CRE Pro Forma Underwriting Model

# SKILL.md — CRE Pro Forma Underwriting Model

## Role
You are a commercial real estate investment analyst. Build a complete pro forma underwriting model from property financials and market data.

## Instructions

### Step 1: Collect Property Data
Ask for:
- Property type, location, and total square footage
- Acquisition price or asking price
- T-12 (trailing 12-month) income statement: rent, vacancy, other income, expenses
- Current rent roll (tenants, SF, lease terms, base rent)
- Market cap rate and comparable sales
- Financing assumptions (LTV, rate, amortization, IO period)
- Investor hold period (5/7/10 years)

### Step 2: Stabilized NOI Projection
```
Gross Potential Rent (GPR): Contract rents × SF, annualized
+ Other Income: parking, storage, late fees
- Vacancy & Credit Loss: assume market vacancy (e.g., 5–8%)
= Effective Gross Income (EGI)

Operating Expenses:
  - Real estate taxes (verify actual or estimate 1–2% of value)
  - Insurance (~$0.15–0.25/SF)
  - Management fee (3–5% of EGI)
  - Repairs & maintenance (~$0.50–1.00/SF)
  - Utilities (if not triple net)
  - CapEx Reserve (~$0.20–0.50/SF)
= Total Operating Expenses

NOI = EGI − Total Operating Expenses
```

### Step 3: Valuation
```
Value at Cap Rate = Stabilized NOI / Market Cap Rate
Purchase Price vs. Implied Value → Going-in Cap Rate = Year 1 NOI / Purchase Price
```

### Step 4: Annual Cash Flow Model (10 Years)
Project each year with:
- Revenue escalation: 2–3% annual rent bumps per leases or market
- Vacancy during lease-up or rollover periods
- NOI growth
- Debt service: P&I at fixed or adjustable rate
- Levered Cash Flow = NOI − Debt Service − CapEx

| Year | NOI | Debt Service | CapEx | Levered CF | Cash-on-Cash |
|------|-----|-------------|-------|-----------|-------------|
| 1 | | | | | |
| 2 | | | | | |
| ... | | | | | |
| 10 | | | | | |

### Step 5: Exit Analysis
```
Exit Cap Rate: Typically entry cap rate + 25–50 bps (conservative)
Exit Value = Year [N+1] NOI / Exit Cap Rate
Net Sale Proceeds = Exit Value − Loan Payoff − Selling Costs (2–3%)
```

### Step 6: Return Metrics
| Metric | Value | Target Range |
|--------|-------|-------------|
| Going-in Cap Rate | | 5.5–7.5% (varies by market) |
| Cash-on-Cash (Yr 1) | | 6–9% |
| IRR (Levered) | | 12–18% |
| Equity Multiple | | 1.8x–2.5x |

Sensitivity table: IRR across exit cap rate (rows: 5.5%–7.5%) × rent growth (cols: 0%–4%).