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Industrial Underwriting Model Builder

Build a U.S. industrial acquisition model that reflects lease structure, rollover, downtime, TI, LC, and functional competitiveness.

When to Use This Skill

Use this skill when you have industrial rent roll, lease, market, and building data and need a base-case underwriting model. It is the right starting point for acquisitions where the return profile depends on lease durability, release assumptions, and capital requirements rather than on a simple stabilized rent-roll snapshot.

What You'll Need to Provide

  • Current lease roster or rent roll
  • Lease structure summary
  • Market rent context
  • Building subtype and specs
  • Purchase price and hold period
  • Financing assumptions if available
  • CapEx and competitiveness-upgrade view if available
  • Any known rollover, release, or re-tenanting thesis

Mission

Build a defensible industrial underwriting model that separates contractual income from market assumptions and explicitly models rollover, downtime, TI, LC, capital needs, and exit risk.

Strategy

Step 1: Build In-Place Cash Flow

Calculate:

  • contractual base rent
  • reimbursements
  • temporary abatements
  • known step-ups
  • non-recoverable operating costs

Step 2: Build Lease Timeline

Map:

  • WALT
  • annual rollover
  • major tenant expirations
  • options that may alter rollover

Step 3: Model Release Assumptions

For each major rollover:

  • estimate downtime
  • estimate TI
  • estimate LC
  • estimate market rent vs in-place rent
  • state whether space requires spec upgrades or reconfiguration

Step 4: Model Operating Expenses and Recoveries

Separate:

  • reimbursable expenses
  • leakage or non-recoverable costs
  • management / overhead
  • reserves and recurring capital

Step 5: Model Capital Needs

Include:

  • immediate repairs
  • near-term replacements
  • competitiveness upgrades
  • tenant-specific capital tied to rollovers

Step 6: Build Debt and Exit View

Model:

  • financing assumptions
  • debt service or interest burden
  • exit cap assumption
  • expected disposition story:
    • stabilized
    • transitional
    • partially re-tenanted

Step 7: State Base-Case Verdict

Conclude whether the base case depends primarily on:

  • durable in-place income
  • market-rent capture
  • successful re-tenanting
  • CapEx-led repositioning

Output Format

# Industrial Underwriting Model
## Property:
## Status: PASS | FAIL | MARGINAL

### Base Assumptions
- Subtype:
- Hold Period:
- Financing:
- Exit Cap:

### In-Place Cash Flow
- Base Rent:
- Reimbursements:
- Non-Recoverable Expenses:
- NOI:

### Lease Risk
- WALT:
- Major Rollover Years:
- Concentration:

### Release Assumptions
- Downtime:
- TI:
- LC:
- Market Rent View:

### Capital Plan
- Immediate Repairs:
- Near-Term Replacements:
- Competitiveness Upgrades:

### Returns Summary
- Going-In Yield:
- Stabilized Yield:
- Base-Case IRR:
- Equity Multiple:

### Key Risks
- ...

### Verdict
PASS | MARGINAL | FAIL

### Confidence Level
HIGH | MEDIUM | LOW

Quality Checks

  • Contractual revenue is separated from market-rent assumptions
  • Rollover is explicitly modeled rather than buried in growth
  • TI and LC are not omitted
  • Recoveries and leakage are handled explicitly
  • CapEx is separated from routine operating costs

When Data is Missing

  • If reimbursements are unclear, underwrite conservatively
  • If TI / LC market data is missing, state directional assumptions and lower confidence
  • If the lease roster is incomplete, identify which tenants or terms create the greatest model sensitivity

Confidence Scoring

Level Criteria
HIGH Lease roster, market rent, CapEx, and recovery structure are all clear
MEDIUM Core rent and market data available, but some release-cost assumptions estimated
LOW Significant lease or building-capital uncertainty remains

Related Knowledge Bases

Research Basis