# Wildcat Capital Investors Real Estate Private Equity Case Solution

Solution Id Length Case Author Case Publisher
2563 2510 Words (9 Pages) Craig Furfine Kellogg School of Management : KEL553
This solution includes: A Word File and An Excel File

Wildcat Capital Investors, LLC is a real estate investment company with its headquarters in Evanston that is privately owned. Deal after deal, the corporation makes investments in a wide variety of real estate assets. After doing some research, Zaski discovered that the Chicago suburb of Skokie, Illinois, had seen a significant change in the year 2007. On a total of 6.5 acres of land, the property that is part of the mezzanine transaction offers 85,812 square feet of rentable space in addition to a bigger parking lot. According to the most recent figures that are currently accessible, there were just six tenants that used 90.5% of the available leased space in the year 2009. According to the market research conducted by Zaski, the neighbourhood of Skokie, which is located on the Near Northsides of Chicago, has around 14 million square feet of corporate office space that is controlled by significant companies.

## Following questions are answered in this case study solution

1. Re-create the base-case property proforma with debt. Using the rent roll numbers in the Excel template, the operating cash flows will differ from the case exhibits by \$2-\$6 (The reversion cash flow will differ by about \$60 due to multiplier effects). Then complete the waterfall shown in exhibit 10 using the benchmark assumptions outlined in the case. (Skip to the last page of this document for instructions on filling out the waterfall) Under these assumptions, calculate the expected return to Wildcat Capital Investors and its limited partners and compare those returns to the property-level return on Financial Commons if it is sold after three years. Returns to Wildcat should be calculated without including its management fee. Note that the waterfall to the equity partners doesn’t get paid until after the loan payments have been made/OLB paid back to the bank.

3. Evaluate the benchmark assumptions Zaski made for reasonableness. Would you have made different assumptions? What do you think is the fair market price for Financial Commons? Explain why your answer does or does not differ from \$10,400,000.

4. If you were an outside investor being approached by Wildcat and were shown the financial projections outlined above, what additional information would you seek before investing?

## Case Analysis for Wildcat Capital Investors Real Estate Private Equity

#### 1. Re-create the base-case property proforma with debt. Using the rent roll numbers in the Excel template, the operating cash flows will differ from the case exhibits by \$2-\$6 (The reversion cash flow will differ by about \$60 due to multiplier effects). Then complete the waterfall shown in exhibit 10 using the benchmark assumptions outlined in the case. (Skip to the last page of this document for instructions on filling out the waterfall) Under these assumptions, calculate the expected return to Wildcat Capital Investors and its limited partners and compare those returns to the property-level return on Financial Commons if it is sold after three years. Returns to Wildcat should be calculated without including its management fee. Note that the waterfall to the equity partners doesn’t get paid until after the loan payments have been made/OLB paid back to the bank.

Excel was used to produce a spreadsheet that was then utilised to create a modelling Pro-forma that was based on the case study's assumptions. According to the calculations, the expected returns for Wildcat and its limited partners are, respectively, 71% and 21%. The return on investment that is anticipated is twenty-five percent, provided that the property in question is held onto until it is sold after three years. The assumptions, computations for amortisation, pro forma, and waterfall calculations are all included in the Excel file.

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