2 ms·
I think implicit here > This was almost a year delay and added cost overruns, etc. It also made the required rent higher to recoup those costs and try to be pr
by mannerheim 4y ago
I think implicit here
> This was almost a year delay and added cost overruns, etc. It also made the required rent higher to recoup those costs and try to be profitable (that deal will lose money).
is the 'try to be profitable' that implies they did end up raising rent higher than otherwise planned, but you are right that this isn't necessarily true.
- s1artibartfast 4y agothats fair
- eagleinparadise 4y agoWe did end up pursuing higher rents than what was "market", unsuccessfully. By setting a lower rent, it meant that a lender or potential buyer would underwrite that income, resulting in significantly lower valuations, making the magnitude of the economics worse. But holding out for higher rents pushes out the business plan and increases the risk of the deal (ie your loan matures and you had no leases in place) If you can hit the same 10% return on 20% lower revenue... you can attract more capital and execute with a better measure of risk. My point was that the I of ROI increased substantially and we needed to try to hit the rate R of ROI.