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Selecting Loans
From the BankXchange® Home Page, click the boxes of all loans to be included in a pricing model. Click on "Add Selected Loans to BX LoanAnalyzer" to transfer the selected loans to BankXchange's® BX LoanAnalyzer page. The selected loans will be displayed along with their ID numbers, names, principal balances, and LTV and DSCR ratios. In the gray field, the bid price is defaulted to a par bid in both percentage and dollar terms. The IRR of the loan, at par, is also displayed.
Manipulating Data Fields
For each loan you have the option of establishing a bid amount or analysis benchmark based on a percentage of par, an absolute dollar amount or a target IRR. Click on any one of the three presented, change the figure to the desired number and click on the "Run Analysis" button at the bottom of the loan list. When you change the variable for one of these options, the other two will automatically convert to conform to your selection.
For instance, if the desired IRR is 9.00% on a loan with a par yield of 8.50%, click on 8.50% and change the number to 9.00%; click on "Run Analysis" and the "Price %" field for that loan will change to 97.30% and the "Price $" field will show a dollar figure equal to 97.30% of par.
Below the last loan in the selected portfolio is a total line which shows the aggregate outstanding principal on the loans, the bid price in percent of par and absolute dollar terms given the assumptions used above, and a portfolio IRR reflecting the prices paid for different loans. This IRR is not simply a weighted average IRR, but an actual rate of return given varying yields, amortization schedules and balloon payment assumptions. Also presented is the WAC, WAM, WALTV and WADSC for the selected portfolio.
To see a schedule of contractual principal runoff, either by individual loan or in aggregate, click on the relevant "View Amortization Schedule".
Excluding/Restoring Loans
To see the impact of your portfolio with or without certain loans, click on either "Exclude" or "Remove" found immediately to the left of a loan's "Property Type/ID". When "Exclude" is clicked, a loan will fall to the bottom of the list and the totals and weighted averages will adjust to be exclusive of that loan's balance. When selecting "Exclude" you have the option of including that loan in later analyses by clicking "Restore". When selecting "Remove" the loan is permanently taken out of the BX LoanAnalyzer.
If you wish to add a loan previously not included in the BX LoanAnalyzer basket, click on "Return to Portfolio List", tick off the box on the desired loan and click on "Add Selected Loans to BX LoanAnalyzer". The expanded portfolio will now show on the BX LoanAnalyzer screen.
Net Present Value at Cost of Capital
To determine the NPV at Cost of Capital of a hypothetical bid, insert your firm's cost of capital in the field so labeled near the top of the BX LoanAnalyzer page. BX LoanAnalyzer will calculate the NPV at Cost of Capital for each loan individually and in aggregate. The NPV at Cost of Capital represents the difference between present value of the cash flows generated by a loan or a portfolio discounted at a firm's cost of capital, and the price paid for the asset. A positive number represents the net enhancement to shareholder value of proceeding under a specific set of investment criteria; a negative number represents the net deterioration to shareholder value.
For example, if a firm's cost of capital is 8.00% and capital is deployed investing in a loan yielding 8.00%, the NPV at Cost of Capital is zero. If the loan is purchased at a discount, the NPV will equal the amount of the discount, whereas if the loan is purchased at a premium, a negative NPV equal to the amount of the premium will result.
Likewise, if capital costing 8.00% is deployed to invest in a loan yielding 9.00% at par, a positive NPV will reflect the net present value of the 1.00% difference in the two rates of return. Purchasing that asset at a discount will further enhance the NPV. The reverse logic, resulting in a negative NPV, holds true for purchasing an asset yielding a return below a firm's cost of capital and/or investing at a premium to par.
Save Function
To save an analysis in a private library attached only to your User ID and Password, click on "Save Analysis" just above the loans selected for the portfolio. You will be offered the option of saving the work as a new file or replacing an existing file of the same name. To retrieve a previously saved analysis, click on "Recall Analysis" from the BX LoanAnalyzer page and you will access the library of all previously saved files.
Analyses are saved after you log off BridgerFunding.com and can be recalled at a later date.
Print Analysis
BX LoanAnalyzer allows you to print out the results of various sets of assumptions and results in a format which is concise and presentation-ready. The report begins with a high level summary of the selected portfolio's aggregate principal balance, number of loans, proposed bid price and portfolio ratios including WAC, WAM, WALTV, WADSC, IRR and NPV at Cost of Capital.
A Portfolio Detail section then lists the loans selected to be in the portfolio, along with the relevant individual principal balance, bid price, IRR and NPV at Cost of Capital . A final Loan Detail section then provides specific information on the characteristics of each note and the supporting collateral.
Bid Proposal
When you are ready to submit a bid, click on "Create Bid". A standardized Bid Proposal form can then be prepared containing the price offered for each loan, conditions attached to the bid, the amount of the deposit offered and the period of time the Seller has to respond.
The Bid Proposal form is in a ready-to-email form. Review and revise your bid by clicking on "Review Bid". When in final form, click on "Submit Bid". A Bridger representative will get in touch with you shortly.
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