Synthesizes live macro regime + lender appetite + CMBS spreads + asset class into a recommended OPTIMAL capital structure for the current environment. Standard CRE templates hard-code LTV (65%) and rate structure (fixed) without macro consideration. This module asks the better question: given current conditions, what stack maximizes risk-adjusted return? Recommends LTV (with explicit guidance to increase / maintain / decrease vs modeled; base by asset class: Office 55%, Hotel 58%, MF 65%, Industrial 68%; adjusted by lender band + macro regime), fixed vs floating preference (lock fixed in normal curve; float in inverted curve during late-cycle to capture rate-cut path), senior-only vs mezz preference (mezz when senior tight + asset DSCR strong; especially Office post-2024), and term length (short in inverted-curve regimes to avoid locking in peak rates, long in early-recovery to lock current low rates before re-rating). Overall structure label: Aggressive Fixed Senior / Standard Fixed Senior / Conservative Fixed Senior / Floating Bridge / Senior + Mezz Stack. Distinct from debt-sizing solver (max sizable loan): this is about optimal structure given the current macro frame. Material when sponsor is finalizing structure for an LP pitch or refinance.
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A day-by-day record of what landed in Underwrite, kept by hand. Page 14 of 23.
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Phase 3 begins: live market data overlay (FRED Treasury / SOFR / CPI / inflation expectations) + 18 more institutional analytics. Live macro frame, deal-vs-market positioning, deterministic engine guarantee preserved (Cherry Street regression byte-identical with seeded fallbacks). 90 modules shipped today.
Synthesizes Phase 3 signals into a single institutional 'is this the right deal at the right time?' verdict. Distinct from Phase 1 Verdict (deterministic math: PURSUE / PASS based on IRR + DSCR + grade) and Macro Alignment Score (underwriting quality vs market): this is the TIMING layer. Even a well-priced deal can be a bad call if the macro regime is screaming wait (late-cycle + tightening lenders + supply oversupply); even a mediocre-priced deal can be timely in early-recovery + constrained-supply + accommodative-lender conditions. Five timing dimensions weighted: macro regime (25 pts), cycle-adjusted cap (20), lender appetite (20), supply environment (20), live calibration (15). Verdicts: strong-buy (85+, exceptional window), buy (70-84, favorable), neutral (50-69, deal-specific factors dominate), wait (30-49, headwinds material, consider delaying), pass (<30, multiple severe signals, only contrarian / distressed buyers should engage). Surfaces the primary catalyst when wait or pass is recommended so the IC sees exactly which dimension is fighting the deal. Full-size verdict banner at top of Phase 3 section in IC memo. This + Phase 1 Verdict + Deal Strength composite = the full IC committee read on whether the deal is buy-able in current conditions.
This is the module that makes Underwrite feel alive. Compares the deal's underwriting inputs against LIVE FRED data and surfaces inconsistencies as actionable suggestions. The engine actively coaches the underwriting against current macro conditions. Checks: expense growth vs current CPI (live FRED, currently 3.78% YoY), senior debt rate vs current AAA CMBS market (live 10Y + 125 bps spread), rent growth vs 5Y inflation expectations, exit cap vs live comp band. Each suggestion names the field, the modeled value, the market-implied value, and a recommended recalibration with a plain-English rationale. Severity bands: critical (gap likely wrong, deal at risk), warning (material gap, justify or recalibrate), info (minor flag, conservatively cushion). Currently flagged automatically: deals modeling 2.5% expense growth when live CPI is 3.78% get a critical suggestion to recalibrate. The engine is now plugged into real markets; your underwriting gets reviewed against live macro on every memo render.
State-level tax variables layered on top of the uniform federal LTCG rate. The federal 20% + 3.8% NIIT applies everywhere, but state-level adds dramatically vary: no-tax states (TX, FL, NV, WA, TN) add 0%; high-tax states (CA, NY, NJ, MA) add 9-13%. Combined federal + state burden on a CA-based LP can be >35% of capital gains vs <20% in TX. Bands: low-tax / moderate-tax / high-tax / punitive-tax based on composite (top marginal income 60% weight + property tax 40%). Estimates annual income tax on distributions + capital gains tax at exit + total state burden over hold + IRR drag for fully-taxable LPs. Tax-exempt LPs (pensions, endowments, REITs) unaffected. Seeded library: 15 major states. Cherry Street (Ithaca NY): New York state, punitive band (10.9% income tax, 1.4% property tax), ~~$430k total state burden over 7yr hold, ~190 bps IRR drag for fully-taxable LPs. Production Phase 3 will pull current-year Tax Foundation state tables.
Net domestic migration per metro, distinct from population growth (which includes births, deaths, international migration). Pure net domestic migration is the cleanest CRE demand signal because it captures economic choice, people moving toward jobs / affordability / quality of life rather than demographic momentum. Five-year cumulative trend, migration ratio (in/out movers), in-mover median age (signals demand mix: young = MF, older = single-family / luxury). Composite health score 0-100 with bands: inflow-strong (75+, secular tailwind), inflow-moderate, stable, outflow-moderate, outflow-stressed (<25, severe headwind). Mid-2026 patterns: Sunbelt still net positive but cooling from 2022 peak (Austin +2.0%/yr, Charleston +2.5%, Nashville +2.2%); West Coast gateways outflowing (SF -1.4%, LA -1.2%); NYC -0.8%; Boston near-zero. Production Phase 3 integrates Census ACS + IRS county-to-county migration data. Cherry Street (Ithaca NY): mild outflow -0.4%/yr, moderate band.
