Presale and Peak Equity
Tests several cases of sales speed and down payment to show the Peak Equity that shareholders must be ready to provide
Read with Real Estate Project Strategic Financial Management Handbook: A Practical Guide · Part 5
The figures entered are hypothetical examples. Every field can be edited.
Base case Peak Equity–
| Peak Funding Gap | – |
|---|---|
| Peak month | – |
| Cumulative share sold by the transfer month | – |
Results are calculations for learning purposes only. The figures entered are hypothetical examples, not real project data, and are not investment advice.
How to use
- Enter three cases each for sales speed and down payment. The middle value is the base case.
- Enter the costs, construction schedule and loan facility.
- Read the table to see whether sales speed or down payment has a greater effect on the equity you need to prepare.
Assumptions and limitations
- Sales are constant at the monthly rate from the month sales start to the transfer month, or until 100% of GDV is reached. Anything still unsold in the transfer month is not counted as cash received.
- The down payment is paid in equal instalments. Instalments falling after the transfer month are received in the transfer month, together with the balance.
- Peak Equity = max(0, Peak Funding Gap − loan facility), assuming the loan can be drawn in full whenever needed.
- In practice, banks usually require equity to be injected first, with loan drawdowns following progress, and there are interest, selling expenses and tax, which this page does not include. Actual figures are therefore usually higher.
The results are only an illustrative calculation. They do not reflect any bank's terms or the actual sales of any project.