3184 students

COURSE DESCRIPTION

This is the 13th course in the 16-course Accelerator. In this case-based course, you will learn to model real estate partnership-level returns. Often referred to as waterfall modeling, the process involves forecasting the timing and amount of contributions from and distributions to the partners in a real estate partnership based on the terms of the partnership (i.e. JV) agreement.

In this course you will learn to:

  1. Forecast the amount and timing of contributions from each of the partners in a real estate partnership
  2. Model partnership distributions on a monthly and annual basis
  3. Use several techniques to model preferred return, return of capital, and promote interest
  4. Build multi-tiered waterfall models with various promote levels based on both Cash-on-Cash and IRR hurdles
  5. Model double promote structures (i.e. structures with more than one partnership)
  6. Account for sponsor fees in calculating partnership returns

CASE DESCRIPTION – PARTNERS IN FROST AND MAIN

You are a development manager for A.CRE Development Partners, a boutique real estate development firm in South Florida focused on creative office and mixed-use retail and residential projects. As one of just a handful of real estate professionals at the firm, you’re often required to wear multiple hats and take on more responsibility than many of your friends from college who work at institutional shops.

On top of sourcing land, quarterbacking planning and entitlement, and hiring consultants and general contractors, you’re also tasked with raising capital for the projects you develop. This usually means pitching prospective deals to former investors, friends, and family of the firm’s principals.

This group of early investors in a deal generally provides pursuit capital (i.e. the capital necessary to take a project from bare land to shovel-ready), while the larger equity piece necessary to secure debt financing and take a project vertical (i.e. to build) comes from institutional partners who only invest once a project is fully ready to build. One particular project you’re developing, Frost and Main, was capitalized in this fashion.

Frost and Main is a 210-unit mid-rise apartment project with 40,000 SF of ground floor retail pre-leased to a small format urban grocer. The project is currently under construction, with nearly 50% of the total project cost spent to date. Upon completion, all investors intend to stay in long term. The plan is to take out the construction loan with permanent debt upon stabilization, and then hold the investment for up to 10 years.

The equity capital in Frost and Main consists of friends and family of the firm’s principals at the GP level, with a small pension fund investing the LP equity capital. A local bank is providing a 60% LTC construction loan.

PROPERTY TYPE

  • Office; concepts apply to all property types

SOFTWARE RECOMMENDED/REQUIRED

  • While we recommend using Microsoft Excel, as that is the industry standard, this course will work with most other spreadsheet software such as Google Sheets and OpenOffice Calc
  • This course was built using the Google Chrome browser, thus we recommend you use Google Chrome for optimal view experience
  • This course is best taken on a desktop computer, although the platform is compatible with tablet and mobile devices

EXCEL PROFICIENCY REQUIREMENT

  • The course assumes you have at least a basic proficiency working with Microsoft Excel

Instructor(s)

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Spencer Burton

Spencer Burton is the Co-Founder and CEO of CRE Agents, a Vertical AI Agentic Platform changing how work gets done in commercial real estate. With over 20 years of experience as a fiduciary, principal, and founder in real estate, he is a recognized expert in applying AI to CRE. His mission at CRE Agents is to give people back life’s most precious asset—time. By pushing repetitive tasks to AI-driven “digital coworkers”, CRE Agents empowers professionals to focus on high-impact work, driving better returns and more fulfilling careers.

Prior to CRE Agents, Spencer served as President and founding team member of Stablewood, a multi-strategy institutional real estate investor leveraging AI, machine learning, and data analytics. At Stablewood, he co-developed an AI-enabled digital coworker that underwrote and created investment memos for 50,000+ CRE transactions, equating to four years of work for 20 full-time analysts.

Spencer is also the co-creator of Adventures in CRE (A.CRE), the industry’s leading platform for financial modeling, education, AI learning, and career development. Through A.CRE, he’s trained thousands of professionals at some of the world’s top companies and universities.

Spencer has built a reputation as an innovator and thought leader in CRE. He has held senior roles at top institutional firms, helped launch two successful startups, and deployed automation across brokerage, development, acquisitions, debt production, and management.

Spencer holds a Bachelor’s in International Affairs with an emphasis in economics from Florida State University and a Master’s in Real Estate with a concentration in finance from Cornell University.

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