Executive recommendation
REPRICE
REPRICE. Key drivers: levered IRR 9.8% against a 22.0% target; equity multiple 1.34x on $208.18M invested; profit margin on cost 11.9%. Net sellout proceeds of $656.01M against $586.21M of total development cost (selling costs already netted off revenue) produce $69.81M of development profit over 5 years.
Primary strength
Cost & schedule risk at 18.2% overrun tolerance.
Primary risk
NPV at the target return is -$49.04M — the deal does not clear its hurdle.
Investment score
Risk level
High
Return summary
The three headline return tests, judged against the targets set on the Inputs page.
Levered equity IRR
Below target9.8%
Target 22.0% · green needs +1.00pp
-12.2% vs target
Equity multiple
Below target1.34x
Target 1.60x
-0.26x vs target
On $208.18M total equity invested
NPV at target return
Below target-$49.04M
Discounted at 22.0% · required > 0
$49.04M short of the target return
Profitability and capital risk
Development economics and the ability to repay the construction facility.
Net development profit
Below target$69.81M
Margin target 20.0% on cost
$727,155 per unit
Profit margin on cost
Below target11.9%
Minimum 20.0%
-8.1% vs minimum
Break-even sale price per sqft
On target$1,698
Underwritten at $1,900/sqft · legacy programme
+$202/sqft of price cushion
Peak equity requirement
$208.18M
Initial equity $59.65M
$208.18M invested in total
Loan payoff coverage
On target6.93x
Required ≥ 1.00x · comfortable ≥ 1.25x
Debt of $46.86M repaid from period 4 proceeds
Equity cash flow
Equity contributions, debt draws, sales proceeds, loan repayments and net equity cash flow.