BitReal — Model Methodology

Overview

What the model calculates

The model projects the performance of a BitReal-style fund over a 10-year period, combining two asset classes — a growing real estate portfolio and a systematically accumulated Bitcoin treasury. It models two channels of Bitcoin accumulation: ongoing allocation from rental income, and periodic equity release through property recapitalisation.

The model outputs five series across 11 time points (Year 0 through Year 10):

RE Portfolio — total value of the real estate portfolio at each year
Cumulative Income — gross rental income accumulated from Year 1 onwards
BTC Treasury — value of Bitcoin holdings at each year's BTC price
Total Fund — RE portfolio + BTC treasury, net of outstanding recapitalisation debt
RE-only Baseline — the same portfolio with no Bitcoin allocation, for comparison

All monetary values are in £ millions. Bitcoin prices are in USD and converted at a fixed rate of £1 = $1.27 throughout the model. This rate is held constant — the model does not attempt to forecast GBP/USD movements.

Input Variables

The sliders and what they control

The model has seven user-controlled input variables plus two scenario controls. All can be adjusted via the sliders on the Market Intelligence page.

Variable	Default	Range	Description
AUM₀	£50m	£5m – £500m	Starting portfolio value at Year 0
C	£10m/yr	£0 – £100m	New capital deployed each year
y	6%	3% – 9%	Gross rental yield on portfolio value
α	20%	5% – 40%	Proportion of gross income allocated to Bitcoin
P₀	$70k	$50k – $200k	Bitcoin entry price at Year 0
g_BTC	16%	2% – 60%	Annual BTC price CAGR
g_RE	5%	0% – 12%	Annual property appreciation CAGR
LTV	50%	0% – 60%	Loan-to-value ratio applied at recapitalisation
f	5 years	Off / 1–10 yrs	Recapitalisation frequency (0 = disabled)

The scenario tabs (Bear, Base, Bull, Ultra Bull) are presets that set the BTC CAGR slider to a specific value — 6%, 16%, 22% and 30% respectively. These imply year-10 BTC prices of approximately $120k, $300k, $500k and $1m from a $70k entry, which update dynamically as the entry price slider is adjusted.

Formula 1

Real estate portfolio value

The portfolio value at each year combines the original starting portfolio (appreciating at the property CAGR from Year 0) with each subsequent tranche of new capital deployed (each tranche appreciating from its year of deployment).

RE Portfolio Value at Year y

RE(y) = AUM₀ × (1 + g_RE)^y + Σ_{k=1 to y} [ C × (1 + g_RE)^(y−k) ]

The first term is the original portfolio appreciating over y years. The second term sums each year's new capital deployment, with each tranche appreciating from the year it was deployed. A tranche deployed in Year 3 has y − 3 years of appreciation by Year y.

Example: Starting AUM £50m, £10m new capital per year, 5% property CAGR.

Year 0: £50m × 1.05⁰ = £50m
Year 1: £50m × 1.05¹ + £10m × 1.05⁰ = £52.5m + £10m = £62.5m
Year 2: £50m × 1.05² + £10m × 1.05¹ + £10m × 1.05⁰ = £55.1m + £10.5m + £10m = £75.6m

The RE-only baseline uses the same formula but with no Bitcoin allocation — it represents what the portfolio would be worth if all income were retained rather than partially deployed into BTC.

Formula 2

Bitcoin price at each year

The Bitcoin price compounds from the entry price at the selected annual CAGR. This produces a smooth exponential growth curve — not a straight line interpolation. Real Bitcoin prices do not follow this curve; the CAGR is used as a long-run planning assumption only.

BTC Price at Year y (USD)

P_USD(y) = P₀ × (1 + g_BTC)^y

BTC Price at Year y (GBP)

P_GBP(y) = P_USD(y) ÷ 1.27

Example: Entry price $70,000, BTC CAGR 16%.

Year 0: $70,000 ÷ 1.27 = £55,118
Year 5: $70,000 × 1.16⁵ = $147,024 ÷ 1.27 = £115,767
Year 10: $70,000 × 1.16¹⁰ = $308,800 ÷ 1.27 = £243,150

Formula 3

Bitcoin accumulation — income channel

Each year (from Year 1 onwards), a fixed proportion of gross rental income is used to purchase Bitcoin at that year's price. The number of coins purchased each year is added to the running total.

