1. 7 Crucial
Deal Metrics
RobbKrautbauer

2. 7 Crucial Deal Metrics
Let’s face it, every piece of communication to a buyer or funding source is an
opportunity for you to look smart or look stupid.
In case it was a question, you want to look smart.
The person you’re sending a deal to is probably smart, so your goal is to think like
they think.
If you’re formally submitting a deal to an institutional investor, there is some key
information that is required to have analyzed before you hit the send button.
That’s what you’re getting today – the 7 crucial metrics you must include in every
deal you submit for review. Check them out and never look stupid again.
7Crucial Metricsto Include in Your Deal Submission
1. Executive Summary
What is the deal about?
What is the situation?
Is there a story?
This gives them a high-level feel for the deal:
Market
Property type
Deal size $$
Debt/equity
What the formal submission is for
Used with permission from TheCommercialinvestor.com/blog

3. 7 Crucial Deal Metrics
Here is an example:
The Park Ave Apts is a 115-unit garden style multifamily complex located in
Dallas, Texas. It consists of 12 two-story buildings with an average unit size of
1,160 SF.
The Property was recently constructed and is in lease up. It is currently 60%
occupied with average rents of $1,400/Unit. The Property includes high-end
amenities including direct access garages.
The Borrower is currently under contract to purchase the Property for $35M
($304,784/unit). Borrower is required to close within 30 days. The requested
loan amount is $26.25M (70% LTV), with the funding to coincide with the
purchase.
The borrower is a JV between Partner 1 (5%) and Partner 2 (95%). The Partner 1
will be the controlling member and property manager.
Simple, high-level, to the point. After reading this, every investor has enough
information to make a choice: keeponreading,orpassifit’snotafit.
Used with permission from TheCommercialinvestor.com/blog

4. 7 Crucial Deal Metrics
2. Deal Metrics
Now this might differ slightly whether debt or equity but the fundamentals are
the same. Key deal information in a table format.
Clean and simple.
For debt, I’d make sure we have this information at minimum:
Loan Amount
Term
LTV
Debt Yield
Rate Type (Fix / Float)
Interest Rate expectations
DSCR off of proposed rate
For equity, I’d make sure we have this information at minimum:
Price $ (Expectations)
Cap Rate
P/SF, P/Unit
Occupancy
Trailing 12 NOI
Year 1 NOI
Unlevered and Leverred IRR (5, 7, 10 Years- or whatever horizon your
investor typically does)
3. Property Information
Location, location, location!
Used with permission from TheCommercialinvestor.com/blog

5. 7 Crucial Deal Metrics
Make sure you have the address and maybe a little information about the
property. This is real estate.
Also, be sure to describe the property: construction type, amenities, etc.
Here is a great example of a property description for a luxury apartment building
in a major city (doesn’t have to be as detailed as this but more is better):
The property’s main entrance includes a well landscaped circular drive and a two-
story lobby with terrazzo floors, and marble and wood paneled walls.
The apartments for rent here all feature generous oor plans, with one-bedroom,
two-bedroom, three-bedroom, and four-bedroom units. The nished ceiling
height is 8 feet. Apartment walls are painted sheetrock and oors are oak
parquet. Most of the apartments feature marble bath/powder rooms with new
xtures and kitchens improved with new cabinetry, granite counter tops and
stone tile flooring.
Appliances include refrigerator, dishwasher, oven/range, microwave and hot
water dispenser. There are large walk-in closets in every unit.
In 2015 renovations were undertaken to all public corridors including new carpet
and wallpaper.
The building is constructed of reinforced concrete with a brick and masonry
façade.
Heating and cooling are provided by a central plant with individual unit fans in
each apartment.
There are five passenger and two service elevators.
Used with permission from TheCommercialinvestor.com/blog

6. 7 Crucial Deal Metrics
There is an on-site parking facility and attentive 24-hour doorman service,
closed-circuit TV security system, and valet and maid service.
The custom-designed children’s playroom is well stocked with toys and games.
The property’s fully equipped tness center is similarly well-appointed with
state-of-the-art cardio and strength-training equipment.
A lush green rooftop sun deck offers striking views ofthe city below. There is also
a resident storage area.
4. Property Financialsand Performance
Need to see a few years of operating data if available.
You should be able to provide a breakdown of revenue and expenses to get the
NOI number for at least the last year. Try to get a few years of data if you can.
Recent leasing information is great too especially if it’s an of ce, retail or
industrial building.
For of ce, retail, industrial, make sure there is a rent roll with detailed
information about their leases, such as:
Lease expiration date
Rent
Rent bumps
5 . Borrower Business Plan/ Sources And Uses (for Debt
requestsonly)
Example:
Borrower plans to repay existing debt in the amount of 10mm. In addition, the
borrower plans to make substantial improvements to each apartment unit.
Used with permission from TheCommercialinvestor.com/blog

7. 7 Crucial Deal Metrics
The borrower plans to update the apartments in groups of 20 at a time. The
borrower will give tenants notice and give them ample time to relocate.
The scope of the work for each of the apartments will include an update to the
heater/cooling system, new kitchen appliances, cabinets, and counter tops, new
ceilings in living room with recessed lighting and updated electrical and new
tub/shower and vanities in the bathrooms.
Estimated renovation cost per unit is $13,000. Down time for the 20 apartments
is expected to be approximately 3months for work plus 2 months for lease-up.
While working on the apartments in groups of 20, borrower plans to provide
updates to common areas and hallways: new wallpaper, new carpet, new paint
where applicable. Also new landscaping to provide a more open, cleaner looking
apartment complex.
6. Sponsor Background/ Track Record (for Debt requests
only)
Used with permission from TheCommercialinvestor.com/blog

8. 7 Crucial Deal Metrics
7. Any MarketInformation
If available.
Major employers, new supply, rent growth expectations. You can nd lots of good
free information by going to large brokerage sites and looking for a research
section: try Marcus and Millichap.
Now there is always more or less you can provide. And there are de nitely
relationships you have or will have where you know they want/need something
specific so you can always add it in there.
In general, this is how the real pros generally like to look at their deals. If you’re
bringing someone new a deal and it’s in the above format and has all
pertinentdealinformation, you will be taken seriously and will you have instant
credibility.
Not to mention, sticking to this format provides you with a checklist to ensure
that you are doing a thoroughinitialanalysisonthedeal to make sure it is attractive.
Your clients will notice and it will get you on their preferred list.
Heck, you may even want to start expecting holiday cards and gifts in the mail!
Now go forth and prosper!
Used with permission from TheCommercialinvestor.com/blog

9. 7 Crucial Deal Metrics
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Used with permission from TheCommercialinvestor.com/blog