Weekend View - August 25, 2024
Manage episode 448839305 series 3613496
In this episode of Multiple Perspectives, Daniel Brereton dives into the essential tools of forecasting and pro formas in commercial real estate (CRE) investing. He explains how these elements are crucial for evaluating potential investment opportunities and managing risks effectively. Listeners will gain insights into how EquityMultiple arrives at projected returns for its offerings and what to consider when assessing these projections in the current market environment.
Key Topics:
The Role of Forecasting in CRE Investing:
- Importance of predicting future market conditions, rental income, and property values.
- How forecasts help project cash flows, estimate returns, and gauge the impact of market fluctuations.
- The complexity of forecasting in the current economic climate with inflationary pressures and fluctuating interest rates.
Understanding Pro Formas:
- Explanation of pro formas as financial projections of a property’s future performance.
- Components of a well-prepared pro forma, including rent growth assumptions, occupancy rates, and capital expenditures.
- How pro formas provide a snapshot of potential returns and help investors assess the viability of an investment.
EquityMultiple's Approach to Due Diligence:
- Overview of the rigorous due-diligence process that each investment on the platform undergoes.
- Less than 5% of reviewed investments make it to the EquityMultiple platform.
- The role of the open investment committee in challenging assumptions and identifying high-quality investments.
Investor Considerations:
- The importance of understanding how projections are made and what goes into the due diligence of private market investments.
- Encouragement for investors to challenge assumptions and stress-test projections to assess potential risks.
EquityMultiple's Investor Relations Team:
- Daniel’s role as the director of investor relations and the team’s commitment to helping investors explore and assess opportunities on the platform.
- Importance of open communication between investors and the EquityMultiple team.
Contact and Additional Information:
- Learn more about our current offerings and explore our platform at equitymultiple.com.
- For questions, contact us at ir@equitymultiple.com.
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