Apolis

Deal: St. Louis Park West End, 200 unitsPage: Make it work

Make it work

Sample

What has to change for the deal to hit its target, one lever at a time or together.Model v1, worked example, no edits

Sample deal.

Untrended yield on cost · untrended
6.51%
NOI over total project cost
Untrended NOI · annual
$3.40M
$17,000 per unit
Total project cost · all in
$52.19M
$260,945 per unit, 200 units
Development spread · over exit cap
101 bps
Exit cap 5.50%

What the deal has to hit

Pick the measure and the target. Every lever below solves against it.

Untrended yield on cost 6.51%, target 7.00%: short 49 bps.

What each lever needs on its own

Each lever solved alone, tagged against the comps or a stated test.

Revenue

  • Rent increase, all types

    Mix-weighted rent against the mix-weighted comp median: at or under is Realistic, up to 5.0% over is Stretch. 3 bed has no comp and is left out.

    $112 per unit per month

    5.1% on the $2,184 average rent

    Not supported

  • Rent increase, 2 bed only

    2 bed has the most room under its comp median. Rent against that median: at or under is Realistic, up to 5.0% over is Stretch.

    $299 per 2 bed unit per month

    11.7% on $2,550, comp median $2,578

    Not supported

  • Other income

    No comp for other income. Against today's $140 per unit: up to 15% more is Realistic, up to 35% Stretch.

    $106 per unit per month

    76% more than today's $140

    Not supported

  • Unit mix shift, 2 bed to Studio

    Same rentable area, each type at its own rent per SF. Share of 2 bed units converted: up to 10% Realistic, up to 25% Stretch.

    24 2 bed units to 52 studios

    32% of the 2 bed units, $943 more rent a month each

    Not supported

Costs

  • Hard cost cut

    Against finish swaps found: fully covered is Realistic, at least 50% covered is Stretch.

    $3,617,870 total

    $18,089 per unit, 8.8% of hard cost

    Not supported

  • Soft cost and contingency cut

    Share of $4,436,560 soft cost and contingency: up to 10% Realistic, up to 25% Stretch.

    $3,617,870 total

    81.5% of soft cost and contingency

    Not supported
Finish swaps found 8 swaps, $1,325,050
  • Cabinets: Standard close, single toneLow rent risk$120,000 ($600 per unit)
  • Window coverings: Vinyl blinds in place of solar shadesNo rent risk expected$30,000 ($150 per unit)
  • Laundry: Compact 24 inch stacked pairLow rent risk$110,000 ($550 per unit)
  • Countertops: LaminateHigh rent risk$375,900 ($1,880 per unit)
  • Flooring: Both: carpet in bedrooms, LVP at bathsModerate rent risk$197,000 ($985 per unit)
  • Smart features: Keyless entry onlyLow rent risk$80,000 ($400 per unit)
  • Ceilings: Popcorn (acoustic spray)Moderate rent risk$152,150 ($761 per unit)
  • Appliances: Standard white, top freezerHigh rent risk$260,000 ($1,300 per unit)

Land

  • Land price reduction

    Price per unit after the cut against 7 land comps: at or above the $11,833 median Realistic, at or above the $8,615 low Stretch.

    $3,617,870 off the price

    More than the $2,000,000 price

    Not supported

  • Units added at the same land

    Units per acre against 19 comps: up to the 75th percentile Realistic, up to the densest comp Stretch. Added units carry average NOI and non-land cost.

    Cannot reach the target alone

    Each added unit yields 6.77% on its own $250,945 cost, under the target.

    Not supported

Financing

  • Loan to cost

    Moves IRR, not yield on cost

    Choose Investor IRR as the target to solve it

    Not a yield lever

  • Construction loan rate

    Moves IRR, not yield on cost

    Choose Investor IRR as the target to solve it

    Not a yield lever

  • Interest-only months

    Moves IRR, not yield on cost

    Choose Investor IRR as the target to solve it

    Not a yield lever

  • TIF or grant amount

    Moves IRR, not yield on cost

    Choose Investor IRR as the target to solve it

    Not a yield lever

  • Waterfall structure

    Moves IRR, not yield on cost

    Choose Investor IRR as the target to solve it

    Not a yield lever

Which combination closes the gap

Check levers and set amounts. Each starts at what it bears and still reads Realistic.

  • +3 bps

    Realistic

  • +4 bps

    Realistic

  • +9 bps

    Realistic

  • +14 bps

    Realistic

  • +18 bps

    Realistic

  • +6 bps

    Realistic

  • Off

    Stretch

  • Off

    Realistic

With these: 7.06%, target met

  • Rent, all types+3 bps5% of the gap
  • Rent, 2 bed+4 bps9% of the gap
  • Other income+9 bps19% of the gap
  • Unit mix+14 bps29% of the gap
  • Hard cost+18 bps37% of the gap
  • Soft and contingency+6 bps13% of the gap
How the math works

Yield on cost is NOI over total project cost. For a target, NOI needed is the target times cost, and the cost allowed is NOI over the target.

Revenue levers close NOI needed less NOI. A rent dollar reaches NOI at 94.12%, after vacancy, concessions and credit loss; other income is carried in full.

Cost and land levers close cost less the cost allowed, dollar for dollar. Developer fee, contingency and financing are held where they are.

Units added at the same land carry the average NOI and the average non-land cost per unit, so each one yields 6.77% on its own cost. Adding units moves the deal toward that figure, never past it.

A development spread target is a yield on cost target of the 5.50% exit cap plus the spread.

Investor IRR is the LP IRR from the scenario rerun the sensitivity grid uses, solved by bisection. That run holds equity, loans and the sale date fixed, so cost, land and loan levers wait for the live model.

In a combination, levers apply in the order listed. Each lever's share is the change it makes on top of the levers above it, so the shares add to the combined result.

Tests without a comp use stated thresholds: other income up to 15% more, a mix shift up to 10% of a type, soft cost and contingency up to 10%, read Realistic.