Real Estate Private Equity

Real estate investors acquire, develop, or improve property and related operating businesses. Returns may come from rental income, occupancy, rent growth, repositioning, development, financing, and changes in market valuation. Those drivers should be modeled separately.

Property analysis starts with net operating income, or NOI. NOI generally subtracts property operating expenses from revenue before debt service, depreciation, and certain capital expenditures. Definitions should be consistent across properties and transactions. A building with strong NOI may still require substantial leasing costs or renovation spending.