AI: AA & CRE

A letter on AI

AI won't replace analysts. Analysts who use AI will replace those who don't.

The world of analytical tools is evolving rapidly. Since 2022, we’ve tested dozens of AI platforms and plug-ins, many unimpressive, some promising, and until recently, few transformative.

What’s clear is that the pace of AI improvement is accelerating. At Alkaline, we’re leaning in. We continue to experiment, build, and integrate AI tools that enhance the way we analyze real estate data and structure complex financial models. Recent advances in Excel automation and analytical workflows have been particularly impressive. Tasks that once took hours can now be completed in minutes.

But while generating outputs is becoming easier, verifying those outputs is becoming harder. As AI makes it simple to produce analyses, charts, and models, the demand for logic, transparency, and sound assumptions will only increase. That’s where experience still matters, and we remain committed to providing rigorous, transparent real estate analysis grounded in CRE fundamentals. Fast analysis is great... but without accuracy, it's useless.

We’re excited about what these tools enable, and we’re dedicated to building efficient, confidential, and elegant analytical solutions for our clients. The tools have changed, but the fundamentals remain the same.

- Spencer Correnti, Founder & CEO

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Sample Dashboard

Alkaline's Test Project — Pro Forma Dashboard
Multifamily Development Pro Forma

Alkaline's Test Project

1234 Pacific Beach Drive, San Diego, CA 92109 300 Units · 396,000 GBA Sponsor: Alkaline Advisors
26.5%
Levered IRR
4.57x EMx
$93.4M
Total Project Cost
$311K / unit
$181.6M
Net Sale Value
$605K / unit
$121.4M
Levered Profit
3.57x ROI
$59.4M
Construction Debt
63.6% LTC
$34.0M
Total Equity
GP 10% / LP 90%

Investment Returns

Property & Partnership Level
Metric
Unlevered
Levered
LP Returns
GP Returns
IRR
15.3%
26.5%
21.6%
39.1%
Equity Multiple
2.99x
4.57x
3.38x
15.30x
Profit
$169.1M
$121.4M
$72.8M
$48.6M
Equity
$84.8M
Total Basis
$34.0M
Total Equity
$30.6M
90% Share
$3.4M
10% Share

Annual Cash Flows

10-Year Hold Period
Cumulative Levered Returns
NOI & Debt Service
Cash on Cash Return (Post-Refinance)
DSCR & Debt Yield (Post-Refi)

Capital Structure

Sources, Uses & Project Timeline
Sources of Capital
$93.4M
Total Sources
Uses of Capital
$93.4M
Total Uses
Project Timeline
Jan 2025 — Month 0
Project Start
Land Acquisition
Jan 2027 — Month 24
Construction Complete
Lease-up begins (150 pre-leased)
Jun 2027 — Month 29
Stabilization
300 units at 95% occupancy
Jan 2028 — Month 36
Refinance
Perm loan: $87.8M at 6.5%, 30yr amort
Jan 2035 — Month 120
Disposition
Exit at 6.0% cap, net value $179.3M
Sources Schedule — Monthly Draw Period
Uses Schedule — Monthly Draw Period
Construction Budget — Gantt Schedule

Operating Performance

Revenue, Expenses & Unit Mix
Revenue vs Expenses (Annual)
Unit Mix & Rent Roll
Unit Type Units % Avg SF Avg Rent
Studio 1 100 33.3% 800 $2,800
Mix Two 100 33.3% 1,000 $3,300
Mix Three 100 33.3% 1,500 $4,500
Total / Avg 300 100% 1,100 $3,533
Stabilized Revenue
$14.1M/year
$3,917/unit/mo avg
Lease-Up
5 months
150 pre-leased + 30/month
Expense Ratio
30.8%
At sale (Year 10)
Occupancy at Sale
92.0%
Physical occupancy

Sensitivity Analysis

Levered IRR by Exit Cap & Sale Month
IRR Sensitivity Matrix
Exit Cap ↓ / Month →96108120132144
5.00%32.2%30.3%28.8%27.6%26.6%
5.50%30.4%28.8%27.6%26.6%25.7%
6.00%28.7%27.5%26.5%25.6%24.9%
6.50%27.2%26.2%25.4%24.8%24.2%
7.00%25.7%25.0%24.4%23.9%23.5%
Valuation Snapshot
Metric Stabilization Sale
NOI $8.4M $10.9M
Cap Rate 5.50% 6.00%
Value $153.2M $181.6M
YOC 9.0% 11.7%
Dev. Spread 352 bps 567 bps
Timeline Month 29 Month 120
Alkaline Advisors LLC · alkaline-advisors.com · info@alkaline-advisors.com · 239 896 0331
Model created by Alkaline Advisors LLC · Analysis Start: January 2025