SOURCES AND USES
Transcript
Welcome to this video. In this video, I will cover the Sources and Uses section in the ARGUS excel model. In a typical investment, sources of capital consist of debt and equity. Uses of capital consist of purchase price and various items.
Uses
I am going to input $15mm for purchase price. Negative 250 thousand for roof credit. 100 thousand for legal expenses. 100 thousand for working capital. Mortgage Brokerage Fee is 2.0% of total debt amount. In fact, I can use a percentage-based expense wherever I want in Sources and Uses section. Let’s say due diligence fees are 5% of legal fees. I input the 5% here and do the calculation besides it. This is just a demonstration of the great amount of flexibility I have in the Sources and Uses section. I will reenter 24 thousand for Due Diligence Fee. Acquisition fee is 1% of purchase price. 150 thousand for capital raise fee. 730 thousand for Capital Expenditure Reserve and 1.4 million for Tenant Improvement Reserve. Reserves are basically the funds put aside for future uses. This topic will be covered in detail in Other Assumption Section. Keep moving down, 30 thousand for Due Diligence Costs. 116 thousand for Cash Basis Tax Credit. 10 thousand for Transfer Tax. I am going to do something special for Material Preparation Fees. Having the benefit of being in Excel, I can create a break-down list for Material Preparation Fees anywhere in this model. Of 20 thousand total amount, 10 thousand is item 1 and the other 10 thousand is item 2. I can sum them up and link it back. This flexibility serves two purposes. First, I can have additional information on what a cost is made of. Second, I can do this when there is not enough space for me in this section.
Sources
Alright, I am going to go back to the sources. I will input 11 million dollars for loan amount, which represents roughly a 60% percent loan to value. General Partner will put 1.3 million in this deal and Limited Partner will contribute 5.5 million, which accounts for 80% of the equity piece. I will cover the GP and LP dynamics in this model later in the Waterfall section.
Final Check
Last but not least, I need to check if the Total Sources match the Total Uses. 17.8 million 17.8 million. I am all set with Sources and Uses section. Thank you for watching this video.