cre-investment-analysis

Commercial Real Estate Investment Analysis & Business Plan

Professional-grade commercial real estate investment analysis combining academic rigor with institutional underwriting standards. This skill produces defensible, audit-ready analyses suitable for lenders, equity partners, institutional investors, and academic research.

Core Capabilities

Investment Analysis

• Property Types: Multifamily, office, retail, industrial, mixed-use, land development
• Financial Modeling: DCF, IRR, NPV, cash-on-cash returns, equity multiples, yield metrics
• Underwriting: Institutional-grade assumptions, sensitivity analysis, scenario modeling
• Market Analysis: Supply/demand dynamics, comparable sales/leases, submarket positioning
• Risk Assessment: Systematic risk factors, mitigation strategies, probability-weighted outcomes

Business Plan Development

• Executive Summary: Investment thesis, value proposition, target returns
• Market Overview: Demographics, economic drivers, competitive landscape, barriers to entry
• Property/Portfolio Description: Physical characteristics, tenant mix, lease analysis, capital needs
• Financial Projections: 5-10 year pro formas, capital structure, waterfall distributions
• Operations Strategy: Property management, value-add initiatives, repositioning plans
• Exit Strategy: Hold period rationale, exit assumptions, multiple disposition scenarios

Analytical Frameworks

• Acquisition Analysis: Purchase price justification, sources & uses, closing adjustments
• Development Feasibility: Land basis, hard/soft costs, construction timeline, lease-up assumptions
• Disposition Strategy: Hold vs. sell analysis, 1031 exchange considerations, tax implications
• Portfolio Optimization: Correlation analysis, geographic diversification, risk-adjusted returns
• REIT Analysis: FFO/AFFO metrics, same-store NOI growth, leverage ratios, dividend coverage

Methodology

1. Property & Market Assessment

Physical Analysis

• Site characteristics (location, access, visibility, topography)
• Building specifications (square footage, age, condition, systems)
• Unit mix and layouts (for multifamily)
• Parking ratios and amenities
• Deferred maintenance assessment
• Required capital expenditures

Market Positioning

• Submarket definition and boundaries
• Competitive set identification
• Market rent analysis (asking vs. effective)
• Occupancy trends and absorption rates
• New supply pipeline
• Economic and demographic drivers
• Transportation and infrastructure

2. Financial Underwriting

Revenue Modeling

• In-place vs. market rents (roll-to-market analysis)
• Lease expiration schedule
• Renewal probability and rent escalations
• Vacancy and collection loss assumptions (market-based)
• Ancillary income (parking, laundry, pet fees, etc.)
• Percentage rent (for retail)

Operating Expense Projection

• Property taxes (actual + projected reassessment)
• Insurance (property, liability, flood if applicable)
• Utilities (tenant vs. landlord responsibility)
• Repairs and maintenance (% of EGI or per-unit/SF)
• Property management (% of EGI, typically 3-5%)
• Administrative costs
• Payroll (on-site staff if applicable)
• Contract services (landscaping, security, etc.)
• Replacement reserves ($/unit or $/SF annually)

Capital Structure

• Debt: LTV ratio, interest rate, amortization, IO period, prepayment penalties
• Equity: Preferred vs. common, promote structure, waterfall tiers
• Total project costs: Acquisition, closing, renovation, lease-up reserves
• Sources and uses statement

Cash Flow Analysis

• Levered vs. unlevered returns
• Before-tax vs. after-tax analysis
• Free cash flow to equity
• Promote/carry calculations
• Sensitivity to key variables (rent, occupancy, exit cap)

3. Valuation Methods

Income Approach

• Direct capitalization: NOI / cap rate
• Discounted Cash Flow (DCF): NPV of cash flows + reversion
• Terminal value calculation (exit cap rate or cap rate compression/expansion)

Sales Comparison Approach

• Price per unit (multifamily)
• Price per square foot (office, retail, industrial)
• Adjustments for condition, location, size, vintage
• Recent comparable transactions analysis

Cost Approach (primarily for new construction)

• Land value + replacement cost - depreciation
• Developer's profit and entrepreneurial incentive

4. Risk & Sensitivity Analysis

Scenario Modeling

• Base case (most likely)
• Downside case (conservative assumptions)
• Upside case (optimistic but achievable)

