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Real Estate Financial Modeling Accelerator (Updated Nov 2024)

Prior to launching the Accelerator program, Michael and I fielded email after email requesting a more structured real estate financial modeling training program on the site. Over the years, we've covered hundreds of real estate modeling…

Structured Parking

Any above-grade or below-grade, ramp accessible structure capable of accommodating vehicle parking. The multi-level design allows for greater parking densities and increasing land use efficiency. Putting 'Structured Parking' in Context Overview Solis…

Short Sale

The sale of the property for less than the outstanding debt balance owed to all lienholders (typically senior and mezzanine debt providers). The property will fall into foreclosure if all parties do not reach a consensus agreement to sell. Putting…

Stabilized Pro Forma

Also sometimes referred to as the Economic Pro Forma, the stabilized pro forma is used to evaluate the value of a property at the inception of the analysis period. The stabilized pro forma seeks to estimate the net operating income at time zero.…

REVPAR (Revenue Per Available Room)

Referred to in commercial real estate as RevPar, Revenue Per Available Room is a metric used in hotel underwriting to calculate the amount of revenue each available room generates in a given period. RevPar is calculated by either 1) dividing…

Residual Pro Forma

The pro forma used to evaluate the residual/terminal value of a property. The residual pro forma seeks to forecast the net operating income a subsequent purchaser might use in valuing the subject property. This figure is often either the…

Renewal Option

A clause contained in a lease agreement giving the tenant the right to renew or extend their lease agreement. The option clause usually contains various predefined terms which both parties initially agree upon, such as a reversion to a ‘market-related’…

Purchase and Sale Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of selling a property. Putting 'Purchase and Sale Agreement' in Context Background Sierra Equity Partners, a real estate private equity firm,…

Stacking Plan

A visual representation of a building showing a breakdown of space occupied by tenants on each individual floor. The breakdown may extend to include other details of the tenant such as their company name, occupied square footage, lease expiration…

Rent Roll

A list of tenants in an income producing real estate asset and the property owners’ reflection of all the rental income derived from the tenants at a specific time (usually at the end of the month). The rent roll often includes other information…

Wall Street Prime Rate

The Wall Street Prime Rate (Prime Rate) is the interest rate charged between the largest banks in the United States. The rate is not linked to the Fed funds rate although there is typically a 300 basis points (3%) spread between them. The WSJP…

Present Value Factor

Also called the Present Value of One or PV Factor, the Present Value Factor is a formula used to calculate the Present Value of 1 unit n number of periods into the future. The PV Factor is equal to 1 ÷ (1 +i)^n where i is the rate (e.g. interest…

Sale Leaseback

A transaction in commercial real estate where, upon completion of the sale, the seller immediately leases back the property from the new owner (i.e. buyer). The lease is generally NNN and long-term and converts the seller/lessee from an owner…

Project Buyout

The Project Buyout is the time when the owner of a development project selects the General Contractor (GC) who then, either together with the project owner or alone, goes through the process of selecting and hiring all the subcontractors (subs)…

Real Estate Private Equity (REPE)

Real Estate Private Equity, or REPE, is a term used to describe an individual or firm making direct investments in real estate using private capital, rather than public capital. This form of investment in real estate is generally thought of…

Strip or Convenience Center

This retail subtype is characterized by having a row of stores, with on-site parking often found in the front of the stores. Open canopies may be used to connect store fronts of the tenants at the center. Average size may be 10,000 - 15,000…