Underwriting Downside Contingency
How does one underwrite a downside contingency in a PERE deal? Would you just include a contingency line below NOI taking x% of NOI or are there other ways to incorporate this?
Lol funny
Capitalize it into your project costs. Take a % of total project cost or Y1 NOI if that’s what you’re referring to.
Agree with cpgame I feel like the contingency should be baked into the respective line items (above NOI) that you are referring to when those costs materialize in your budget assuming this is a development deal and using DCF.
hard cost, soft cost and land cost contingency in a construction budget has 0 effect on NOI.
Ipsam ipsum deleniti ut voluptatem non eaque ab saepe. Quo est provident aut voluptate. Animi ad eligendi voluptas suscipit ut quos. Cupiditate voluptas aut doloribus asperiores doloremque et eligendi. Occaecati et ipsa illum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...