Sensitivity Tables

• Two-way tables (e.g., exit cap vs. rental growth)
• Monte Carlo simulation for complex portfolios
• Stress testing (recession scenario, interest rate shock)

Key Risk Factors

• Market risk (supply/demand imbalance)
• Lease-up risk (new construction or major repositioning)
• Interest rate risk (floating rate debt, refinance risk)
• Operational risk (management, deferred maintenance)
• Liquidity risk (ability to exit on timeline)
• Regulatory/political risk (rent control, zoning changes)

5. Business Plan Components

Executive Summary (2-3 pages)

• Investment highlights
• Property/market overview
• Financial summary (purchase price, NOI, returns)
• Value creation strategy
• Risk factors and mitigants
• Recommendation

Market Analysis (5-10 pages)

• Economic overview (MSA and submarket)
• Demographics and employment
• Supply and demand fundamentals
• Competitive analysis
• Market rent and occupancy trends
• Outlook and growth drivers

Property Description (5-10 pages)

• Location and access
• Site and improvements
• Unit/space mix
• Rent roll analysis
• Physical condition assessment
• Required capital improvements

Financial Analysis (10-15 pages)

• Operating pro forma (5-10 years)
• Capital budget
• Cash flow projections
• Return metrics (IRR, equity multiple, cash-on-cash)
• Sensitivity analysis
• Comparison to investment hurdles

Operational Strategy (3-5 pages)

• Property management approach
• Leasing strategy
• Capital improvement plan
• Value-add initiatives
• Timeline and milestones

Exit Strategy (2-3 pages)

• Hold period rationale
• Exit assumptions (cap rate, NOI)
• Disposition process
• Alternative exit scenarios

Appendices

• Detailed rent roll
• T-12 operating statements
• Property tax assessment
• Environmental Phase I
• Property condition assessment
• Market comparables
• Detailed financial model

Working with Input Documents

Commercial real estate analysis frequently requires extracting data from various document types. This skill works seamlessly with Claude's official document processing skills to analyze input materials.

Common Document Types in CRE Analysis

Financial Documents

• Excel Spreadsheets (.xlsx, .xlsm, .csv): Operating statements, rent rolls, financial models, budgets
• PDF Files (.pdf): Offering memorandums, appraisal reports, environmental reports, property condition assessments, tenant estoppels, title reports

Presentation Materials

• PowerPoint (.pptx): Investment presentations, market studies, board presentations
• Word Documents (.docx): Business plans, market reports, legal documents, LOIs, PSAs

Required Skills for Document Processing

To analyze documents as inputs, you need the official Claude document skills:

• pdf - Extract text/tables from PDFs, read offering memos, appraisals
• xlsx - Read/analyze spreadsheets, extract rent rolls, operating statements
• docx - Read Word documents, extract text from reports
• pptx - Analyze presentation content, extract market data

Installing Official Document Skills

If you already have these skills: Skip this section - they're already available in your environment.

If you need to install them:

Option 1: Claude.ai Users

• These skills are built-in and automatically available
• No installation needed

Option 2: Claude Code Users

• Skills are located at /mnt/skills/public/ in your environment
• Available skills: pdf, xlsx, docx, pptx
• These load automatically when needed

Option 3: Manual Installation (if needed)

# Download from Anthropic's official skills repository
git clone https://github.com/anthropics/skills.git
cd skills/skills/

# Copy the skills you need to your Claude skills directory
cp -r docx ~/.claude/skills/
cp -r xlsx ~/.claude/skills/
cp -r pdf ~/.claude/skills/
cp -r pptx ~/.claude/skills/

Or visit: https://github.com/anthropics/skills

Document Processing Workflows

Workflow 1: Analyzing an Offering Memorandum (PDF)

User provides: PDF offering memorandum for a property

Processing steps:

1. Use pdf skill to extract text and tables from the offering memo
2. Identify key data points: purchase price, NOI, rent roll, cap rate, property details
3. Use cre-investment-analysis skill to validate assumptions and create independent analysis
4. Cross-reference extracted data with market standards
5. Generate investment recommendation

Example prompt:

I have an offering memorandum PDF for a multifamily property. Please:
1. Extract all financial data and property information
2. Using the cre-investment-analysis skill, validate the sponsor's assumptions
3. Perform independent DCF analysis
4. Provide investment recommendation

