A Practitioner's Guide to Reading the Filings, Building the Model and Reaching a Recommendation
Julian R. Sterling
These are the four Excel workbooks that go with the book. Every number in them is a live
formula, and every figure Chapter 19 publishes is reproduced exactly — FFO of 532.0,
AFFO of 381.0, net asset value of $42.97 a share, an implied cap rate of 6.21%, net debt to
EBITDA of 4.76× and a payout ratio of 81.3%. Nothing is locked, protected or watermarked.
Free to download. No sign-up, no email address, nothing to fill in.
Everything described below is inside it, with the read-me.
The five workbooks
Chapter 19
Meridian Industrial Trust — the complete analysis
Eight sheets and 121 live formulas, working from the filings to the recommendation:
the income statement and balance sheet as reported, the FFO and AFFO bridges, the net
asset value build asset by asset, the leverage and coverage tests, the dividend safety
analysis and the valuation summary. Six checks sit at the top and all six pass. Change
the cap rate on the NAV sheet and watch the recommendation move — which is the
fastest way to see why Chapter 12 says the cap rate is doing more work than the
multiple.
The same structure, empty, for a REIT of your own. Every formula is wrapped so that a
blank column shows blanks rather than a screen of errors — you can open it, look at
how it is built, and fill it in later. The FFO and AFFO bridges, the NAV build, the
leverage tests and the dividend coverage are already wired.
REIT_Analysis_Template.xlsx · XLSX · 12 KB
Appendix C
Practice cases 1 and 2
Two timed cases with the brief, a working area and a live solution: reconciling reported
FFO to a defensible AFFO, and building a net asset value from a property schedule with
a debt mark. Both reproduce the appendix exactly. Work them against a clock before
opening the solution block.
Practice_Cases_1-2.xlsx · XLSX · 13 KB
Appendix B
Analysis checklist
All 54 items with a status dropdown, a notes column and a counter, grouped the way the
book groups them: the filings, the income measures, the balance sheet, the portfolio,
the dividend, the valuation and the recommendation. A "no" is the next question
to ask on the call.
Analysis_Checklist.xlsx · XLSX · 12 KB
Appendix F
The loop, run
Chapter twelve describes a feedback loop between the share price and the business, calls
both directions self-reinforcing, and prints one table at one moment in time. This file
turns the loop: three years, both directions, on Meridian's own figures. It reproduces the
chapter's three lines to the basis point first, then finds where the accretion frontier
actually sits — not at net asset value, but at a 6.2 per cent discount on the test the
table uses and an 11.6 per cent discount on the test the chapter prescribes three pages
later. Forty-two controls, eight of which name a finding rather than a pass.
The_Loop_Run.xlsx · XLSX · 20 KB
Conventions used throughout
Blue text
a hardcoded input — you may edit these
Black text
a formula — do not overtype these
Green text
a link to another sheet
Yellow fill
the assumptions that carry the answer
One honest note
Chapter 19 publishes a NAV sensitivity table of $45.86 and $40.36 at cap rates 25 basis points
either side of the base case. The live build in the workbook returns $45.72 and $40.47 —
a rounding difference in the published table, not a modelling error, and the base case of
$42.97 reproduces to the cent.
Both sets of figures are shown side by side on the sensitivity sheet, with the variance
displayed. A companion file that quietly adjusted its own output to match a printed table
would teach the opposite of what the book teaches.
Opening the files
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. 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.
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.
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.
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