Sensitivity Analysis & Risk Mitigation
Scenarios
Mitigations
Key Variables
• Cost +10%: IRR drops to 18% • Rent -10%: IRR drops to 20% • Cap rate +0.5%: IRR drops to 19%
• Fixed-price modular contracts • Pre-leasing to top employer groups • CPACE reduces WACC
Construction cost, rent, cap rent
Levered Return (IRR)
Levered Return (IRR)
Constructi on Loan Interest Rate (%)
Constructio n Cost ($/psf)
9.8% 5.0% 5.5% 6.0% 6.5% 7.0%
0.0%
300
325
350
375
400
4.5%
20.8% 20.5% 20.2% 20.0% 19.7%
4.5%
24.3% 22.2% 20.2% 18.4% 16.8%
4.0%
19.6% 19.4% 19.1% 18.9% 18.6%
4.0%
23.2% 21.1% 19.1% 17.3% 15.7%
3.5%
18.5% 18.3%
18.0%
17.7% 17.5%
3.5%
22.1% 19.9%
18.0%
16.2% 14.6%
3.0%
17.4% 17.1% 16.8% 16.6% 16.3%
3.0%
21.0% 18.8% 16.8% 15.1% 13.4%
2.5%
16.2% 15.9% 15.7% 15.4% 15.2%
2.5%
19.8% 17.6% 15.7% 13.9% 12.3%
Contingen cy (%)
ESG Initiative ($)
0.0% 3.0% 3.5% 4.0% 4.5% 5.0%
4,000,000 4,500,000 5,000,000 5,500,000 6,000,000
4.5%
20.5% 20.4% 20.2% 20.1% 19.9%
4.5%
20.4% 20.3% 20.2% 20.2% 20.1%
4.0%
19.4% 19.3% 19.1% 19.0% 18.8%
4.0%
19.3% 19.2% 19.1% 19.0% 19.0%
3.5%
18.3% 18.1%
18.0%
17.8% 17.7%
3.5%
18.1% 18.1%
18.0%
17.9% 17.9%
3.0%
17.1% 17.0% 16.8% 16.7% 16.5%
3.0%
17.0% 16.9% 16.8% 16.8% 16.7%
2.5%
16.0% 15.8% 15.7% 15.5% 15.4%
2.5%
15.8% 15.7% 15.7% 15.6% 15.5%
Made with FlippingBook Online newsletter maker