Gross Income at Year y

I(y) = RE(y) × y_ield

BTC Purchased via Income at Year y (coins)

ΔCoins_income(y) = [ I(y) × α × 1,000,000 ] ÷ P_GBP(y)

The multiplication by 1,000,000 converts £millions to £ before dividing by the per-coin price in £.

Example: Year 1, RE portfolio £62.5m, 6% yield, 20% BTC allocation, BTC price £63,937.

Income = £62.5m × 6% = £3.75m
BTC allocation = £3.75m × 20% = £750,000
Coins purchased = £750,000 ÷ £63,937 = 11.7 BTC

This repeats each year, with both the income base and BTC price changing. The running total of coins is cumulative — coins are never sold.

Formula 4

Bitcoin accumulation — recapitalisation channel

At each recapitalisation year (every f years, from Year f onwards), the model releases equity from the portfolio up to the LTV threshold, net of any existing mortgage from prior recapitalisations. The released equity is used entirely to purchase Bitcoin.

New Debt Released at Recapitalisation Year y

NewDebt(y) = max( 0, LTV × RE(y) − Mortgage_outstanding )

BTC Purchased via Recapitalisation (coins)

ΔCoins_recap(y) = [ NewDebt(y) × 1,000,000 ] ÷ P_GBP(y)

Outstanding Mortgage (updated after each recap)

Mortgage_outstanding += NewDebt(y)

The outstanding mortgage accumulates across multiple recapitalisation events. The model does not amortise the mortgage — it is treated as interest-only debt serviced from rental income. The total outstanding mortgage is deducted from Total Fund Value at each year.

Example: Year 5, RE portfolio £119.1m, LTV 50%, no prior recapitalisations, BTC price £115,767.

New debt = max(0, 50% × £119.1m − £0) = £59.55m
Coins purchased = £59,550,000 ÷ £115,767 = 514.4 BTC
Outstanding mortgage after Year 5 = £59.55m

At Year 10 (second recapitalisation with f = 5), the outstanding mortgage from Year 5 is deducted before calculating new debt capacity:

New debt = max(0, 50% × £207.2m − £59.55m) = £44.05m
Coins purchased = additional BTC at Year 10 price
Outstanding mortgage after Year 10 = £59.55m + £44.05m = £103.6m

Formula 5

Bitcoin treasury value and total fund value

Total BTC Coins Held at Year y

Coins(y) = Σ ΔCoins_income(1..y) + Σ ΔCoins_recap(recap years ≤ y)

BTC Treasury Value at Year y (£m)

BTC Treasury(y) = Coins(y) × P_GBP(y) ÷ 1,000,000

Total Fund Value at Year y (£m)

Total(y) = RE(y) + BTC Treasury(y) − Mortgage_outstanding(y)

The total fund value nets off the outstanding recapitalisation debt. This is conservative — in practice, the rental income from the portfolio would be servicing the mortgage interest, and the gross value of both the RE portfolio and BTC treasury would be stated before debt deduction in a standard fund NAV calculation. The model shows the net figure to give a clearer picture of genuine equity value.

Worked Example

Year-by-year calculation with default inputs

The table below shows each year's calculation using the model default inputs. Note on scale: this worked example uses a starting AUM of £50m with £10m new capital per year — the default inputs on the Market Intelligence interactive model. The fund-level illustration on The Model page uses a smaller starting point of £10m with £5m per year, which produces different absolute numbers (128 BTC, £195.5m at Year 10) while following the same methodology. The formulas on this page apply equally to both — only the inputs differ. To verify any specific set of outputs, enter the relevant inputs into the interactive model and the chart will reproduce them.

