Question
I have a financial modeling problem that has to be solved in excel Project: to buy commercial real estate using owned and borrowed capital, rent
I have a financial modeling problem that has to be solved in excel
Project: to buy commercial real estate using owned and borrowed capital, rent it for 5 years and sell. Object parameters: total area: 9700 sqm, rentable area 8000 sqm, acquisition price 12,3 million EUR, rent price 10,5 Eur/sqm. Rent is indexed at inflation rate (i found 2,2% for 2021) annualy, but maximum of 4%. A plan is to sell the real estate at the same iyeld as it was at the time of acquisition with assessed indexing. the real estate is acquired with the existing tenants and we assume the average occupancy is 95% during all period. we also assume all costs are fully covered by tenants, despite the fact that the area is not rented to 100%. CAPEX is 2% of acquisition price annualy. Bank financing: LTV (loan-to-value) ratio is 60%. interest rate is 2,5% + EURIBOR or 2,5%+IRS fixed at 0,7 (two scenarios). Term is 5 years, debt repayment is 15 years in total. the task is to prepare model in excel with IRR calculation for 5 year period, assessing cash flow from renting the asset (paid to investor once a year) and cash flow from selling the asset at the respective yield at the end of the period.
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