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GBI has sourced a freehold plot in Berlin-Pankow. Please see attached the invest
GBI has sourced a freehold plot in Berlin-Pankow. Please see attached the investment memorandum (the “IM”) on Project ASTA. GBI considers to acquire the plot but needs further analysis regarding the residential concept to maximize the value.
We would like you to produce a cash flow model for the potential acquisition of this plot and a short investment memo (max. 10 slides), summarizing your analysis of and recommendation for the opportunity with the following content:
Please incorporate the following assumptions into your analysis of Project ASTA (Base Case):
Timeline
• Acquisition Date: June 30, 2024
• Building Permit: December 31, 2024
• Construction Start: July 1, 2025
• Practical Completion: determine a reasonable date
Development Budget / All-In Costs
• Development Budget (excluding Acquisition Price, Real Estate Transfer Tax, Closing Costs and Financing Costs): assume a total budget of €4,000/sqm incl. VAT
• Financing: assume the plot (acquisition loan) and the development budget (construction loan) is acquired with 65.0% LTC, priced at 6.5% All-In interest rate, 1.0% arrangement fee and 3.0% commitment fee
• Tax: assume a Capital Gains Tax Rate of 31.0% at Exit; assume that the plot is acquired in an asset deal at a Real Estate Transfer Tax of 6.0% applies
Rent / Exit
• ERV: determine ERV by using public available information
• Exit Cap Rate: determine the exit cap rate by using public available information
Please fulfil the following tasks and provide the requested information below in the short investment memo:
Task 1)
• Please provide a high-level assessment and verify the given GLA (BGF) in the IM whether it seems to be approvable by local authorities
Task 2)
Please provide …
• a brief macro / micro location desсrіption / analysis
• letting comparables
• an overview of your exit assumptions / considerations (market intel – comps, yields)
• business plan considerations / assumptions
Task 3) Trader Developer Strategy
• Scenario 1: Sale at Practical Completion
Please include your recommendation on the price at which you would buy the plot based on the information in the IM (including areas), above mentioned assumptions and calculate an appropriate target IRR / money multiple and provide a sensitivity table that shows IRR and money multiple based on different purchase prices and exit yields
Please also compile any other key metrics you see necessary to evaluate the investment opportunity in a holistic manner (basis, profit, income, yield metrics etc.)
• Scenario 2: Sale via Forward Funding
You have sold the project in a forward funding to an investor on start of construction
Apply the following Instalments for the forward funding proceeds (instead of securing construction loan during the construction phase; you repay the acquisition loan once first instalment is received; no forward funding coupon to the investor)
1st Instalment: 30.0%, Construction Start Date
Final Instalment: 10.0%, one quarter after Practical Completion
Remaining 60.0% of Instalments will be pro-rata quarterly distributed to GBI between the first and final instalment
Please include your recommendation on the price at which you would buy the plot based on the information in the IM (including areas), above mentioned assumptions and calculate an appropriate target IRR / money multiple
Please also compile any other key metrics you see necessary to evaluate the investment opportunity in a holistic manner (basis, profit, income, yield metrics etc.)
Please send across the model (Excel) and short investment memo (PDF) by May 12th, 2024.
The investment memo should include all necessary information (incl. CF and all relevant financial metrics) that you need to make your case for the investment and should be used for presenting and discussing the opportunity with a selection of members from our team.
P.S. Please find attached an example cash flow model. Feel free to use this cash flow template, adjust this template or to create your own. It is important that your assumptions will be shown clearly and be connected to the cash flow model (dashboard / input sheet / assumptions overview).
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