Primary strength
Cost & schedule risk at 18.2% overrun tolerance.
Executive summary
Bayfront Residences · Miami
New Development — For-Sale Development · Luxury Condominium · 3-year build, 2-year absorption
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.
Recommendation
REPRICE
Grade
E
Risk
High
Score
35 / 100
Investment scorecard
| Criterion | Value | Points | Weight |
|---|---|---|---|
| Levered equity IRR | 9.8% | 6 | 25 |
| Equity multiple | 1.34x | 4 | 15 |
| Profit margin on cost | 11.9% | 5 | 20 |
| NPV at target return | -$49.04M | 0 | 20 |
| Loan payoff coverage | 6.93x | 10 | 10 |
| Cost & schedule risk | 18.2% overrun tolerance | 10 | 10 |
Returns
Levered equity IRR9.8%
Project IRR (unlevered)11.2%
Equity multiple1.34x
NPV at target return-$49.04M
Net sellout proceeds$656.01M
Development profit$69.81M
Profit margin on cost11.9%
Profit margin on adjusted revenue9.5%
Capital & coverage
Total development cost$586.21M
Loan commitment$360.28M
Peak loan balance$198.61M
Total equity invested$208.18M
Peak equity requirement$208.18M
Effective LTC35.8%
Loan payoff coverage6.93x
Break-even sale price per sqft$1,698
Assessment
Primary risk
NPV at the target return is -$49.04M — the deal does not clear its hurdle.