Commercial Real Estate Valuation Model Template

When conducting a Commercial Real Estate Valuation, you will need a solid model to ensure that you’re not losing out with your investment. Basically, you want to determine the most probable price which a commercial property should bring in a competitive and open market under all conditions that requisite a fair sale.

The determined value out of the commercial real estate valuation represents the value of the projected future income stream that you can expect to obtain out of the investment. That is to say, if the valuation value is lower than the price given, then that means the investment is a bad one. Thus, it is clear to see, conducting a commercial real estate valuation model first is very useful to determine if the investment is a good one.

But, planning to build a model is one thing, while creating one is another. It is oftentimes a very complex task which needs a lot of calculation of certain ratios that will determine the profitability of a property. It is a good thing that you can simply use a financial model template to create a commercial real estate valuation model, so you won’t have to create a model from scratch. 

To give you an idea on what’s included in the template, the following elements are provided:

• Executive Summary which contains the result of the DCF valuation and also contains the summaries and charts of the projected rental income, key metrics e.g. yields, and key assumptions

• Estimated Rent Roll over the next 10yrs

• Calculation of remaining Contracted Rent (to calculate the WAULT)

• Calculation of the key metrics such as Revenues, OPEX, NOI, Free Cash Flows (Terminal Value calculation), Gross and Net Yields, etc.

• Debt Schedule to simulate how much of the valuation can cover up the existing debt

• Calculation of Net Fixed Assets and Taxes

• Levered Cash Flows and Yield Analysis

• Financial Statements (Income Statement, Balance Sheet, and Cash Flow Statement) 

You can also use other real estate model templates at eFinancialModels, which has a wide range of industry-specific financial model templates made by professional financial modeling experts with a substantial experience and know-how in different industries.