A Proforma is used to help to highlight the assumptions of the property.
The proforma is provided by the issuer as their projection with the investment.
A Proforma is a financial projection highlighting sources and uses of funds, equity/debt breakdown, and partner underwriting.
- Sources & Uses Table: Breakdown of funds allocated for the project.
- Equity / Debt breakdown: Detailed overview of equity and debt financing for the investment.
- Underwriting by partner on the project in excel format: Partner's financial analysis and evaluation of the investment opportunity in spreadsheet format.
Things to Look For:
- Realistic revenue and expense projections.
- Sensitivity analysis for different scenarios.
- Alignment with market trends and data.
Questions to Ask:
- What assumptions underpin the financial projections?
- How were revenue and expense estimates calculated?
- What are the key risks to achieving the projected returns?
Example: If the proforma shows optimistic rental growth, ask how this compares to historical trends and market conditions.