Underwrite the stabilised asset: NOI, cash-on-cash, DSCR

1 · Learn the move · Context + audience

Once the building is up and the leases are signed, the question changes from 'does it pencil' to 'is it the asset we meant to keep'. Your partners will argue with the inputs, not the division, so the underwriting has to be built for them: every line sourced to the rent roll, the recoveries schedule, the operating budget or the lender's quote, and every assumption standing on its own line where someone can change it. Context and audience do the work here. Tell the model who reads it (the partners deciding whether to accept the permanent terms on a project loan with no corporate line behind it), what they already know, and what decision it serves, and the output drops the sales register and becomes a document of record. The arithmetic in this lesson is simple and can be shown: NOI from pasted lines, DSCR as NOI over the debt service the lender quoted, cash-on-cash as cash flow over the equity in your capital account. What the model does not do is compute debt service from a rate and amortisation, supply a vacancy allowance or reserve it was not given, or compare your DSCR to a 'typical' covenant. The covenant it compares to is the one in your quote.

Audience: my partners, deciding whether to accept the permanent terms on this project's loan. Build the stabilised underwriting from my documents only: EGI, operating expenses including re-leasing TI for our small suites, NOI, annual debt service as quoted, DSCR against the covenant in the quote, and cash-on-cash on the equity in our capital account. Cite every line. Where an input is missing, write [NEEDS: ...]. [rent roll] [recoveries] [operating budget] [loan quote] [capital account]