Hello,
I was wondering if anyone has any comments on software on the market to use in leiu of my Excel spreadsheets that I have used to this point. I wanted to get some comments on what the 'standard' is in development analysis software currently.
Most programs I am finding on the market, Argus, PlanEASe are meant for brokers who are analyzing existing buildings, or a lease by lease analysis, and are not weighted heavily towards a new development approach (where the number and terms of tenant leases are unknown). I am also working with mixed-useprojects(Residential over Retail etc.), that occur over multiple phases.
I thought with some of you underwriting loans, you could give me some insight into what programs you use or formats you accept, and also, when underwriting these projects, do you re-enter all of my assumptions into your own program, do you typically review my assumptions, etc. What are your thoughts if someone just submits their proformas in excel? Is this considered risky due to the potential human error?
Thanks-
Full Version: Developer Software to use
Everything that I have seen from medium sized banks to large regional banks indicates that they all use in-house spreadsheet solutions. Now for some comments.
- There is no such thing as ” number and terms of tenant leases are unknown…”. You know what you are building and we know what you are building. We also have our impression of how long the product is going to take to lease up as well as a third-party providing market information. We can use all of this when we are building our own assumptions.
- Usually you will submit your information in hard-copy. It is very rare that I have the borrower’s spreadsheet to play around with. Even if I had it, I would still have to do my scenarios so they are not much help. However, I personally find it interesting to poke around and check out the formulas.
- I am not an Excel expert by any means, but the most important thing is to understand the transaction and how the funds are going to flow. Then it is just a matter of adjusting for :
o Unit sales
o Phase starts
o Unit starts
o Building starts
o Limitations built into the facility {i.e.: you can not have more than 10 units going at one time, etc}
o Unit closings
You get all that information from the term sheet {negotiated with the borrower}, the appraisal, and feedback from knowledgeable internal people.
- Your assumptions are a good place to start, but they might be adjusted downward if they are considered too optimistic. I have yet to see a developer’s set of assumptions adjusted upwards.
- You are right about the possibility of errors in spreadsheets. This is a reason why I am extremely careful when I prepare scenarios and double check the numbers. If the deal is understood, an unlikely number will stand out.
Good luck
- There is no such thing as ” number and terms of tenant leases are unknown…”. You know what you are building and we know what you are building. We also have our impression of how long the product is going to take to lease up as well as a third-party providing market information. We can use all of this when we are building our own assumptions.
- Usually you will submit your information in hard-copy. It is very rare that I have the borrower’s spreadsheet to play around with. Even if I had it, I would still have to do my scenarios so they are not much help. However, I personally find it interesting to poke around and check out the formulas.
- I am not an Excel expert by any means, but the most important thing is to understand the transaction and how the funds are going to flow. Then it is just a matter of adjusting for :
o Unit sales
o Phase starts
o Unit starts
o Building starts
o Limitations built into the facility {i.e.: you can not have more than 10 units going at one time, etc}
o Unit closings
You get all that information from the term sheet {negotiated with the borrower}, the appraisal, and feedback from knowledgeable internal people.
- Your assumptions are a good place to start, but they might be adjusted downward if they are considered too optimistic. I have yet to see a developer’s set of assumptions adjusted upwards.
- You are right about the possibility of errors in spreadsheets. This is a reason why I am extremely careful when I prepare scenarios and double check the numbers. If the deal is understood, an unlikely number will stand out.
Good luck
Any ideas on how you would approach this scenario:
Land Cost: $1,000,000
Apartments(80,000sf) over Retail. (20,000sf)
To determine the feasibility of each use type, (a model for apartments and retail) how would you allocate the cost of the land to each use? on a buildng sf basis? Have you encountered this before? So apts would have a land cost line item of $80,000 and apartments have $200,000?
QUOTE(loanuniverse @ Nov 14 2005, 12:04 PM)
Everything that I have seen from medium sized banks to large regional banks indicates that they all use in-house spreadsheet solutions. Now for some comments.
- There is no such thing as ” number and terms of tenant leases are unknown…”. You know what you are building and we know what you are building. We also have our impression of how long the product is going to take to lease up as well as a third-party providing market information. We can use all of this when we are building our own assumptions.
Thats true, but often in feasibilty analysis we are just basing, say 90% efficiency in the building, and a lease rate of $20.00/sf for Retail for instance to give us the big picture approach to the feasibility of the deal. We do not illustrate the Lease Term (5 yrs), Security Deposits, Rent Abatements, Renewal probability, etc. at this stage of the analysis. That's what i mean when I said, 'unknown'.
http://www.computerworld.com/databasetopic...1,93294,00.html
interesting article about spreadsheet errors.
- Usually you will submit your information in hard-copy. It is very rare that I have the borrower’s spreadsheet to play around with. Even if I had it, I would still have to do my scenarios so they are not much help. However, I personally find it interesting to poke around and check out the formulas.
- I am not an Excel expert by any means, but the most important thing is to understand the transaction and how the funds are going to flow. Then it is just a matter of adjusting for :
o Unit sales
o Phase starts
o Unit starts
o Building starts
o Limitations built into the facility {i.e.: you can not have more than 10 units going at one time, etc}
o Unit closings
You get all that information from the term sheet {negotiated with the borrower}, the appraisal, and feedback from knowledgeable internal people.
- Your assumptions are a good place to start, but they might be adjusted downward if they are considered too optimistic. I have yet to see a developer’s set of assumptions adjusted upwards.
- You are right about the possibility of errors in spreadsheets. This is a reason why I am extremely careful when I prepare scenarios and double check the numbers. If the deal is understood, an unlikely number will stand out.