Three US tax code mechanisms that can affect a taxable LP's after-tax return, each described as an illustrative overlay rather than as a rule in force: (1) a like-kind exchange at exit, which the memo does not render and the product does not model or advise on; (2) cost segregation with a first-year bonus rate, where the overlay reclassifies about 25% of building basis as short-life property and applies its own assumed first-year rate to that share, without asserting the rate in force for any year; (3) Opportunity Zone treatment, which applies only if the property sits in a designated zone, which the engine does not know. The memo reports the illustrative after-tax IRR lift for the overlays it renders, on the deal's own figures (rough rule: tax savings / equity / hold × 100 = bps), and says that the rate, the zone designation and the eligibility for this property and this year are for a tax professional to confirm. Relevant to taxable LP pools (family offices, HNW); REITs, pensions and endowments are unaffected. Production Phase 3 will integrate with the existing after-tax overlay engine for full integrated modeling.
Current institutional CMBS pricing spreads over the live 10Y Treasury, by tier. Seeded mid-2026 spreads: AAA SASB 100 bps, AAA Conduit 125 bps, AA 175 bps, A 240 bps, BBB 425 bps, BB 720 bps, plus CRE-CLO AAA 165 bps and BBB 525 bps. Maps the deal's senior rate to the closest CMBS tier (implied tier) and surfaces the spread vs AAA Conduit benchmark. The CMBS bond market is the deepest source of price discovery for institutional CRE debt; even portfolio lenders (life insurance, debt funds) price loans relative to where CMBS clears. Positioning bands: well-below-market (unusually favorable, likely relationship lender or pre-cycle lock), in-line-with-AAA (best-in-class), above-AAA-typical (moderate leverage), in-line-with-BBB (higher leverage / value-add), well-above-market (bridge debt or stressed). Cherry Street: 6.25% rate vs 10Y Treasury 4.5% + 125 AAA Conduit = 5.75% = 175 bps spread, prints in-line-with-AAA range. Production Phase 3 integrates Trepp / Bloomberg CMBS live spread feeds.
ENR (Engineering News-Record) Construction Cost Index-equivalent inflation applied to the deal's capex load. Market tier baselines: Gateway +7% YoY (labor scarcity + complex projects), Major Sunbelt +6% YoY (volume pulling in trades), Secondary +5% YoY (lower volatility). For acquisition-led deals (capex <10% of value) treated as minor variable. For capex-heavy deals (value-add 10%+, ground-up 50%+), surfaces stress projections at +1%, +2%, +5% overrun above baseline and the implied IRR drag. Cost overruns are a top-3 institutional risk on capex-heavy deals. Production Phase 3 integrates Turner Construction / CBRE construction cost index live data.
Institutional ESG positioning score (0-100) across three pillars: Environmental (50% weight) = inverted physical climate risk + inverted transition risk; Social (25%) = asset class social value (Multifamily 85, Mixed-Use 75, Industrial 50, Hotel 45, Retail 55, Office 40) + affordability layer (residential rent vs market); Governance (25%) = sponsor alignment (GP coinvest presence) + transparency (engine is reviewable, always 95). Material for ESG-mandated institutional capital: GRESB scoring, SEC climate disclosure for public REITs, SFDR Article 9 EU funds, CalPERS / CalSTRS / NYS Common Retirement Fund mandates all use ESG inputs in allocation decisions. Bands: ESG-leading (85+, unlocks tight-priced ESG-mandated tranches), ESG-aligned (65-84, acceptable to most ESG LPs), ESG-mixed (45-64, some LPs may pass), ESG-laggard (<45, limited appetite). Inline gold-gradient progress bar makes the composite immediately scannable. Cherry Street (Ithaca NY Mixed-Use, ~$2,400 rent, no GP coinvest): high environmental scores from low-exposure market, moderate social score, mid-pack governance = ESG-aligned band.
Hotel-specific performance benchmark filling the gap left by the rent comp module (which handles residential / commercial via $/unit and $/SF). Hotels are priced on RevPAR (ADR × Occupancy), not rent per SF. Back-derives deal ADR from the engine's hotel rent input (monthly rent per key = ADR × occupancy × 30 days). Routes to a class auto-inferred from ADR: luxury ($600+), upper-upscale ($280-$600), upscale ($150-$280), midscale ($90-$150), economy (<$90). Surfaces dual positioning: ADR (rate) and occupancy each in/below/above-band, plus combined RevPAR spread to comp midpoint. Mixed positioning (one in-band, one diverging) is the norm for repositioning hotels. Seeded comp library covers 8 market × class combos (NYC luxury / upper-upscale, Miami luxury, Major defaults, Secondary defaults). Pioneer Square Boutique Hotel example would render here; non-hotel deals (Cherry Street, Pine Tower) gracefully skip the section. Production Phase 3 integrates STR (Smith Travel Research) / Trepp Hotel comp feeds.
