During the July 11 edition of the RealNex Webinar Series, Dr. Jeffrey Fisher introduced the new Development Analysis tool available in MarketEdge. He highlighted the differences between development analysis and traditional investment analysis and how the two can be put together to create a blended return should a developer decide to hold rather than sell at the end of the development phase. To prepare the analysis the presentation highlights all the development cost inputs, loan terms on both construction and permanent and income assumptions. The analysis focused on the feasibility of the project, the maximum investment and minimum income required to be feasible, sensitivity analysis, rates of return and optimum time to exit.
The RealNex MarketEdge Development Analysis application takes users through a step by step process prompting for all the key assumptions required.
The project starts with a focus on Development costs focusing on the details of:
- Land Acquisition, including any buildings
- Site Prep, with details for grading infrastructure like roadways, sidewalks, water and sewer, gas and electric among others
- Hard Costs – Including budgets for construction of buildings, the foundation, shell, walls, electrical systems
- Soft Costs – To capture legal, accounting, architectural, engineering, zoning, environmental and related costs
- Miscellaneous Expenses – as needed
- Contingency Reserves – if desired
- Required Equity
The Development Costs less the Equity set the amount of the required Construction Loan, which is then modeled based on the staged timing of take downs as costs are incurred.
The analysis then moves into the lease up phase including rates, terms and timing together with leasing costs and operational expenses. Finally the system takes into consideration the details of the permanent loan all the terms and timing.
Once the system walks you through all the required inputs a host of financials are generated to determine feasibility and to indicate when optimum returns are achieved. Should return hurdles not be achieved assumptions can be tweaked to determine if costs can be saved or additional income realized to make the project work. Once effectively modeled to indicate an appropriate and worthwhile investment, professional presentations can then be swiftly created for developers, lenders and investors.
Of course, the MarketEdge Development Analysis comes with all the updated presentation tools to put together complete, branded offering memorandums and to manage projects in private and secure Deal Rooms. In addition to the complete set of financial reports, charts and dashboards, the system automatically makes available aerial photos of the subject site, area maps, demographics and enables the user to create detailed property profiles and photo arrays to showcase the asset.
While not part of the MarketEdge Development Analysis, clients may also want to take advantage of the RealNex 3D Virtual Reality modeling services. These tools can help bring a development project to life to facilitate approval processes and accelerate lease up.
Click the link below to access the presentation deck and webinar recording.
And, If would like to learn more about MarketEdge please click on the following link and a RealNex Product Specialist will reach out to you.