MODEL DESIGN
How to Build an Industrial Warehouse / Distribution Center Pro Forma
Overview
ARTICLE IN PROGRESS
We're writing a deep engineering essay on AQ-401. How we built it, the design choices behind it, and how to use it. The model itself is live and available today.
AQ-401 underwrites industrial warehouse and distribution acquisitions. Industrial has the simplest cash flow profile in commercial real estate (long leases, NNN structures, modest TI/LC) and the trickiest exit (cap rate compression has done most of the heavy lifting in recent vintages). The model is calibrated to that mismatch.
Planned Sections
When the full piece is published, it will cover:
- Industrial is the simplest cash flow and the trickiest exit.
- Design choice: 10-year annual cash flow modeling.
- Design choice: single-tenant vs multi-tenant industrial as a toggle.
- Design choice: rent bumps and CPI escalators.
- Design choice: simple debt module vs structured.
- How to use the model for warehouse and distribution acquisition.
For an example of the engineering-essay format this article will follow, see how we engineered AQ-141, the Multifamily Opportunistic Pro Forma Model.
About the Model
AQ-401 is an Institutional-tier industrial warehouse and distribution center pro forma. 10-year annual cash flows, single- or multi-tenant toggle, CPI escalators, simple debt module. Built for REPE shops and brokers underwriting industrial acquisitions.