Financial Feasibility Studies - Continued...

With respect to commercial real estate development projects, most financial feasibility studies created by Rainmaker Marketing Corporation represent untold hours of detailed scenario analyses that, more or less, adhere to the following analysis steps:

1. Stabilized Income Analysis.  This is the first pro forma financial analysis that is undertaken.  The revenue data points and operating expense data points set forth in the market study are used to generate an initial operating income analysis.  The purpose is to determine the maximum amount of supportable long-term debt the proposed project can routinely be expected to service.  This is undertaken on a "best-case", "middle-case" and "worst-case" analysis basis (with the results of each scenario being presented).

2. Development & Capitalization Analysis.  This pro forma financial analysis creates the pre-construction phase project capital funding and construction phase project capital funding requirements of the given project proposal.  Most of the empirical assumptions made in the course of the analysis are found within the body of this analysis step.  The results are then subject to further modification below.

3. Consolidated Analysis.  This pro forma financial analysis combines the Development & Capitalization Analysis with the Stabilized Income Analysis to provide an integrated pro forma accounting of all of the projected operating and non-operating cash flows of the proposed project.

The resulting integrated analysis is then subjected to sensitivity testing to determine the likely issues that may stress the financial results of operations.  The modified "worst-case" scenario analysis is the resulting output that is then transmitted to the client and incorporated into the capital funding plan proposal (and private placement offering memorandum if a private placement offering is the desired outcome).

Take the time to learn about the differences the Rainmaker approach offers.  Contact a Rainmaker consultant today.