Originating, Underwriting, Structuring and Managing Property Loans
Julian R. Sterling
These are the companion files of The Real Estate Debt Investor by Julian R. Sterling.The book on Amazon →
One Excel workbook that answers the question Chapter 7 ends on, now corrected. Around it, a blank version and a sizing and exit-test model for your own loans, thirteen working documents to print, forty questions that mark themselves, and three cases the book does not work. All free. Nothing is gated behind a sign-up, and no email address is asked for.
Seven workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 23 September 2026.
Get an email if these files are corrected
Optional. When a workbook on this page is corrected or a new worked case goes up, readers on the list get one email, plus a short note when a new book comes out. The downloads do not need it.
The chapter’s own two loans, with figures on them. A tight senior loan at 200 basis points
against a wide whole loan at 550. Apply the four deductions the chapter names — cost of
funds, expected loss, operating cost, capital held — and the ranking barely survives.
Gross margin says the whole loan wins by 350 basis points, nearly three times.
Return on capital says it wins by 3.4 points, a tenth. The margin overstates the
advantage by roughly seventeen times. That is what the chapter means by a
business that manages to gross margin selecting the wrong deals — and at that size the
distortion does not merely blur the ranking, on a slightly different pair it reverses it.
And the wide margin is a position on an estimate. Raise the default probability from 3.00 to
4.36 per cent and the whole loan ties with the senior one. A margin for error of
1.45× — inside the range any honest analyst would put around a PD. Meanwhile the
objection people actually raise, that it is three times the work, turns out not to bite until it
costs nearly six times as much to run.
The floor, priced. The clause the chapter says gets conceded when everyone is
tired costs the borrower nothing on the day. If the reference rate falls 150 basis points, it
earns 750,000 a year — three quarters of the senior loan’s entire
credit margin. The negotiator who gives it away at eleven o’clock has given away more than
the credit team gained by pricing the risk correctly.
And early repayment, where the surprise is instructive. On the loan alone, an
early exit makes the lender more money — 38.4 per cent against 33.1 — because
the arrangement fee annualises over a shorter life. So the chapter’s warning is not about
the loan; it is about the five words at the end of it, at a compressed margin. Run the
round trip and the lender can absorb just 13 basis points of compression on the
replacement loan before the early exit costs real money.
Which reframes prepayment protection entirely: not a penalty, not a windfall, but
the amount of margin compression the lender can survive — 13 basis points with none,
41 with a hundred of protection, 70 with two hundred: about 29 more for every hundred, not the
forty the first edition said. Twenty-three checks.
Set both risk weights to 100 per cent — the unregulated fund case — and look again. Then
put your own funding spread in. Most lenders discover that the ranking of their last three loans
depends more on the capital line than on anything discussed at credit committee, which is
precisely the chapter’s argument and much more persuasive as your own numbers.
What the arithmetic does not settle
It cannot tell you the probability of default, which is the input the whole comparison turns on and
the one nobody can observe. It cannot price the risk a team is not equipped to manage — the
chapter’s sharpest point, and the one no model captures. And capital treatment differs by
lender type and jurisdiction, which is why the book avoids naming regimes. The arithmetic holds in
any regime; only the inputs change.
The same models, for your own loans
Two workbooks with every input emptied. The checks sheets count what is still missing and test what holds for any inputs.
Chapters 5, 7, 8 and 18 · Appendix G
A blank return model, and the sizing and exit test
The book’s workbook with its inputs emptied: your two loans, your funding spread and your capital ratio. And a new file for the arithmetic Chapters 5 and 18 ask for: the five metrics at the loan requested, the loan each of your limits allows and which one binds; the exit test on a good and a bad case, on debt yield alone and on every test you set; the downside shortfall, the recovery, and the value decline at which the loan is not repaid.
The book’s two deals are listed in a text file inside the archive. Type Chapter 18’s back in and the file returns a gap of 11 at maturity and a shortfall of 7 on the swept balance. Type Chapter 5’s in and it shows what the chapter leaves out: on its own 2.0× cover at 5 per cent, the bad case refinances 54, not 60.
