New IC memo section: composite 0-100 score grading how aggressive vs conservative the deal's assumptions are vs institutional market norms. Six dimensions each scored 0-15: rent growth (2.5% baseline), exit cap spread (entry → exit shift, positive = expansion = conservative), expense vs rent growth (margin expansion thesis), vacancy underwriting (per-asset-class typical band), LTV (65% baseline), hold period (5-7 institutional baseline). Plus 10-point cushion bonus when no individual assumption flags aggressive. Bands: very-conservative (85+, lender-favorite), balanced (70-84, standard IC quality), aggressive (55-69, deal needs assumptions to hold), very-aggressive (<55, market-timing bet). Per-dimension table shows framing + rationale for each input. Cherry Street: ~78/100 balanced (rent growth neutral at 3%, exit cap compression aggressive at -50 bps, LTV neutral at 65%, hold neutral at 7yr). Anticipates the IC question 'how aggressive is the underwriting?' with an explicit grade. Headline IRR is a function of assumptions; a 15% IRR built on aggressive assumptions is fundamentally riskier than the same IRR with conservative cushion.
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A day-by-day record of what landed in Underwrite, kept by hand. Page 16 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.
New IC memo section: the LP-side 'how much skin in the game does this sponsor have?' analysis. Sums GP coinvest contribution + estimated at-risk fees (50% of acquisition fee, 30% of asset mgmt, 100% of disposition typical LP-friendly institutional structure) to get total sponsor dollar exposure. Skin-in-game ratio = exposure / LP commitment. Bands: thin (<5%, fee-only sponsors, weak alignment), standard (5-15%, typical CRE structure), strong (15-25%, well-capitalized sponsor), deep (>25%, sponsor acting as principal: family office or single-LP structures). Reframes the LP-vs-GP relationship from 'how much promote does GP earn' to 'how much GP capital is at risk', a more honest framing for diligence. Cherry Street (no coinvest configured): thin alignment, ~$132k at-risk fees only, recommendation: press for GP coinvest. Reuses sponsorFees module's fee breakdown.
New IC memo section: 0-100 composite synthesizing operating fundamentals into a single 'how good is this NOI?' number. Distinct from headline NOI dollar amount or growth rate: those tell you magnitude and trajectory, but not quality. Four dimensions each scored 0-25: margin trend (expanding/stable/compressing), cash flow stability (year-over-year CF variability via coefficient of variation), tenant concentration (rent-roll diversification, N/A for aggregate-revenue deals), operating leverage resilience (NOI sensitivity to revenue from buildOperatingLeverage). Bands: institutional-grade (85+, insurance / pension allocator quality), standard (70-84, typical CRE), concerns (50-69, underwriting cushion required), weak (<50, high execution / volatility risk). Cherry Street: ~90/100 institutional-grade (stable margin, very stable CF, no rent roll concentration, moderate operating leverage). The right metric for LP allocators comparing deals on operating quality rather than headline IRR alone.
New IC memo section: for sponsors planning multi-deal pipelines, the year by which cumulative distributions equal initial contribution (= 'recycling point' when capital can be deployed into the next deal). Both LP and GP velocity surfaced. On most CRE deals recycling happens at exit (typical 65% LTV structures don't return full equity in 5-7 years from operations alone). Pre-exit recycling = high-yield core stabilized acquisition or low leverage. GP recycling is typically faster than LP when coinvest + promote are active; the promote amplifies GP returns relative to contribution. Cherry Street: LP recycles at Y7 (exit, classic CRE pattern). Year-by-year cumulative vs contribution table with hit-threshold cells flagged in gold. Useful for GP fund-level capital deployment planning and for LP allocators thinking about liquidity timing.
New IC memo section: quantifies the IRR impact of disposition costs at exit (broker fees, transfer tax, legal, escrow, marketing). Re-runs the engine with 0% selling costs to get the counterfactual gross IRR, compares to the user's input net IRR; the delta is the drag in basis points. Bands: light (<100 bps), typical (100-200, US institutional baseline at 2-3% selling cost), heavy (200-300, high-transfer-tax jurisdictions like NYC mansion tax), very-heavy (>300, specialty assets). Cherry Street: 2.5% selling cost = ~75 bps drag on a $13M+ implied exit value, ~$331k of dollar friction. Important because sponsors often quote net IRR but compare to industry pre-friction benchmarks; surfacing the gross IRR and dollar friction makes the comparison honest.
