Financial Model Case Study

Mixed-Use Urban Development

36 Apartments · 850 sqm Retail · $18.1M AUD · Urban Australia

At a Glance

Project Snapshot

Ground-up mixed-use development: 36 residential apartments above 850 sqm of retail, urban Australia.

$18.1M

Total Project Cost

AUD, fully capitalized

36

Residential Units

Apartments above ground-floor retail

850

Retail GLA (sqm)

Ground-floor commercial tenancies

10.3%

Investor IRR

Over a nine-year lifecycle

2.03x

Equity Multiple

$8.1M in, $14.1M out

16/16

Audit Checks

All integrity checks passing

Situation

The Development Opportunity

This mixed-use project delivers 36 residential apartments above 850 sqm of ground-floor retail within an urban Australian site. The capital stack combines $10.0M in senior construction debt with $8.1M in investor equity to fund the $18.1M project cost, with a strategy built around a standard development timeline and operating hold period leading to a 2035 exit.

01

2027 Q1

Land acquisition and construction commencement

02

2028 Q3

Construction completion — six-quarter build

03

2029

Lease-up and stabilization period begins

04

2035

Exit disposition at 5.25% cap rate

Approach

Modeling Methodology

The financial model underwrites the full project lifecycle, from initial land acquisition through the final exit disposition.

1

S-Curve Construction Draws

The draw schedule front-loads land costs and distributes hard costs following a standard bell-curve pattern.

2

Dual-Speed Lease-Up

Residential and retail tenancies are modeled on separate stabilization timelines, reflecting distinct mixed-use absorption dynamics.

3

Annual Rent Escalation

Annual escalations are applied to both residential and retail base rents, compounding throughout the entire hold period.

4

Conservative Exit Assumptions

Exit valuations utilize standardized cap rate and disposition cost assumptions, paired with a transition to amortizing permanent debt.

Workbook Structure

What the Model Covers

The model is organized across eight integrated tabs, tracing all outputs back to a single input sheet.

Assumptions

All model inputs are centralized on one sheet for streamlined updates.

Development Budget

Provides a quarterly S-curve cost allocation with full draw reconciliation.

Debt Schedule

Tracks the transition from construction financing to permanent amortizing debt.

Revenue & Lease-Up

Models the occupancy stabilization timelines for residential and retail components.

Operating Pro Forma

Calculates key performance metrics including NOI, cash flow, and debt coverage.

Sources & Uses

Ensures static reconciliation between total project costs and funding sources.

Equity Returns

Analyzes exit valuations and investor-level performance metrics like IRR.

Audit Checks

Provides formula-driven integrity checks to verify all model calculations.

Capital Structure

Sources & Uses: $18.1M Total Capitalization

$10.0M

Senior Debt

55% of total capitalization

$8.1M

Investor Equity

45% of total capitalization

$18.1M

Total Project Cost

Fully capitalized

Uses Breakdown ($M)

Construction Timeline

S-Curve Draw Schedule

Quarterly construction draws totaling $16.6M across seven quarters, front-loaded with land acquisition in Q1 2027.

$16.6M

Total Draws

Across seven quarters

$2.8M

Peak Quarter

Q1 2027, Q4 2027, Q1 2028, Q2 2028

Q3 2028

Final Draw

$1.2M completion draw

Quarterly Construction Draws ($M)

Debt Structure

Construction-to-Permanent Debt Transition

$10.0M senior debt facility transitions from interest-only construction financing to a 25-year amortizing permanent loan at exit.

01

2027–2028 — Construction Period (Interest-Only)

Senior debt draws $10.0M at 6.2% interest-only. Draws follow the S-curve schedule across seven quarters.

02

2029 — Permanent Loan Conversion

Debt converts to a 25-year amortizing permanent loan at 5.8% upon stabilization.

03

2035 — Exit & Debt Repayment

Remaining $8.8M loan balance repaid at exit from gross proceeds of $23.5M.

$10.0M

Senior Debt Facility

55% of total capitalization

6.2% → 5.8%

Rate Transition

Construction to permanent

$8.8M

Balance at Exit

After 6 years of amortization

Operating Performance

Revenue, NOI & Lease-Up Ramp

96%

Residential Occupancy

Stabilized by Year 2, ramping from 40% at opening

93%

Retail Occupancy

Stabilized over six quarters, trailing residential absorption

75.4%

NOI Margin

Stabilized margin held consistently through the hold period

Investor Returns

Equity Cash Flows & Exit Proceeds

Annual Investor Cash Flows ($M)

$8.1M

Equity Deployed

Across 2027–2028

$14.1M

Net Proceeds

At 2035 exit

10.3%

Investor IRR

Nine-year lifecycle

2.03x

Equity Multiple

$8.1M in → $14.1M out

At exit in 2035, the property sells for $23.5M at a 5.25% cap rate. After repaying $8.8M in senior debt and $586K in disposition costs (2.5% of gross value), investors receive $14.1M in net proceeds — returning 2.03x on $8.1M of deployed equity over a nine-year hold.