Default input assumptions

Starting AUM

£50m

New capital / yr

£10m

Gross yield

BTC allocation

20%

BTC entry price

$70k

BTC CAGR

16%

Property CAGR

Recap LTV

50%

Recap frequency

5 years

Year	RE Value (£m)	BTC Price (£)	Income (£m)	BTC Alloc (£m)	Coins Bought	Recap Coins	Total Coins	BTC Value (£m)	Mortgage (£m)	Total Fund (£m)
Y0	50.0	55,118	—	—	—	—	0.0	0.0	0.0	50.0
Y1	62.5	63,937	3.75	0.75	11.7	—	11.7	0.75	0.0	63.3
Y2	75.6	74,167	4.54	0.91	12.2	—	23.9	1.78	0.0	77.4
Y3	89.4	86,034	5.36	1.07	12.5	—	36.4	3.13	0.0	92.5
Y4	103.9	99,799	6.23	1.25	12.5	—	48.9	4.88	0.0	108.8
Y5 ★	119.1	115,767	7.15	1.43	12.4	514.4	575.7	66.6	59.6	126.2
Y6	135.0	134,290	8.10	1.62	12.1	—	587.8	78.9	59.6	154.4
Y7	151.8	155,776	9.11	1.82	11.7	—	599.5	93.4	59.6	185.5
Y8	169.4	180,700	10.16	2.03	11.2	—	610.7	110.3	59.6	220.2
Y9	187.8	209,612	11.27	2.25	10.8	—	621.5	130.3	59.6	258.5
Y10 ★	207.2	243,150	12.43	2.49	10.2	181.3	813.0	197.7	103.6	301.3
Total	—	—	78.1	—	117.3	695.7	813.0	197.7	103.6	301.3

★ Recapitalisation years. At Year 5: new debt = 50% × £119.1m = £59.6m, deployed entirely into Bitcoin at £115,767/BTC = 514.4 coins. At Year 10: existing mortgage £59.6m, new debt capacity = 50% × £207.2m − £59.6m = £44.0m, deployed at £243,150/BTC = 181.3 coins.

Note: minor rounding differences may appear between this table and the interactive model due to intermediate precision. The model operates in full floating point — the table shows figures rounded to one decimal place.

Limitations and Omissions

What the model does not include

The model is intentionally simplified to illustrate the structural logic of the BitReal strategy. The following factors are not modelled and would all reduce returns in practice:

Mortgage interest costs. Recapitalisation debt carries an interest rate. At current UK mortgage rates (~5–6% for investment property), the interest on £59.6m of debt in Year 5 would be approximately £3m per year — reducing the net cash flow available for Bitcoin accumulation.
Management fees and operating costs. Property management typically costs 8–12% of gross rent. A 10% management cost on the default model reduces annual BTC allocation by approximately 10%.
Void periods and vacancy. The model assumes 100% occupancy throughout. In practice, void periods of 2–5% per annum are common.
Transaction costs. Stamp duty, legal fees and agent costs on property acquisition typically total 3–6% of purchase price. These are not deducted from the starting AUM.
Tax. The model does not deduct corporation tax, income tax or capital gains tax. The tax treatment of rental income and Bitcoin treasury holdings will depend on the fund structure, which has not yet been finalised. In a standard UK company structure, corporation tax at 25% on rental profits (after mortgage interest deduction) would reduce annual Bitcoin allocation by approximately 25%. A tax-transparent LP structure — which is standard for institutional UK property funds — would eliminate this at fund level. Investors should take independent tax advice based on their own jurisdiction and circumstances.
Bitcoin volatility. Bitcoin does not compound smoothly at a fixed CAGR. Historical drawdowns of 50–80% are common. The model does not reflect interim volatility or the timing risk of large recapitalisation purchases.
GBP/USD exchange rate. The model uses a fixed rate of £1 = $1.27. Sterling depreciation would increase the GBP value of Bitcoin holdings; appreciation would reduce it.
Lender appetite and refinancing availability. The model assumes recapitalisation is always available at the selected LTV. In practice, lender appetite, interest rate cycles and portfolio LTV covenants may constrain refinancing.

This page is published for information purposes only. BitReal is not authorised or regulated by the Financial Conduct Authority. Nothing on this page constitutes financial advice, an investment recommendation, or a financial promotion within the meaning of the Financial Services and Markets Act 2000. All figures, projections and worked examples are illustrative only and do not constitute forecasts or guarantees of future performance. Bitcoin and other digital assets are highly volatile and you may lose all capital invested. Past performance is not indicative of future results.

How the fund performance model is calculated.