Mixed-use deal analysis

Two rolls, one plate

I keep the residential income and the commercial income apart until NOI. Residential gross potential rent is units times monthly rent times 12. Commercial gross potential rent is area times rent per square foot per year. Each line has its own vacancy. Other income is added once. Operating expenses are taken once.

That is the whole trick, and it is easy to lose in a spreadsheet that grew a tab at a time. The engine holds both lines in one pro forma, then prices the NOI, sizes the loan, and writes the verdict from that same run.

Worked example

Cayuga Commons (Illustrative Case) in Ithaca, NY is the illustrative case the engine is locked to. It is 24 apartments at $2,400.00 a month, vacancy 6.00%, and 4,200 square feet of retail at $38.00 per square foot per year, vacancy 8.00%. The price is $8,500,000. The hold is 7 years. The exit cap is 6.50%.

Rent growth on this case is 3.00% a year. Expense growth is 2.50%. The loan is 65% of price at 6.25%. Year 1 debt service is $408,220.50.

Where this pass simplifies

Street retail under apartments often wants its own growth, its own vacancy path, and its own exit cap. This model uses one rent growth rate and one exit cap for the whole building. A named tenant roll is supported when the lease terms can be written in whole years. A term the model cannot represent is not rounded into a nearby year.

Those limits are on the mixed-use methodology page and the model boundaries.

Frequently asked questions