What is a Backshop deal?
Deals are the foundation of Backshop. Deals are similar to a balance sheet where Assets = Debt + Equity.
- The Assets of a CRE Deal are called Properties.
- The Debt is called a Loan, which is made up of one or more Notes.
- The Equity is called the Borrower or Owner.
Deals are modeled in Backshop by:
- Conducting lease-by-lease underwritings of the Properties to calculate cash flow and value.
- The Notes, their payment terms and priority are modeled and, when compared to the cash flow/value of the Properties, critical statistics like Loan to Value (LTV), Debt Service Coverage Ratio (DSCR) and Debt Yield are derived.
- Finally, the Equity is modeled with both the borrower structure and the upfront and ongoing equity contributions to calculate the IRR of the Equity Investment.
Here is a simplified view of the Backshop data model: