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03
Financial modeling
Underwriting analyst
How do operating, capital, debt, and exit assumptions change returns?
Financial Modeling
Pro-Forma · Northgate Apartments
Auditable sources and uses, operating assumptions, debt, cash flows, returns, and sensitivity · Model v3.2
Development · total cost budget
Total development cost$74,800,000
↳ Land & acquisition$11,200,000
↳ Hard costs (GMP)$49,900,000
↳ Soft costs (A&E · fees · permits)$9,400,000
↳ Financing & interest reserve$4,300,000
Yield on cost (stabilized)4.87%
Cost / unit (all-in)$406,522
Loan-to-cost62%
Senior construction debt (loan-eastsideyards)$46,000,000
↳ LP equity (90%)$25,920,000
↳ GP co-invest (10%)$2,880,000
Operating · 5-yr NOI ramp · construction → stabilized
YrOccRevenueNOIΔ
10%$0−$380,000constr
252%$3,414,000$614,500lease-up
368%$4,727,000$1,417,500+130.7%
474%$5,434,000$2,106,000+48.6%
576%$5,877,000$2,517,000+19.5% ⟂
Y5 exit · stabilized NOI $3.64M · 4.9% yield-on-cost (-313 bps over exit cap)
Exit · Y5 sale
Exit cap rate8.00%
Gross sale (Y3 NOI ÷ exit cap)$31,462,500
Sale costs (2.0%)−$629,250
Net sale$30,833,250
Debt payoff−$17,500,000
Net equity at exit$13,333,250
Sensitivity · exit cap × rent growth
49 cells · levered IRR · recomputes liveExit cap8.00%
Rent growth3.0%
rent ↓
7.25%
7.50%
7.75%
8.00%
8.25%
8.50%
8.75%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
Hover a cell to preview · click or drag the sliders to recompute the model
Below pref · < 12%Clears pref · 12–14%Solid · 14–16%Strong · 16–18%Target+ · 18–22%Trophy · > 22%