Begriffe German American Realty

Internal Rate of Return

—> Die interne Rendite (Internal Rate of Return, IRR) ist eine Finanzkennzahl, die verwendet wird, um die Rentabilität oder den potenziellen Ertrag einer Investition zu bewerten. Sie entspricht dem Diskontsatz, bei dem der Nettobarwert (Net Present Value, NPV) aller zukünftigen Cashflows einer Investition null ist. Mit anderen Worten, die IRR ist der Zinssatz, bei dem der Gegenwartswert der Einnahmen einer Investition genau den anfänglichen Investitionskosten entspricht. Dies macht die IRR zu einem wichtigen Maßstab bei der Analyse von Investitionsprojekten und der Kapitalbudgetierung

—> IRR ist besonders nützlich, wenn es darum geht, verschiedene Investitionsmöglichkeiten zu vergleichen und diejenige auszuwählen, die den größten finanziellen Nutzen verspricht.

—> bezieht den Zeitwert der Investitionen (des Geldes) mit ein

—>

Sind Kategorien die verwendet werden, um verschiedene Arten von Investitionen basierend auf ihrem Risikoprofil einzuordnen

• Core: Class A 7-10% IRR

• Core PLus: Class A Product upside potential 10-13% IRR

• Value Add: Class B product with operational / Leasing / physical upside potential 15 - 20 %

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Yearly return of an investment in comparison to the invested equity

• Refers to a particular year

• Formular:

  • (Pretax CashFlow / Total amount of cash invested)

• In Development phases ( heavy reositioning) 0 - 2%

• In Light repositioning phases 5 - 8 %

Is the expected return of a real estate investment

• NOI / Price = Cap Rate

Net operating income (Nettobetriebseinkommen / Spez. für real Estate)

• Preis * Cap rate = NOI

At this cap rate, a sale is possible that covers the total investment costs before taxes (Capital Gain Tax). In this context, any unused equity funds (e.g., for the renovation of the properties), available cash, as well as repayments and distributions to investors are deducted from the total investment costs.

The reported sales are understood as "cash sales." This means that the buyer does not assume the loan agreements. Consequently, any prepayment penalties are added to the total investment costs for calculation purposes.

If the target return is exceeded, the General Partner (GP) earns more through a promote and profit split.

In normal circumstances the share of the GP is about 5% and the LP is around 95%. If the preferred Returns are achieved the GP earns more called a Promte around 20%.

Strict split without additional Earnings

similar to Promote; over the preferred rate 50% of all cash flows go to GP first. After an other mielsone the splitting can be different

LP has the Right / Chance if the preferred Return is not achieved to access the generated earnings of the GP.

Is in general the unding used to finance deals. Within the funds, there is a distinction between senior and junior, priority and subordinated creditors.

1. Senior Debt

2. Junior debt

3. Preferred Equity (LP)

4. Common Equity (GP)

1. Acquistions fee —> 1,5% of the purchae Price

2. Asset Management Fee —> 1% off effecitve gross revenue and 1% of equity invested

3. Constructions Management Fee: 4 - 7 % of Construction costs

4. Disposition fee: 1- 2% of sale proceeds

1. Return targets

2. sale comparabeles

3. replacement costs

Gesamtmiteinnahmen

Operative Netto Mieteinnahmen

• TOI - ( Admin + Maintence + insurance + Insurance+ Utility + taes + cleaning)

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Loan to Value ratio / Rate of Debt to Value / Verschuldungsgrad

Loan to Cost ratio —> Rate of Debt to Total invested Capital (GIK)

Risikoaufschlag / Difference between rfi and the cap rates

Operating Expenses / (Gross Potential Rent + Vacancy Loss + Total Other Income)

Tilgungszahlungen

Break-Even Ratio is a financial metric used to determine the point at which a company's revenues equal its total costs, resulting in neither profit nor loss

• (Total operating expanses + total debt service) / (Gross Potential Rent + Other income)

Loan Constant is a percentage that represents the annual debt service of a loan relative to the total loan amount

• (Interest + principal Payments) / Loan Amount)

• if Cap rate is bigger that positive leverage

Debt Service Coverage Ratio (DSCR) is a financial metric used to assess a company's ability to service its debt.

• NOI / (Interest + Principal Payments)

Annual Pro Forma Modeling involves creating financial projections for a company on an annual basis

• Original Value * (1+x%)^(analysis Year -1)

Difference between possible market rents and in place rents

covenants are legally binding clauses in loan agreements or bond issues that stipulate certain conditions the borrower must adhere to.

Typical Loan covenants for GAR are:

• LTV

• DSCR

Debt yield is a standardized way to measure net operating income (NOI ) against total loan value. The ration is simple to calculate, nut it is an accurate measure of risk that can be used to evaluate individual loans or compare different loans

• NOI / Total Loan amount

higher debt yield = less risk for the investor

Development of the rent in future periods

—> Opposite is the untrended rent (rent at the beginning of the business case

Yield on Cost (YOC) is the annual dividend divided by the initial investment cost

• NOI / total invested capital (GIK)

Yield on Cost - Yield on Purchase Price

Gross Assets Value (Bruttoinventar Wert): Value of the Fund without deducting any liabilities or expenses

Net Asset value: is the fairvalue of the equity which is the assets minus liabilites

Total Value paid in: The ratio of the current value of remaining investments within a fund, plus the total value of all distributions to date, relative to the total amount of capital paid into the fund to date.

Residual Value paid in: measures the residual value of a fund at any particular time during its life. Investors rely on this measure to provide a value for their remaining assets in the fund, which can be added to their existing distributions to provide a total investment return as a multiple of their initial investment.

Percentage of tenants stay or renew their leases for a given period of time (60% ist good)

To late paid rents —> all in eviiotn s process, tenants are reliefed of the apartement

Default of accounts receivable ( default of rent )

• 3-4% is very high

Loss due to not leased apartments

• 5% is still in line

Letter of intent

lease trade-out, measures the change in rents when one resident moves out and another moves into the same unit.

Total Expense Ratio

• Typically the follwing cost are included in the TER

  • Administration of the fund

  • Fees for the depository bank

  • Cost for audting

  • Marketing costs

  • individual cost related to the costs listed before

• Typically the following cost are not included in the TER

  • Tranactions cost

  • Performance fees

  • Agio ( Ausgabe aufschlag)

  • Disagio ( Rückgabeaufschlag

Capital Draw is out of the business case -> money that is already there and calculated

Capital Call is not already there but can be called from investors

Gesellschafter Darlehen

Broker Opinion Value

The millage rate (or mill rate) is a property tax rate used to calculate the amount of tax owed based on the assessed value of a property. It represents the amount of tax payable per $1,000 of the property's assessed value. For example, a mill rate of 10 means $10 in tax for every $1,000 of the property's assessed value

Buffer above what we believe construction budget costs are going to be

Corporate Cedit Financing / In normal cases the NY Prime rate is 300 BP higher than the FFR