Good luck
- There is no such thing as ” number and terms of tenant leases are unknown…”. You know what you are building and we know what you are building. We also have our impression of how long the product is going to take to lease up as well as a third-party providing market information. We can use all of this when we are building our own assumptions.
Thats true, but often in feasibilty analysis we are just basing, say 90% efficiency in the building, and a lease rate of $20.00/sf for Retail for instance to give us the big picture approach to the feasibility of the deal. We do not illustrate the Lease Term (5 yrs), Security Deposits, Rent Abatements, Renewal probability, etc. at this stage of the analysis. That's what i mean when I said, 'unknown'.
http://www.computerworld.com/databasetopic...1,93294,00.html
interesting article about spreadsheet errors.
- Usually you will submit your information in hard-copy. It is very rare that I have the borrower’s spreadsheet to play around with. Even if I had it, I would still have to do my scenarios so they are not much help. However, I personally find it interesting to poke around and check out the formulas.
- I am not an Excel expert by any means, but the most important thing is to understand the transaction and how the funds are going to flow. Then it is just a matter of adjusting for :
o Unit sales
o Phase starts
o Unit starts
o Building starts
o Limitations built into the facility {i.e.: you can not have more than 10 units going at one time, etc}
o Unit closings
You get all that information from the term sheet {negotiated with the borrower}, the appraisal, and feedback from knowledgeable internal people.
- Your assumptions are a good place to start, but they might be adjusted downward if they are considered too optimistic. I have yet to see a developer’s set of assumptions adjusted upwards.
- You are right about the possibility of errors in spreadsheets. This is a reason why I am extremely careful when I prepare scenarios and double check the numbers. If the deal is understood, an unlikely number will stand out.
Good luck
For something that small, why two line items?
Just create one line item for “land cost” in the sources and uses. You could get fancy and allocate a slightly higher amount to one or the other, but why? Is not like you are going to be able to split the property in two at the end of construction. Things might be different if the residential portion is for sale and you are keeping the retail portion for cash flow. Things could get interesting on your side if taxes are a consideration. There are market values for both commercial and residential land values if you want.you could use those values as a guideline.
I have personally only worked on single-use residential construction or refurbishment/conversion {townhomes, condos & single family}. Mixed property are a rarity in this market. On the other hand, there is a loan participation that was done by a colleague where we entered on the retail side only and it was financed with two facilities. We are talking a lot more money and a higher level of complexity involved. If I remember correctly, the issue of two facilities was due to different timetables and perception of risk being higher in the retail portion.
The way I would see it as a lender’s analyst is “one loan, one property, one cost”.
Just create one line item for “land cost” in the sources and uses. You could get fancy and allocate a slightly higher amount to one or the other, but why? Is not like you are going to be able to split the property in two at the end of construction. Things might be different if the residential portion is for sale and you are keeping the retail portion for cash flow. Things could get interesting on your side if taxes are a consideration. There are market values for both commercial and residential land values if you want.you could use those values as a guideline.
I have personally only worked on single-use residential construction or refurbishment/conversion {townhomes, condos & single family}. Mixed property are a rarity in this market. On the other hand, there is a loan participation that was done by a colleague where we entered on the retail side only and it was financed with two facilities. We are talking a lot more money and a higher level of complexity involved. If I remember correctly, the issue of two facilities was due to different timetables and perception of risk being higher in the retail portion.
The way I would see it as a lender’s analyst is “one loan, one property, one cost”.
I am new to commercial loans but I have been doing as much research as I can to find good commercial loan software. Try this site...
brokerprooffice.com
You can download a demo version of their software. It looks really awesome to me. I am working on some SBA loans and I showed my SBA partner the demo version and he said that I should buy it, that it would be a great edge on the competition.
brokerprooffice.com
You can download a demo version of their software. It looks really awesome to me. I am working on some SBA loans and I showed my SBA partner the demo version and he said that I should buy it, that it would be a great edge on the competition.
QUOTE(Will @ Nov 14 2005, 11:33 AM)
Hello,
I was wondering if anyone has any comments on software on the market to use in leiu of my Excel spreadsheets that I have used to this point. I wanted to get some comments on what the 'standard' is in development analysis software currently.
Most programs I am finding on the market, Argus, PlanEASe are meant for brokers who are analyzing existing buildings, or a lease by lease analysis, and are not weighted heavily towards a new development approach (where the number and terms of tenant leases are unknown). I am also working with mixed-useprojects(Residential over Retail etc.), that occur over multiple phases.
I thought with some of you underwriting loans, you could give me some insight into what programs you use or formats you accept, and also, when underwriting these projects, do you re-enter all of my assumptions into your own program, do you typically review my assumptions, etc. What are your thoughts if someone just submits their proformas in excel? Is this considered risky due to the potential human error?
Thanks-
I was wondering if anyone has any comments on software on the market to use in leiu of my Excel spreadsheets that I have used to this point. I wanted to get some comments on what the 'standard' is in development analysis software currently.
Most programs I am finding on the market, Argus, PlanEASe are meant for brokers who are analyzing existing buildings, or a lease by lease analysis, and are not weighted heavily towards a new development approach (where the number and terms of tenant leases are unknown). I am also working with mixed-useprojects(Residential over Retail etc.), that occur over multiple phases.
I thought with some of you underwriting loans, you could give me some insight into what programs you use or formats you accept, and also, when underwriting these projects, do you re-enter all of my assumptions into your own program, do you typically review my assumptions, etc. What are your thoughts if someone just submits their proformas in excel? Is this considered risky due to the potential human error?
Thanks-
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