The purpose of this test is to evaluate your financial modeling skills along with your writing abilities.

Scenario

$$ Select service hotel in Arkansas is for sale. Lightstone is interested in Underwriting this Asset as a potential acquisition. The targeted levered returns for this transaction are a $15\%$ IRR and $1\mathrm{.}75$x Equity Multiple over a $5$ Year Hold.

Goal

$$ Create a financial model in Excel to evaluate this potential acquisition. Take into account the aforementioned targeted levered returns threshold and demonstrate your ability to calculate Unlevered & Levered Cash Flows and solve for Unlevered & Levered: IRR, Net Profit, Max Outstanding Capital and Equity Multiple.

Underwriting Guidelines

Building Facts:

$110$ keys

Purchase Price:

$$ $$15,000,000$

Rate and Occupancy:

$$ $$115$ rate

$68\%$ occupancy

Operating Expenses:

$$ Provide rough estimates on as many line items as possible

Leverage Assumption:

$60\%$ LTV

$5\mathrm{.}0\%$ Rate

$25$ Year Amortization

$$ No Financing Fees

Exit Cap Rate Range:

$8\mathrm{.}5\%$ cap rate