{"id":574,"date":"2012-12-02T23:20:20","date_gmt":"2012-12-02T22:20:20","guid":{"rendered":"http:\/\/monceauinvest.fr\/invest\/nos-methodes\/levier\/"},"modified":"2019-03-18T11:02:55","modified_gmt":"2019-03-18T10:02:55","slug":"levier","status":"publish","type":"page","link":"https:\/\/monceauinvest.fr\/en\/nos-methodes\/levier\/","title":{"rendered":"Leverage"},"content":{"rendered":"<div class=\"row-fluid\">\n\t<div class=\"wpb_content_element span12 column_container\">\n\t\t<div class=\"wpb_wrapper\">\n\t\t\t <div class=\"row-fluid\">\n\t<div class=\"wpb_widgetised_column wpb_content_element span12 second\">\n\t\t<div class=\"wpb_wrapper\">\n\t\t\t<div id=\"nav_menu-5\" class=\"widget widget_nav_menu clearfix\"><ul id=\"menu-methodes-anglais\" class=\"menu\"><li id=\"menu-item-2564\" class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-2564\"><a href=\"https:\/\/monceauinvest.fr\/en\/nos-methodes\/levier\/\">Leverage<\/a><\/li>\n<li id=\"menu-item-2565\" class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-2565\"><a href=\"https:\/\/monceauinvest.fr\/en\/nos-methodes\/indicateurs-cles\/\">Key indicators<\/a><\/li>\n<li id=\"menu-item-2566\" class=\"menu-item menu-item-type-post_type menu-item-object-page menu-item-2566\"><a href=\"https:\/\/monceauinvest.fr\/en\/nos-methodes\/types-de-strategie\/\">Risk-reward strategies<\/a><\/li>\n<\/ul><\/div>\n\t\t<\/div> \n\t<\/div> <\/div> <div class=\"row-fluid\">\n\t<div class=\"wpb_content_element span12 page2 wpb_text_column\">\n\t\t<div class=\"wpb_wrapper\">\n\t\t\t\n\n    <div id='af-social-network'>\n    <a class='af-social-icon' href='mailto:guillaume.gagey@monceauinvest.fr'><i class='fas fa-envelope'><\/i><\/a>\n    <a class='af-social-icon' rel='external' href='https:\/\/www.facebook.com\/sharer\/sharer.php?u=https%3A%2F%2Fmonceauinvest.fr%2Fen%2Fnos-methodes%2Flevier%2F'><i class='fab fa-facebook-f'><\/i><\/a>\n    <a class='af-social-icon' rel='external' href='https:\/\/twitter.com\/intent\/tweet\/?url=https%3A%2F%2Fmonceauinvest.fr%2Fen%2Fnos-methodes%2Flevier%2F'><i class='fab fa-twitter'><\/i><\/a>\n    <a class='af-social-icon' rel='external' href='https:\/\/www.linkedin.com\/sharing\/share-offsite\/?url=https%3A%2F%2Fmonceauinvest.fr%2Fen%2Fnos-methodes%2Flevier%2F'><i class='fab fa-linkedin-in'><\/i><\/a>\n    <a class='af-social-icon' rel='external' href='javascript:window.print()'><i class='fas fa-print'><\/i><\/a>\n    <\/div>\n    \n<p>Leverage makes it possible to increase shareholders\u2019 capital gains by financing acquisitions with capped rate bank loans. This debt is generally in the special purpose vehicle and is repaid with net rental incomes or disposal proceeds.<\/p>\n<p>Leverage only works if the interest rate on the bank loan is lower than the overall profitability of the deal.<\/p>\n<p>Example:<\/p>\n<div>\n<ul>\n<li>Acquisition of a building for \u20ac30m<\/li>\n<li>Financed with \u20ac15m of capital and \u20ac15m of debt, APR of 5% paid annually<\/li>\n<li>Capital expenditures loan of \u20ac10m engaged at the beginning of the deal, APR of 5% paid annually<\/li>\n<li>Sale of the building for \u20ac50m after three years<\/li>\n<li>Total multiple = 1.25x of the initial value<\/li>\n<li>Interest on debt = 5% per annum, i.e. a total of \u20ac26.25m and a multiple of 1.05x<\/li>\n<li>Value of equity = \u20ac23.75m, i.e. a multiple of 1.58x<\/li>\n<\/ul>\n<\/div>\n<p>The interest rate being lower than the deal\u2019s overall profitability, we have a positive leverage.<\/p>\n<p>Therefore, if the deal is done only with equity, the\u00a0<a href=\"http:\/\/monceauinvest.fr\/en\/nos-methodes\/indicateurs-cles\/\">Equity Multiple<\/a> is 1.25x. If we leveraged the acquisition with 50% of debt and 100% of the capital expenditure facility, the Equity Multiple reaches 1.58x, which is more than twice more performing than what we could have done without debt.<\/p>\n\n\t\t<\/div> \n\t<\/div> <\/div> \n\t\t<\/div> \n\t<\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":3,"featured_media":2280,"parent":570,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"template-page2.php","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-574","page","type-page","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Leverage - Monceau invest<\/title>\n<meta name=\"description\" content=\"In order to maximize profitability, we use debt as a leverage.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/monceauinvest.fr\/en\/nos-methodes\/effet-de-levier\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Leverage - 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