Workflow 2: Analyzing Operating Statements (Excel)

User provides: T-12 operating statement in Excel

Processing steps:

1. Use xlsx skill to read and analyze the spreadsheet
2. Extract revenue, expense, and NOI data
3. Validate expense ratios against industry benchmarks (from references/underwriting-standards.md)
4. Identify unusual line items or inconsistencies
5. Use extracted data for pro forma projections

Example prompt:

Analyze this T-12 operating statement (Excel file) for a 200-unit apartment property:
1. Extract all revenue and expense data
2. Calculate operating expense ratio and compare to industry standards
3. Identify any red flags or unusual expenses
4. Use the cre-investment-analysis skill to project stabilized NOI

Workflow 3: Creating Investment Presentations (PowerPoint)

User wants: PowerPoint presentation for investment committee

Processing steps:

1. Use cre-investment-analysis skill to perform complete analysis
2. Generate key findings, financial projections, risk analysis
3. Use pptx skill to create professional presentation
4. Include market data, financial tables, sensitivity analysis
5. Format according to institutional standards

Example prompt:

Create an investment committee presentation using:
1. cre-investment-analysis skill to analyze this acquisition
2. pptx skill to create a 15-slide PowerPoint with:
   - Executive summary
   - Market overview
   - Property details
   - Financial analysis
   - Risk assessment
   - Recommendation

Workflow 4: Creating Professional Excel Financial Models

User wants: Professional CRE financial model in Excel

Processing steps:

1. Use cre-investment-analysis to define model structure and calculations
2. Use xlsx skill to create Excel workbook with professional formatting
3. Apply industry-standard color coding and formulas
4. Organize tabs logically (Summary, Assumptions, Pro Forma, etc.)
5. Ensure all calculations use formulas and cell references (no hardcoding)

Example prompt:

Create a professional multifamily acquisition model in Excel:

Property Details:
- 180 units, purchase price $27M
- Current NOI $1.65M
- 70% LTV financing at 6.0%

Model Requirements:
1. Summary tab with all key metrics
2. Assumptions tab (color-coded inputs)
3. 10-year operating pro forma
4. Debt amortization schedule
5. Cash flow waterfall
6. Sensitivity tables (IRR vs. exit cap and rent growth)

CRITICAL: Use formulas and cell references throughout - no hardcoded values except in Assumptions tab. Follow professional CRE formatting standards.

Professional Excel Standards (using xlsx skill):

• Blue text: All assumption inputs (growth rates, cap rates, costs)
• Black text: All formulas and calculated values
• Green text: Cell references to other worksheets
• Yellow highlights: Key assumptions requiring attention
• No hardcoding: Every number except assumptions must be a formula
• Cell references: Use absolute ($B$5) and relative (B5) references appropriately
• Consistent formulas: Copy formulas across periods - no manual entry
• Zero formatting: Display zeros as "-" for cleaner presentation
• Currency format: Use $#,##0 with units in headers ("Revenue ($000s)")

Workflow 5: Extracting Rent Roll Data (Excel + Analysis)

User provides: Rent roll spreadsheet

Processing steps:

1. Use xlsx skill to read rent roll data
2. Calculate weighted average rent, occupancy, lease expiration schedule
3. Identify roll-to-market opportunities
4. Use cre-investment-analysis to project rental income with lease-up assumptions
5. Generate value-add analysis

Example prompt:

I have a rent roll Excel file. Please:
1. Extract all unit-level data (unit #, beds/baths, SF, current rent, lease expiration)
2. Calculate weighted average rent and occupancy
3. Compare to market rents (Austin, TX - Class B multifamily)
4. Using cre-investment-analysis skill, project stabilized income after roll-to-market
5. Estimate value creation from rent growth

Workflow 6: Analyzing Appraisal Reports (PDF + Word)

User provides: Appraisal report (PDF) and supplementary docs (Word)

Processing steps:

1. Use pdf skill to extract appraisal conclusions, comparable sales, income approach
2. Use docx skill to read supplementary market reports
3. Validate appraiser's assumptions against market data
4. Use cre-investment-analysis to perform independent valuation
5. Identify discrepancies or areas of concern

Example prompt:

Review this appraisal report (PDF) and market study (Word doc):
1. Extract the appraiser's value conclusion and methodology
2. Extract comparable sales and income approach assumptions
3. Using cre-investment-analysis skill, perform independent analysis
4. Compare results and identify any material differences
5. Provide assessment of appraisal quality

Integration Best Practices

Excel Model Creation (CRITICAL) When using xlsx skill to create CRE financial models:

1. NO HARDCODING: Use formulas with cell references - never hardcode values in calculation cells
2. Color Coding: Blue text = inputs, Black text = formulas, Green text = cross-sheet references
3. Cell References: All calculations must reference Assumptions tab (e.g., =Assumptions!$B$5)
4. Consistent Formulas: Copy formulas across periods - don't manually enter values
5. Professional Formatting: Currency as $#,##0, zeros as "-", negatives as (123)
6. Zero Errors: Deliver models with NO #REF!, #DIV/0!, #VALUE!, or #N/A errors
7. Documentation: Source all blue assumption inputs in adjacent cells or comments

Example of CORRECT formula structure:

❌ WRONG: =1450 * 180 * 12 * 1.03
✅ CORRECT: =Assumptions!$B$8 * Assumptions!$B$5 * 12 * (1 + Assumptions!$B$9)

Data Extraction Priority

1. Always extract and validate source data before creating analysis
2. Cross-reference multiple documents when available (e.g., rent roll vs. offering memo)
3. Flag discrepancies between documents
4. Document all data sources in final output

Quality Control

1. Verify extracted numbers match source documents
2. Check for data entry errors or OCR mistakes (especially with PDFs)
3. Validate calculations independently
4. Compare extracted assumptions to market standards
5. Excel Models: Test that changing any assumption flows through entire model

Common Document Combinations

• Acquisition package: Offering memo (PDF) + T-12 (Excel) + Rent roll (Excel) + Photos
• Due diligence: Appraisal (PDF) + PCA (PDF) + Phase I Environmental (PDF) + Title report (PDF)
• Underwriting: Financial model (Excel) + Market study (Word/PDF) + Comp set (Excel)
• Investment committee: Analysis memo (Word) + Financial model (Excel) + Presentation (PowerPoint)

Handling Common Document Issues

Scanned PDFs (Non-searchable)

• The pdf skill includes OCR capabilities for scanned documents
• May require additional processing time
• Verify extracted data accuracy due to OCR errors

Protected/Encrypted PDFs

• The pdf skill can handle password-protected files if password is provided
• Some restrictions may prevent text extraction

Complex Excel Models

• Focus on extracting key inputs and outputs
• Validate formulas when possible
• Note assumptions and limitations

Legacy File Formats

• .doc files: Convert to .docx before processing
• .xls files: Usually can be read by xlsx skill
• Older formats may require conversion

Example: Complete Acquisition Analysis from Documents

User provides:

• Offering memorandum (PDF)
• T-12 operating statement (Excel)
• Rent roll (Excel)
• Market study (PDF)

Complete workflow:

Please analyze this multifamily acquisition opportunity:

STEP 1: Extract data from all documents
- PDF offering memo: Property details, asking price, seller's pro forma
- Excel T-12: Actual historical financials
- Excel rent roll: Unit-level data, lease expirations
- PDF market study: Market rents, occupancy, new supply

STEP 2: Validate and cross-reference
- Compare seller's pro forma to actual T-12
- Compare in-place rents to market rents
- Identify discrepancies or red flags

STEP 3: Perform independent analysis using cre-investment-analysis skill
- Create base case pro forma with conservative assumptions
- Develop 3 scenarios (base/downside/upside)
- Calculate IRR, equity multiple, cash-on-cash returns
- Perform sensitivity analysis

STEP 4: Create deliverables
- Investment memo (Word doc using docx skill)
- Financial model (Excel using xlsx skill)
- IC presentation (PowerPoint using pptx skill)

All deliverables should follow institutional formatting standards.

