Case Study
Ground-Up Industrial/Logistics Development
expertIndustrial/Logistics (ground-up)Senior construction + mezzanine + JV equity~25 min
The Deal
You are an originator at a debt fund evaluating a request to size and confirm financing for a speculative, ground-up industrial development. The sponsor, Meridian Point Development, has already lined up a full capital stack — senior construction debt, a mezzanine tranche, and JV equity from an institutional partner — and needs your underwriting sign-off before the deal is finalized. You'll review the development budget/pro forma, the capital stack term sheet, and the appraisal, then work through the numbers a lender would check before committing.
You’ll Practice
- Identify structural/timing red flags in a multi-tranche construction capital stack
- Calculate total development cost and blended loan-to-cost (LTC) across senior and mezzanine debt
- Calculate debt yield on a construction loan against a stabilized NOI projection
- Calculate a preferred return owed under a JV equity waterfall
- Judge whether a development's yield-on-cost justifies its cost against market cap rates
- Evaluate how a construction delay cascades through a layered capital stack