New IC memo section: surfaces whether the deal's projected IRR clears the institutional LP hurdle for its lifecycle stage. Institutional bands drawn from 30+ years of CRE return data: stabilized acquisition 8-10%, lease-up 10-13%, value-add 13-17%, repositioning 17-22%, ground-up 20-28%. A 12% IRR on a stabilized deal is great (above band); the same 12% on a ground-up deal is mediocre (below band). Status flags: above-band (strong, above institutional norm), in-band (fair, standard positioning), below-band (tight, repricing or restructure needed), well-below-band (mispriced for risk, requires non-standard LP). Cherry Street: stabilized acquisition stage, 15.34% projected vs 8-10% institutional hurdle = above-band, strong relative positioning. The right risk-adjusted comparison vs a flat benchmark like 10Y Treasury: accounts for the LP-expected return for the deal's specific risk profile.
New IC memo section: single-tag classification placing the deal on the institutional CRE lifecycle spectrum based on operating fundamentals (Y1 vs stabilized NOI) and cost structure (capex load, lease-up years). Five stages: stabilized acquisition (Y1 NOI within 5% of stabilized, capex <5%), lease-up (occupancy ramp), value-add (10-25% capex, 15%+ NOI uplift), repositioning (25-50% capex, change of use), ground-up development (cost >=50% above purchase price). Each stage maps to a typical LP archetype (Insurance/Pension Core for stabilized; Value-Add Funds for value-add; Opportunity Funds for repositioning and ground-up). Cherry Street prints 'stabilized acquisition': Y1 NOI within 5% of stabilized, ~2.8% capex load. Useful for portfolio managers categorizing pipeline and LPs matching mandate.
New IC memo section: structural difference between two institutional sizing metrics. LTV = loan / appraised value; LTC = loan / total project cost (acquisition basis + closing friction + capex). On vanilla acquisitions LTC and LTV sit within a few hundred bps of each other. On value-add and ground-up deals they diverge dramatically; total cost includes capex above acquisition, so LTV looks lenient relative to LTC. Bands: acquisition (capex <5% of value, LTC ~= LTV), light-value-add (5-15%), heavy-value-add (15-40%, LTC is the operative constraint), ground-up (>40%, LTV largely meaningless until built). Cherry Street: LTV 65%, LTC ~63%, 200 bps gap, standard acquisition. The right framing depends on deal type: acquisition LPs care about LTV (asset coverage); value-add and construction lenders price against LTC (cost-loaded exposure).
New IC memo section: one of the most-asked institutional questions surfaced explicitly. Decomposes the headline IRR into four counterfactuals: base (NOI grows + cap shifts), compression-only (NOI flat, cap shifts), growth-only (NOI grows, cap flat), and no-thesis (neither). The deltas isolate each driver's contribution in basis points. Framing classification: growth-driven (NOI > 60%, defensible), balanced (40-60%, standard), compression-dependent (cap > 60%, market-timing risk), compression-only (red flag: NOI flat or compressing, all returns from cap movement). Cherry Street: ~70% growth-driven thesis on the entry cap 7.0% → exit cap 6.5% spread. Inline stacked bar visualizes the split. The classification matters because cap rates are market-driven and outside sponsor control, while NOI growth is the operational thesis sponsors can actually defend.
New IC memo section: modern portfolio theory applied to a single CRE deal. Single-asset IRR stdev (from Monte Carlo) is dramatically higher than the variance of a diversified portfolio of N comparable deals; portfolio_stdev = single_stdev / sqrt(N). The difference is the idiosyncratic risk premium an LP should demand for holding the single asset vs the diversified-portfolio equivalent. Default N = 25 (institutional CRE allocator's typical non-trivial fund). Cherry Street: 268 bps single-asset stdev, 54 bps portfolio-of-25 stdev, ~214 bps concentration premium. The premium-adjusted hurdle = point IRR - premium = what the LP keeps after compensating for single-asset risk. Explains why REITs trade at tighter spreads than single deals, and why insurance / pension capital favors diversified vehicles. Bands: low (<150 bps), moderate (150-250), high (250-400), very-high (>400).
