Eastdil interview Flashcards

Eastdil interview Flashcards Why real estate?-grew up working for dad's construction company-learned the building side of the business at an early age-when i got into high school i became extremely into finance in general-then both worlds sort of collided and i realized that i absolutely love real estate-i also love and admire great architecture Different asset classesoffice, industrial, multifamily, retail, hospitality Relationship between debt and equity-Debt involves borrowing money to be repaid, plus interest,-Because the lender does not have a claim to equity in the business, debt does not dilute the owner's ownership interest in the property-Equity involves raising money by selling interests in the investment Why do you want to work at EastdilI have really come to admire the overall structure of the firm. Placing employees on salary, compared to the commission structure typical firms operate, I think creates an extremely collaborative environment. Rather than other firms where employees are competing with each other for deals and collaboration does not exist.-I also follow some of the deals that happen in LA. 1299 Ocean Avenue, right next to Eastdil's office was an interesting deal sold to Douglas Emmett Real estate income statement-Gross rents-Other income-Expenses-NOI-Depreciation-Net income Modeling experienceone thing jon said was that if there was one thing to do is to focus more on mastering my excel modeling skills over the coming months. I'm planning on taking three real estate financial modeling classes over winter break in december...Understand and be able to explain the three real estate valuation methods Income approachReplacement cost approachSales comp.approach What does Eastdil Secured do as a firm?-Boutique real estate advisory firm comprised of three business lines-Investment bankingpublic marketsstructure iposbondspublic equity raises-investment salestraditional property brokerage-debt placement Weaknesses-I would say one of my greatest weaknesses would be that I can be a bit stubborn-I'm sort of a perfectionist and like things to be done in a certain way and sometimes sometimes this can work to my detriment Discount rateRate of return used in a discounted cash flow analysis to determine the present value of future cash flows If you bought a $10 million property with $5 million in equity how much would the property need to appreciate to in

order to double your money?needs to appreciate to $15 million to double your money

Debt yield(Net Operating income / first mortgage)Cap rate for your debt LIRRLevered internal rate of return-Used to determine how debt is helping or hindering investment results Difference between IRR and a discount rate IRR is the discount rate that makes the NPV equal to zero What would you value the property we are sitting in right now?-first find how much income it is generating through the gross rents-subtract the gross rents by the aggregate expenses to find net income-then i would look in the market to see where cap rates have been trading in the past year or two-then i would apply a similar cap rate to this specific property Cap rateNet Operating income / purchase priceUnleveraged return IRR-A discount rate that makes the net present value of all cash flows from a particular project equal to zero-In simple terms, it is the rate at which a real estate investment grows (or, heaven forbid, shrinks). In this sense, you can think of it as a time sensitive compounded annual rate of return-IRR gives more credit to cash flows that occur closer to year zero-Understanding the time value of money