Instructions & Details
1. Put yourself in the role of an investment analyst at the local private equity firm Iridius Capital. Imagine that your boss, the Chief Operating Officer (and an MRED graduate) has asked that you to help prepare a draft of a loan request as part of the broader acquisition process. The lender here will be CBRE Debt & Structured Finance in Phoenix. Address the loan request to Mr. Michael Kolt, Vice President, Debt & Structured Finance, CBRE Capital Markets.
2. Using the assumptions provided in the attachment, prepare a two-part memo. In part one, evaluate the attached data to estimate a purchase price for this opportunity. Justify your estimate using relevant data from the market place (e.g., Loopnet, cap rate surveys, etc) and defend it.
3. In part two, utilize your estimated purchase price to inform the draft of the loan request. Develop a simple financial model of the opportunity with a 10-year holding period. Communicate the findings of your model using tables of return metrics (cash on cash, debt coverage ratio, and debt yield) and T-charts at the 1) project level, 2) equity level, and 3) lender level. For part two, assume a maximum loan to value ratio of 75%.
4. Create a specific section of part two that focuses on your analysis of data from related sources to estimate the interest rate you believe best matches the project.
5. In total, the memo should include an executive summary (summarizing both part one and two) and the following sections:
a.Acquisition Price Analysis & Recommendation
b.Investment Opportunity & Loan Request
c.Financial Analysis & Metrics
d.Interest Rate Analysis & Discussion
e.Conclusion
6. Please accompany your MS Word document submission with the MS Excel workbook showing your calculations and models.
7. Please write in complete sentences and DO NOT use the first person.
8. Page Range: minimum 6, maximum 10 (1.5 spacing).
9. The CBRE loan request template is provided to give you a sense of how the loan officer takes information from your application and places it into their standardized template for discussion and presentation. Please do not replicate this, it is for demonstration purposes only.
10. To be eligible for an A, you are required to include an extra section, extending beyond the page limit (maximum 1 page). This extra section should focus on the role of sustainability within investor demand. Please cite all sources.
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