New IC memo section: classic finance metric. OLC = % change in NOI / % change in revenue. Stresses revenue ±5% via proforma rerun and computes the headline OLC as the average of up-shock and down-shock coefficients. Bands: low (<1.3x, NOI moves with revenue), moderate (1.3-2.0x, typical CRE), high (2.0-3.0x, operationally heavy like hotels), extreme (>3.0x, fragile). Also surfaces the fixed cost share of total OpEx as supporting evidence. The 'implied 10% revenue shortfall → NOI impact' translates the multiplier into a directly-relevant stress number; a 2.0x OLC means a 10% revenue miss = 20% NOI miss. Cherry Street prints ~1.7x (moderate), 67% fixed costs. Useful for sizing the vacancy cushion in underwriting.
New IC memo section: the lender's ongoing-exposure view. Forward LTV = outstanding debt (senior + mezz) / implied asset value (NOI / entry cap rate, constant-cap assumption) year by year. Distinct from origination LTV: this tracks how the lender's position evolves as NOI grows and debt amortizes. Asset Coverage Ratio (ACR = 1/LTV) is the inverse: ACR >1.0x means the asset is worth more than the outstanding loan. Cash-out refi capacity at maturity = (75% × current value) - outstanding debt. Sub-100% LTV cells flagged in red. Cherry Street: 65% LTV at origination → ~46% LTV at end-of-hold (ACR 2.18x), with ~$2.6M cash-out capacity at 75% refi LTV. Bands: strong (LTV <50%), typical (50-70%), tight (70-100%, no cash-out room), underwater (>100%).
New IC memo section: tracks what fraction of NOI actually converts to distributable cash year-by-year, after debt service (senior + mezz) and capital spend (leasing TI/LC). NOI is the headline; cash-to-equity is what the LP pockets. Institutional bands: strong (>50%, low leverage or high debt yield), typical (30-50%, standard 65-70% LTV), tight (10-30%, refurb / lease-up heavy), thin (<10%, returns live on exit). Cherry Street's avg conversion ~33% (typical band, 65% LTV with moderate capex). Year-by-year table flags negative-conversion years (when NOI doesn't cover DS+capex and sponsor cash injection is required). Two deals with identical NOI trajectories can have radically different cash conversion if one is more leveraged; yield-focused LPs care about this more than nominal NOI.
New IC memo section: year-by-year DSCR at base, -10%, -15%, and -20% NOI stress (standard CMBS lender-side test). Worst-case DSCR at each stress level surfaced explicitly. Max NOI stress at which the deal stays above the 1.25x institutional covenant for every year of the hold = a single 'how much NOI cushion does this loan actually have' number. Sub-covenant cells flagged in red so the IC can see exactly which year breaches first. Cherry Street: Y1 DSCR 1.46x base, stays above covenant through -15% NOI (worst-year 1.24x), breaches at -20% (worst-year 1.16x). Max clearing stress 14.4%. Anticipates the question every lender's credit committee asks, 'what's the cushion if NOI underperforms?', and surfaces the answer on the sponsor's IC memo before it's even asked.
New IC memo section: splits LP total equity gain into three institutional sources: operating cash (yield-driven, recurring), debt paydown (forced equity buildup from loan amortization, contractual unless default), and appreciation (sale-driven from rent growth + cap movement). Shape classification: yield-heavy (operating > 50%), paydown-heavy (paydown > 25%), appreciation-dependent (appreciation > 60%), or balanced. Inline stacked bar visualizes the three components. Cherry Street: ~$1.3M operating + ~$700k paydown (~115 bps of IRR) + ~$3.8M appreciation = appreciation-dependent shape (classic CRE pattern). The shape captures risk profile behind the headline IRR; a 70% appreciation deal is fundamentally riskier than a 30/30/40 balanced split at the same IRR.