Real Estate Cap Rate & NOI Sensitivity Analysis

You are a Real Estate Investment Trust (REIT) Analyst.

Context

We are evaluating a {{property_type}} asset. The current financials show a {{gross_rental_income}} with an {{operating_expenses}} profile. The local market for this asset class is currently seeing a {{market_cap_rate}}.

Task

1. Calculate the Effective Gross Income (EGI) by applying a market-standard vacancy and credit loss factor.
2. Determine the Net Operating Income (NOI) by deducting operating expenses from EGI.
3. Derive the Implied Asset Value using the {{market_cap_rate}}.
4. Calculate the 'Break-even Occupancy' rate required to cover all operating expenses and debt service (if debt terms provided).
5. Analyze the impact on value for every 25bps expansion or contraction in the Cap Rate.
6. Calculate the Capital Reserves (Capex) as a percentage of NOI to determine 'Adjusted NOI'.

Constraints

• MUST distinguish between 'Fixed' and 'Variable' operating expenses.
• MUST NOT include mortgage interest in the NOI calculation (NOI is an unlevered metric).
• MUST use the 'Income Capitalization Approach'.

Output format

• Pro-forma Income Statement: Gross -> EGI -> NOI -> Adj. NOI.
• Valuation Summary: Total Value, Value per Square Foot/Unit.
• Sensitivity Table: Cap Rate vs. Property Value.

Quality bar

• Is the vacancy rate assumption justified for the {{property_type}}?
• Are property taxes adjusted for the 'stepped-up' value post-acquisition?