Internship at a Commercial Real Estate Loan Division
I am having an interview for a summer internship at a bank that deals with lower-middle market clients for issuing commercial real estate loans. I do not really have a strong background in real estate as I am a finance major. Can anyone give me insight as to what I should expect if I were to intern and what skills/knowledge I should have?
[{"id": "e0apcx2", "text": "I would read up on SBA loans, as I am sure that may be a good chunk of what you will be working with. \n\nhttps://www.sba.gov/blogs/sba-loans-explained-101-small-business-owners\n\nI would also get acquainted with creating proformas and underwriting in excel. \n\nhttps://www.youtube.com/watch?v=KR2GhRmr00s ", "replies": [{"id": "e0z5qge", "text": "Good advice but may not be a priority as it sounds like in this role it could be more investment real estate instead of owner occupied, thus making SBA loans less relevant. ", "replies": [], "depth": 2}], "depth": 1}, {"id": "e0ax1is", "text": "* Know basic CRE debt metrics: LTV, DY, DSCR. \n\n* When underwriting a loan, it's done in 3 respects: The client, the property itself, and the market. \n\n* Be familiar with the capital stack: senior, mezz, equity \n\n* Understand the general nuisances of the main asset classes: industrial, office, retail, and multifamily\n\n* Understand property level financials and be familiar with the line items: rental revenue, reimbursements, ancillary income, utilities, management fee, repairs and maintenance, general admin, taxes, insurance etc.", "replies": [{"id": "e0ja4nq", "text": "CRE = Commercial Real Estate\n\nLTV = Loan To Value ratio\n\nDY = Debt Yield\n\nDSCR = Debt Service Coverage Ratio\n\nYou probably also want to know what a Capitalization Rate (cap rate) is.", "replies": [], "depth": 2}], "depth": 1}, {"id": "e0b76bb", "text": "Know how to create a dcf proforma. Also know LTV, DCR, DY constraints and how to calculate them. They may give you rent rolls, balance sheets and income statements and ask you to underwrite what the loan would look like.", "replies": [], "depth": 1}, {"id": "e0blx5u", "text": "You may also be seeing project finance deals vs term debt. So ground up construction vs a stabilized project. \n\nSo you would need to create pro formas based on market information and finding cap rates to estimate the value based on your pro forma NOI. \n\nMost banks will have some market information tools such as Costar or REIS that you can use to get an idea of the market or have you review through appraisals in the market for a like project. \n\nAt our bank we focus heavily on the tenant financials for projects dealing with industrial, office or retail projects. Being able to also read through and understand risks associated with the tenants financial performance is helpful as well. ", "replies": [], "depth": 1}]