One Model
Using the Simple Acquisition Model for Office, Retail, and Industrial Properties (Version 4.0 and Newer)
In late 2020, this model was updated to version 4.0 and major changes were included in that update. A full revamp of the Property Returns and Partnership Returns tab was completed, and the Data tab and Debt tab were removed. These changes necessitated recording a new walk-through video of the model. Check it out:
Using the Simple Acquisition Model for Office, Retail, and Industrial Properties (Version 1.0)
As mentioned, the model has been updated several times since its first release. Thus, the model in the video will not exactly match the most recent version. Nevertheless, the core functionality is the same.
As always, blue tabs include inputs, with blue font signifying input cells. Green tabs show outputs only. I’ve included a basic instruction box on the summary tab, but feel free to email with any questions you have. Below you’ll find an instructional video on how to use the acquisition model. Further down the page you’ll find the link to download the Excel file.
Feel free to contact me if you have any questions or spot an error that needs fixing.
Using the Equity Waterfall Module Included
In version 1.5 of the model, I added a module to calculate partnership-level returns. You can also download the equity waterfall module separately here.
Below find a short walk-through video of how to use this particular equity waterfall module.
Download the Simple Acquisition Model for Office, Retail, and Industrial Properties
To make this model accessible to everyone, it is offered on a “Pay What You’re Able” basis with no minimum (enter $0 if you’d like) or maximum (your support helps keep the content coming – typical real estate acquisition Excel models sell for $100 – $300+ per license). Just enter a price together with an email address to send the download link to, and then click ‘Continue’. If you have any questions about our “Pay What You’re Able” program or why we offer our models on this basis, please reach out to either Mike or Spencer.
We regularly update the model (see version notes). Paid contributors to the model receive a new download link via email each time the model is updated.
Version Notes
Version 3.0
- Enhanced version page
- Updated headers and labels
- Added option to use metric system (cell H4 on Property Summary tab)
- Enhanced operating cash flow growth module; now includes option for time-driven growth inputs
- Added toggle to cell X of OS DCF to select ‘Simple’ or ‘Detailed’ growth method
- Added option to use time-driven vacancy assumptions
- Now includes time-driven inputs section at bottom of OS DCF tab
- Added ‘Sponsor Fees’ to Partnership Waterfall
- Added Operating History section to OS DCF (columns E and F) for improved underwriting
- Moved ‘1st Year Pro Forma’ to its own column
- Various formatting fixes and enhancements
Version 2.1
- Added GP Catch Up to waterfall
- Added selling cost assumption on exit (see Property Summary tab cell H6)
Version 2.0
- Changed OpEx and CapEx on OS DCF tab to positive, to be more consistent with other models on A.CRE
- Changed CapEx cells on OS DCF tab to blue, to signal the need to model leasing costs
- Added /SF column to OS DCF tab
- Removed $ signs, to allow for non-USD denominated analysis
- Misc formatting fixes and improvements
- Fixed issue where Management Fee (OS DCF tab) was not calculating properly
- Added ‘Operating Metrics’ section to OS DCF tab; includes six operating metrics calculated by year
- Hid unnecessary rows and columns on all tabs
Version 1.5
- Added upgraded waterfall model, correcting a previous error that distributed too much CF in later tiers
Version 1.2
- Corrected error in loan balance calculation on Debt tab
- Minor edits to instructions
- Minor formatting fixes
- Corrected error where debt service was not calculating correctly