Output Standards

Professional Formatting

• Executive summary suitable for board presentation
• Tables and charts with institutional-quality formatting
• Color-coding: Green for actuals, yellow for key assumptions, blue for headers
• Clear labeling of units ($/SF, $/unit, %, basis points)
• Footnotes for key assumptions and data sources

Analytical Rigor

• All assumptions clearly stated and defensible
• Market data sourced from credible providers (CoStar, REIS, LoopNet, CBRE, JLL)
• Conservative underwriting where uncertainty exists
• Explicit treatment of risk factors
• Sensitivity to institutional investor requirements

Academic Standards

• Proper citations for market data and research
• Methodology transparency
• Replicable analysis
• Peer-reviewed frameworks (e.g., Geltner & Miller, Real Estate Principles)
• Alignment with NCREIF, NAREIT, or ULI standards where applicable

Key Metrics & Benchmarks

Return Metrics

• IRR: Target 15-20% for value-add, 8-12% for core
• Equity Multiple: Typically 1.5x - 2.5x over 5-7 years
• Cash-on-Cash Return: Year 1 typically 6-10%
• Yield on Cost: Development projects target 7-9%

Underwriting Assumptions

• Vacancy: Market rate + 200-300 bps for stabilized properties
• Rent Growth: Inflation + 0-200 bps depending on market
• Operating Expense Ratio: 35-45% of EGI (varies by property type)
• Management Fee: 3-5% of EGI
• Replacement Reserves: $250-400/unit annually (multifamily)
• Exit Cap Rate: Entry cap + 25-50 bps (compression risk)

Leverage Parameters

• Core: 50-65% LTV
• Value-Add: 60-75% LTV
• Development: 70-80% LTV (with mezz or pref equity)
• DSCR: Minimum 1.25x (typical lender requirement)

Usage Instructions

For Acquisition Analysis

Provide: Address/location, property type, purchase price, current NOI, unit/SF count, market data Output: Complete investment memo with DCF, sensitivity analysis, and recommendation

For Development Feasibility

Provide: Location, proposed use, site size, development program, estimated costs Output: Feasibility study with pro forma, yield analysis, and risk assessment

For Business Plan Creation

Provide: Investment strategy, target market, property type, capital structure Output: Full business plan suitable for equity raise or lender presentation

For REIT Analysis

Provide: REIT ticker, property types, geographic focus Output: Investment analysis with FFO/AFFO projections, comp set comparison, buy/sell recommendation

Quality Assurance

• Cross-check all calculations
• Verify units and conversions
• Ensure internal consistency (e.g., sources = uses)
• Validate assumptions against market data
• Check formulas in Excel models
• Review for typographical errors
• Confirm all exhibits are referenced in text

References & Resources

Internal References

• See references/underwriting-standards.md for industry benchmarks
• See references/market-data-sources.md for data provider guidance
• See references/reit-analysis-framework.md for REIT-specific metrics
• See references/document-integration-workflows.md for detailed workflows combining this skill with document processing skills
• See scripts/dcf_analysis.py for discounted cash flow calculations
• See scripts/sensitivity_analysis.py for scenario modeling
• See assets/templates/ for Excel pro forma templates

Required Document Processing Skills

To analyze input documents (offering memos, rent rolls, appraisals, financial statements), this skill integrates with Claude's official document skills:

• pdf - Extract data from offering memorandums, appraisals, reports

  • Location: /mnt/skills/public/pdf/
  • GitHub: https://github.com/anthropics/skills/tree/main/skills/pdf
  • Use for: Reading PDFs, extracting tables, OCR on scanned documents

• xlsx - Analyze Excel spreadsheets, rent rolls, operating statements

  • Location: /mnt/skills/public/xlsx/
  • GitHub: https://github.com/anthropics/skills/tree/main/skills/xlsx
  • Use for: Reading/writing Excel files, extracting financial data, creating professional financial models
  • CRITICAL: When creating models, use formulas (not hardcoded values), apply professional color coding, and follow CRE formatting standards

• docx - Process Word documents, reports, business plans

  • Location: /mnt/skills/public/docx/
  • GitHub: https://github.com/anthropics/skills/tree/main/skills/docx
  • Use for: Reading Word docs, creating investment memos, market reports

• pptx - Create and analyze PowerPoint presentations

  • Location: /mnt/skills/public/pptx/
  • GitHub: https://github.com/anthropics/skills/tree/main/skills/pptx
  • Use for: Creating investment committee presentations, board decks

These skills are automatically available in Claude.ai and Claude Code environments. If not available, see "Installing Official Document Skills" section above.