Commercial Property Feasibility Analysis

Market Demand: Denver suburban retail showing resilience in necessity-based retail (medical, food, services). 83% occupancy at acquisition is below stabilized 95% target — vacancy unit is the value-add thesis. Year 1 Pro Forma: Gross potential rent (all 6 units): $280,000. Vacancy/credit loss (17%): -$47,600. Effective Gross: $232,400. NNN expenses passed to tenants. NOI: ~$218,000 (after mgmt 6%). Cap Rate at cost: 7.8% — meets target. IRR Sensitivity: Base (stabilized Y2): 14.2% ✓. Rents 10% below: 11.8%. Rents 20% below: 9.1%. Rents 30% below: 6.4% — below target. Go/No-Go: Conditional Go — contingent on verifying NNN lease terms and credit quality of existing tenants before closing.