Institutional-Grade Models That Insist on a Margin of Safety
We underwrite every deal the way an investment committee would — pressure-testing assumptions, stressing the capital stack, and refusing to let a deal pencil only when everything goes right.
A model is only as honest as its assumptions
Almost any deal can be made to look attractive in a spreadsheet. Nudge the exit cap a few basis points, assume rents grow a little faster, hold capex flat, and a marginal acquisition turns into a winner on paper. The market is full of models built to justify a decision that was already made. Ours are built to test one.
We underwrite to institutional standards because that is where the discipline lives. Every assumption is sourced and defensible: rents from real comparable leases, expenses from actuals plus a reserve, exit caps that account for where we are in the cycle rather than where we'd like to be. Then we stress it — vacancy spikes, rate resets, a soft exit — to see what the deal does when the plan doesn't hold.
The number that matters most isn't the base-case IRR. It's the margin of safety: how much has to go wrong before you lose money, and whether the entry basis protects you when it does. A deal with a 14% projected return and no cushion is more dangerous than a 10% return that survives a downturn. We make that trade-off explicit so you're never the last to understand your own downside.
- A full multi-year cash-flow model with sourced, defensible assumptions
- Capital-stack analysis — debt sizing, coverage, and refinance risk
- Sensitivity tables across rent, vacancy, cap rate, and rate movements
- Downside and break-even scenarios, not just the base case
- A clear statement of the margin of safety and where it breaks
Inside the underwrite
Cash-flow modeling
A detailed multi-year pro forma built from real comps and actuals — not the broker's optimistic OM assumptions.
Capital-stack analysis
Debt sizing, DSCR and debt-yield coverage, and an honest look at refinance and rate-reset exposure across the hold.
Sensitivity testing
How returns move as rents, vacancy, exit cap, and interest rates shift — so you see the full range, not a single point estimate.
Downside scenarios
Recession, slow lease-up, a soft exit, a higher-for-longer rate environment — modeled explicitly so the worst case isn't a surprise.
Margin of safety
We quantify how much has to go wrong before the deal loses money, and whether the entry basis gives you real protection.
Return decomposition
Where the return actually comes from — yield, growth, leverage, or cap-rate compression — so you know what you're really betting on.
How we underwrite
Gather and verify inputs
We pull rent rolls, T-12s, leases, and market comps, and verify them rather than taking the offering memorandum at face value.
Build and stress the model
We construct the base case, then run sensitivities and downside scenarios until we understand exactly what breaks the deal.
Frame the decision
We deliver a model and a verdict: the realistic return range, the margin of safety, and the price at which this deal is worth doing.
Why rigor pays
- A re-underwrite that stress-tested exit cap and lease rollover turned a sponsor's 16% projection into a 9% base case — and the deal later traded down.
- Conservative exit-cap assumptions kept investors from overpaying into the top of a compressed market.
- Explicit refinance modeling surfaced a rate-reset risk a broker's pro forma had quietly ignored.
- Decomposing returns showed a deal's IRR depended almost entirely on cap-rate compression — a bet, not a business plan.
Underwrite it before you commit
Send us a deal and we'll tell you what the numbers really say — including the downside the pro forma left out.