Thirteen pages to print and use. A4, with margins wide enough for US Letter.
Chapters 2 to 17 · Appendices A to D
Thirteen working documents
The thirty-minute screen. The income that exists and the three values. The sponsor, with the verified record and the lender references. Sizing on five metrics with the exit test. Structure, each feature against the risk it addresses, and the intercreditor for a subordinated position. The credit paper and the five questions a committee asks. The term sheet skeleton. The facility agreement and the mark-up. The development drawdown test. Quarterly monitoring with the rent roll compared line by line. Hedging and the maturity eighteen months out. The workout’s first fortnight with the recovery. And the loan book: concentration, expected loss, leverage and what investors should be told.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Forty questions on the book
Seven on the lender’s position, seven on sizing, structure and pricing, seven on the credit paper, the documents, covenants and development, seven on the book, monitoring, hedging, valuation, maturities and workouts, six on Chapter 18 and Appendix G, and six on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part: that is your revision list.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for each answer.
New material, not a restatement. Three situations the chapters name and never take to a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a checks sheet closes it. Type your own figures in and every finding recomputes.
Chapter 11 · Case one
Can we finish it without them?
Chapter 11’s scheme, cost 100, equity 30, facility 70, value 130, with the overrun certified when 85 has been spent. The drawdown test fails that day by the whole overrun, 10, because the equity went in first. A rational sponsor keeps funding far past the zero-profit point: it walks only when the completed value falls below 80, a 38.5 per cent decline. What stops it is capital, 6 of the 10. Completing leaves the lender whole; selling the site loses 4.
Chapter 14 · Case two
The swap that ranks beside you
The chapter’s cap, taken to the number: cover falls to 1.2× only if rates climb 2.62 points past the strike; at the strike it is 1.5×, cap or no cap. Then the pari passu swap the chapter calls a competing creditor: on Chapter 18’s loan of 57, after a two-point fall with three years left, the counterparty claims 3.29 and takes 5.5 per cent of a recovery of 50, costing the lender 2.73.
Chapter 15 · Case three
The provision nobody sized
The watchlist loan of 72 the chapter calls impaired at 82 per cent loan to value. Its accrued interest already discounts for time, at the loan’s own 5.56 per cent: doing both counts fifteen months twice. At a 60 per cent chance the letting works, the provision is 5.6, 7.8 per cent of the loan and 0.52 per cent of a fund levered at 40 per cent. And the same haircuts impair any loan above 68.2 per cent loan to value.
twenty-three controls in the book’s workbook, each stating its own verdict; every other workbook ends with its own
ADDED
a figure the book does not give, used in the cases and marked wherever it appears
Every figure is illustrative, as everything in the book is. The loans, the sponsor, the funding
cost and the risk weights are invented. The arithmetic is not.
Opening the files
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers; the PDF prints on A4 or US Letter. They use no
macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks to
update links on opening, decline — there are none.
What changed, and when
23 Sep 2026
The book’s workbook corrected: the early-repayment sheet hard-coded the running cost at 5 basis points instead of the 9 sheet 1 implies, so Loan A returned 34.1 per cent to term there and 33.1 on sheet 2; it is now 33.1 to term and 38.4 repaid at eighteen months, not 34.1 and 39.4. Each 100 basis points of prepayment protection buys about 29 of tolerance, not forty; 13, 41 and 70 were right. Twenty-three checks. Added: a blank version, a sizing and exit-test model, thirteen working documents, forty questions that mark themselves and three new cases. The workbook can now also be downloaded on its own.
How is a bridge loan earn-out calculated?The lower of the debt yield and LTV loan, less the funded loan: a $7.5M earn-out needs 3,428,571 of NOI for full release, not the 3,200,000 the debt yield implies.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
Go beyond the companion files
The Real Estate Debt Investor develops the complete framework behind these models, with the assumptions, trade-offs and worked examples tied together.
If this book helped — or didn’t — a few lines on Amazon are worth more than they look: they are what the next reader goes on. Write a review. The workbook stays free either way.