Concern on Pro Forma statements presented by auction properties – Rating: 3

7 thoughts on “Concern on Pro Forma statements presented by auction properties – Rating: 3”

  1. Wow – it depends on a lot of things, and why you’re running the proforma in the first place. For commercial real estate I would expect more than 1 year, but it’s not cut-and-dry.

  2. **A pro forma is utterly, completely, beyond worthless when buying a half occupied retail property in today’s CRE climate**.

    You need historical info detailed enough to splice out what it will take to operate the property at a deficit until you can add more tenants.

  3. Are you doing the pro forma? How long do you intend to hold the property for? It does depend. Everyone is going to analyze a deal differently. A proforma is a tool used for project management and investment purposes. It’s often a loosely educated guess that gets refined as you get closer to closing. It then becomes the metric by which you attempt to manage the asset.

  4. If this is 55% occupied with a Pizza Hut, I’m gonna guess it’s a 15-20 year old strip center with Pizza Hut flexing a 5-year option and is paying net plus reimbursements. Depending on your market you may have to offer gross leases rather than net + reimbursements for second use space. You may also have to offer TIAs which is something to think about

  5. Pro forma is Latin for “I’m lying”.

    I would not expect to turn a profit with a 5 year hold. I have sold after 5 years when getting lucky but I never plan to.

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