Trailing 12-month and 3-year total returns for major REIT sector indices, mapped to the deal's asset class. Public REIT returns are a leading indicator of private CRE cycle position: negative sector returns for 12-18 months typically precede private cap expansion 6-12 months later; positive returns precede private compression. Mid-2026 seeded sector ranking: Data Center 22.5% / Industrial 15.8% leading the cycle, Multifamily 9.2% / Self-Storage 8.5% in-stride, Hotel 0.5% / Retail Mall 1.2% lagging, Office -8.5% stressed. Surfaces deal IRR vs sector REIT 12m return as premium-justified (>400 bps over public), in-line, or underpriced. Full sector ranking table highlights the deal's sector row. Cherry Street (Mixed-Use 5.8% trailing): deal IRR 15.3% captures 950 bps premium-justified positioning. Production Phase 3 integrates FTSE NAREIT live index data.
Simulates the deal's debt service as if the senior loan were floating-rate indexed (SOFR + 350 bps typical bridge spread) and stresses across the live forward curve. Most institutional CRE deals price with fixed-rate senior, but bridge debt, value-add transitional loans, and CRE-CLO collateral run floating. For those deals the engine's hardcoded interest rate hides the rate-path exposure that's the dominant risk factor. Year-by-year SOFR projection bootstrapped from live curve + floating-rate DSCR at each year. Positioning: fixed-favorable (deal's fix is cheaper than market expects), rate-neutral (within ±50 bps), or floating-favorable (deal locked in a premium for certainty). Sub-1.25x DSCR cells flagged in red. With seeded mid-2026 SOFR (4.30%) + 350 bps = 7.80% floating vs Cherry Street's 6.25% fixed: 155 bps fixed-favorable.
Distinct from physical climate risk (geographic overlay): transition risk = the regulatory, market, and technology shifts driving the energy transition and their CRE impact. Building electrification mandates (NYC LL97 with $268/ton fines over caps, Boston BERDO, California Title 24, Washington Clean Buildings Performance Standard), SEC climate disclosure, GRESB scoring, state-level carbon pricing, stranded-asset risk for Class B/C office in WFH-soft markets. Composite score = asset class base risk × jurisdiction multiplier. Asset class base: Office 75 (highest target), Hotel 60, Retail 50, Industrial 45, Mixed-Use 35, Multifamily 25. Jurisdiction multipliers: NYC 1.80x (LL97 most aggressive), Boston 1.65x, Seattle/SF 1.55x, LA 1.50x, Texas 0.65x, Florida 0.70x. Estimated per-unit / per-SF compliance capex over hold for elevated/high-band exposures (e.g. NYC Office ~$25-45/SF retrofit). Critical for institutional ESG-mandated capital and for deals in stringent jurisdictions. Cherry Street (Ithaca NY Mixed-Use, 1.10x multiplier × 35 base = 38.5) prints moderate band.
Synthesizes the full Phase 3 module set into a single 0-100 grade for how well the deal's underwriting aligns with current market and macro conditions. Eight dimensions weighted by institutional materiality: cap rate positioning (20pts) + rent assumption (15) + supply vs rent growth thesis (15) + cycle-adjusted exit cap (15) + inflation hedge quality (10) + lender appetite (10) + transaction liquidity (10) + macro regime alignment (5). Distinct from Phase 1's Deal Strength Score which evaluates deal-specific math; this evaluates against EXTERNAL anchors. Bands: strongly-aligned (85+, fits the regime with cushion), aligned (65-84, minor gaps), mixed (45-64, some signals fighting), misaligned (<45, deal at odds with market, reprice / restructure / pass). Per-component table shows score, max, and rationale. Inline gold-gradient progress bar makes the composite visually scannable at the top of the IC memo. Cherry Street: with seeded inputs and Ithaca NY positioning, prints in the aligned-to-strongly-aligned band depending on transaction liquidity availability.
Surfaces market-level transaction depth for the deal's asset class, the missing piece of the exit cap reasonableness analysis. The exit cap assumption is only as good as the market's willingness to absorb the asset at that price. Bands: deep (50+ trades/yr, institutional liquidity, exit cap defensible against a broad buyer pool), active (20-49, standard cycle), thin (5-19, exit timing sensitive; the module states the 25 bps discount this band implies on the exit cap and says the memo's exit cap does not carry it), illiquid (<5, narrow buyer pool; the implied discount is 50 bps, and the module asks whether the exit thesis rests on a specific buyer archetype such as a strategic acquirer, a family office or a tax-motivated buyer). Cherry Street: Ithaca NY Mixed-Use has 8 transactions in the seeded comp library = thin band, 25 bps implied and not carried. Puts 'who buys this at exit?' in front of the IC explicitly. Production Phase 3 integrates Real Capital Analytics / CoStar transaction-volume tracking per market × asset class.