One Excel workbook, and no added inputs at all — every number in it comes from the book.
Chapter 11 finds that one cure costs 11.2 times the other and says the ratio is not specific to
the deal. It is half right, and the half that is wrong is the half a borrower negotiates. It is
free. Nothing is gated behind a sign-up, and no email address is asked for.
The ratio, in closed form. Deposit cure = k·D − I. Prepayment cure
= L − I/(k·c) = (k·D − I)/(k·c). Divide and everything cancels:
the ratio is 1/(k·c), which on this loan is 11.16 — the
chapter’s 11.2, exactly. It genuinely does not depend on how deep the decline is.
But it depends entirely on the covenant level and the amortisation schedule: 13.7 times
interest-only against a 1.15 covenant, 8.7 times on a twenty-year amortisation
against 1.30. That also joins two chapters the book leaves apart — chapter 3’s
warning about trading amortisation for rate costs the borrower twice, and it is
told about it once.
The window in which the cheap cure works is four points wide. The coverage trap
fires at a 14.0 per cent income decline; the debt yield trap at 18.4. Inside that
4.4-point band, 233,000 dollars makes the problem disappear. Outside it, no
deposit touches a debt yield test and the sponsor writes the large cheque anyway. Which is
chapter 13’s own sentence about a different provision — “optionality that
expires exactly when it acquires value” — applied to one it praises without noticing
the shape. The value is bounded, and the bound is computable at closing:
1,911,397 dollars.
And the chapter sizes its debt yield cure to a threshold the loan does not impose.
It restores 9.00 per cent; chapter 6’s ladder puts the trap at 8.50. Nine is
the origination sizing test. At a twenty per cent decline the covenant requires
729,412 and the worked cure is 2,755,556 — 3.8 times as
much, and the overshoot is largest at the shallow end where a sponsor is least likely to
have cash. Read the eighteen per cent row: the debt yield is 8.54, above the trap.
There is no breach, and the chapter prepays 1,894,444 dollars to cure it.
The extension paydown, priced. Debt service at the extension date is
unchanged — a fixed-payment amortising loan keeps its payment. Sized to clear both
conditions, the paydown is 423,994 at the fifteen per cent decline that denies
the extension. So the two million the chapter floats is generous: it covers a decline of about
nineteen per cent, and the right that matters costs a quarter of it. Against the
chapter’s own refinancing gap of 5,905,381 at the same moment, that paydown avoids an
equity call more than ten times its own size — and it costs the lender
nothing at origination to grant.
Plus the maturity page, all six lines. Chapter 13 specifies six and prints
four. The four reproduce to the dollar. Thirty-eight checks, twenty of which exist only to
reproduce the book before questioning it.
The_Cure_Priced.xlsx · XLSX · 19 KB
What to try first
Go to sheet 3 and change the amortisation column. Then go to sheet 4 and change the debt
yield covenant. Those two cells are the whole negotiation: between them they set both the value of
the cheap cure and the range of income decline over which it exists at all. Then replace the loan,
the rate and the income on sheet 1 with your own — everything re-solves, including the
closed form.
What the arithmetic does not settle
It cannot tell you what your agreement actually says, and that is the book’s point rather than
a limitation of the file. Whether a deposit is held and returned or applied to principal, whether
consecutive cures are permitted, whether a cure of coverage also cures debt yield, and whether a
cure prevents the trap or merely reverses it — those are five drafting questions and the
workbook assumes the borrower-favourable answer to each. Where your document differs, the numbers
here are the ceiling rather than the outcome.
Conventions used throughout
Amber fill
an input — you may edit these
Grey fill
a formula — do not overtype these
ADDED
nothing. Every input in this workbook is a figure the book states
Checks sheet
thirty-eight controls — twenty reproduce the book before anything is questioned
The building, the loan and the covenants are the book’s own and fictional, as they are in the
book. This is not legal advice, and no workbook substitutes for reading the agreement.
Opening the file
The workbook opens in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. It uses 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.
Also by Julian R. Sterling
The other books with companion files. The full list of titles is on the
author page.
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.
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.
These files accompany How to Read a Real Estate Loan Agreement. The book is on Amazon.
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.