Build a CRE base case on contractual in-place income before any pro-forma step-up — separating real income from assumed growth so the return rests on something sourced. Reach for this when a deal is being sold on stabilized rents.
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---
name: underwrite-to-in-place-noi
description: "Build a CRE base case on contractual in-place income before any pro-forma step-up — separating real income from assumed growth so the return rests on something sourced. Reach for this when a deal is being sold on stabilized rents."
---
# Skill: Underwrite to in-place NOI
The fastest way to overpay is to underwrite the seller's pro-forma. This runs the base case on in-place income first, then layers each step-up as an explicit, sourced assumption.
## Step 1 — Pin in-place NOI
Build NOI from the actual rent roll and trailing opex — contractual rent, current occupancy, real recoveries. This is the base case (§3 #1).
## Step 2 — Layer step-ups as explicit assumptions
Every mark-to-market, lease-up, and bump becomes a named line with a source and a probability, not baked into a blended growth rate.
## Step 3 — Separate going-in cap from IRR
Show today's income yield and the hold-period levered IRR side by side — they answer different questions (§3 #2).
## Step 4 — Stress the down case
Re-run with the step-ups removed and a wider exit cap; if the deal only works on the pro-forma, say so plainly.
## Output
An in-place base case, a sourced step-up bridge to the pro-forma, and the going-in-cap-vs-IRR pair with a down case.
