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Typically forward 12 at stabilization or starting the month after a refi.
for new development - you'll look at your first year of STABILIZED cash flow typically...and then look at the next 1-3yrs, though at some point it's a bit pointless because you're just increasing it at inflation. Assuming no leverage to keep it simple and apples to apples, we would typically UW new dev at a minimum of 7% yield on cost (or unleveraged cash on cash)
for acquisitions -- it depends on the strategy...if it's a rehab play or a reposition, again you want to look at the first 12-24 months AFTER your strategy is completed/deployed. Makes no sense to look at cash-on-cash or any time of return, really, when you are repositioning the asset or leasing it up.
Dispositions -- everyone typically looks at F12. Though, I had a boss who made an interesting point that I honestly thought makes more sense...and that is "im not paying for anything that the property isnt CURRENTLY doing". i.e. in-place/T12 metrics were heavily favored. Yes, if it's an office building and he has leases under contract or renewal LOI's, it's taken into consideration.
I can't stand the idea of looking at hypothetical forward cash flow for a disposition. I always underwrite the T3 NOI with some (or no) growth rate applied.
For development deals with no refinance I mainly look at cash-on-cash in the first month of stabilization or untended cash-on-cash. For value-add deals I look at going-in cash-on-cash, stabilized cash-on-cash, and the spread between them. I also look at the percent of total distributable cash flow from operations versus net disposition proceeds.
??
Are you asking about developments?
Cash on Cash = the distribution you get/equity basis. How much cash is the investor getting as a % of his investment. If you have a refi, the capital event reduces your equity basis by how ever much capital you receive; if you have $10 in cash, and invested $100 = 10%. if the next day you refi for $50 and the new debt payment reduces your distribution to $7, equity basis is now $50, and your cash on cash is 7/50 , which is 14%. Dont over complicate it. Over complicating raises questions and LP will dig into numbers further and find errors, which will get your boss mad at you and then you'll be fired
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