cre-analysis-underwriting

name	cre-analysis-underwriting
version	1.5.0
last_modified	2026-03-22
description	Use when evaluating a commercial real estate property, CRE loan, or property-level cash flow. Covers market framing, tenancy and lease rollover, NOI construction, valuation, three-constraint loan sizing, and downside-oriented risk assessment across stabilized, transitional, and development situations.
category	real-estate
related_skills	["credit-events-distressed","credit-memo-generator","credit-modeling-and-valuation","credit-surveillance-monitoring","debt-structure-covenants","industry-sector-analysis","portfolio-investment-process","securitization-and-clos","trading-pricing-mechanics"]
triggers	["CRE underwriting","commercial real estate","commercial mortgage","CMBS underwriting","property valuation","NOI analysis","lease analysis","loan sizing","debt yield analysis","cap rate analysis","submarket analysis","multifamily underwriting","office underwriting","industrial underwriting","retail underwriting","hospitality underwriting","construction lending","value-add underwriting"]
disambiguation	Prefer this skill when the context is a property, real estate asset, or CRE loan. For corporate leverage, coverage, and issuer-level cash flow, use credit-modeling-and-valuation. For cap rate or spread discussion as a market trading input rather than a property valuation input, use trading-pricing-mechanics.

CRE Analysis & Underwriting

Commercial real estate underwriting is property-first and cash-flow-first: start with the asset, market, tenancy, lease rollover, and capital needs, then size debt against durable in-place and stressed performance rather than sponsor upside alone.

Core Workflow

1. Frame the asset and market: Identify property type, location, submarket, competitive position, liquidity, and where the asset sits on the stabilized-to-transitional spectrum.
2. Build in-place cash flow: Start from the rent roll, lease terms, occupancy, reimbursements, credit loss, operating expenses, and recurring capital needs to derive in-place NOI.
3. Separate stabilized from pro forma: Distinguish what exists today from what requires leasing, renovation, tenant rollover, re-tenanting, or market rent growth assumptions.
4. Value the real estate through multiple lenses: Use income capitalization first, then cross-check with sales comparison and cost or replacement context where useful.
5. Size debt under simultaneous constraints: Test LTV, DSCR, and debt yield together and identify the binding constraint rather than relying on a single ratio.
6. Stress the major drivers: Pressure test occupancy, renewal probability, downtime, TI/LC, operating costs, exit cap rate, and interest rate assumptions.
7. Translate findings into a lender view: Summarize proceeds, structure, reserve needs, key diligence items, and the risks that could impair refinanceability or repayment.

Available References

Read the most relevant reference for the specific question rather than loading the full library.

Unless a path is explicitly rooted at project references/ or skills/..., the references/... paths below are skill-local to skills/cre-analysis-underwriting/.

Core Underwriting

• references/market-submarket-analysis-framework.md - Market demand, supply, competitive set, and scenario framing.
• references/property-type-deep-dive-analysis.md - Property-type operating models, key underwriting questions, and common failure modes.
• references/lease-analysis-deep-dive.md - Lease economics, rollover exposure, downtime, concessions, and tenant concentration.
• references/tenant-credit-assessment-framework.md - Tenant credit quality, tenant granularity, and concentration analysis.
• references/income-capitalization-approach.md - Primary stabilized valuation framework and cap-rate judgment.
• references/valuation-cross-checks.md - Cost approach and sales comparison as valuation cross-checks.
• references/loan-sizing-three-simultaneous-constraints.md - LTV, DSCR, and debt-yield sizing logic.
• references/sensitivity-analysis-for-cre.md - Scenario design, breakpoints, and downside translation to lender risk.
• references/property-risk-assessment.md - Physical, legal, market, and execution risk framework.

Transitional and Development

• references/construction-development-underwriting.md - Transitional, value-add, construction, and stabilization-risk underwriting framework.
• references/environmental-liability-assessment.md - Environmental diligence, liability pathways, and lender protections.

CRE Modeling and Metrics

• references/cre-pro-forma-cash-flow-modeling.md - NOI buildup, lease types, operating expenses, capex, and value-add scenario modeling.
• references/commercial-real-estate-credit-metrics.md - NOI, cap rate, DSCR, LTV, debt yield, and rent coverage ratio definitions and interpretation.

Workflow and Portfolio Context

• references/cre-underwriting-checklist.md - Single checklist covering screening, diligence, approval conditions, and post-close monitoring.
• references/investment-strategy-spectrum-lender-positioning.md - Business-plan risk, lender positioning, and downside posture.

Examples

Examples support application, not principle storage.

• examples/worked-loan-sizing-example.md - Simple binding-constraint illustration.
• examples/worked-office-underwriting-case-study.md - Full office underwriting case with rollover and refinance risk.
• examples/worked-multifamily-underwriting-case-study.md - Full multifamily case with valuation, sizing, and stress testing.

Output Deliverables

When asked to analyze or underwrite a CRE property or CRE loan, produce:

1. Source citations: Explicitly cite every data source, market input, and qualitative fact used.
   • When a stable direct URL exists, include it inline with the citation and keep any page, slide, filing-date, report-date, or access-date detail in the same citation.
2. Property snapshot: Property type, location, size, occupancy, tenant mix, lease rollover profile, and major asset-specific considerations.
3. Cash flow bridge: In-place NOI, stabilized NOI, recurring capital needs, and the key differences between current performance and pro forma assumptions.
4. Valuation and loan sizing: Value range, proceeds under LTV, DSCR, and debt yield, plus the binding constraint and any reserve requirements.
5. Stress and sensitivity view: Downside cases for occupancy, rents, downtime, expenses, exit cap rate, and interest rate assumptions.
6. Risk and mitigant table: Tenant concentration, rollover, capex, market liquidity, environmental, sponsor execution, and refinance risk.
7. Comparable transactions: Relevant sales, financings, or market markers that help position the subject asset.
8. Recommendation and open diligence items: Clear lender view, key conditions, and unresolved diligence requests.

Limitations

• Cap rate valuation is weakest for distressed, highly vacant, single-tenant, specialty, and ground-up assets.
• Pro forma underwriting often overstates lease-up pace, renewal probability, and rent growth; stress each driver independently.
• Comparable transactions are only useful when tenancy, quality, location, vintage, and transaction timing are truly comparable.
• CRE is intensely local; national benchmarks should calibrate judgment, not replace submarket-specific evidence.
• Insurance, taxes, and capital needs can reprice abruptly; do not treat recent operating conditions as permanent.

Data Quality

• Never silently fill missing data with assumptions. If information is incomplete, use skills/credit-memo-generator/references/incomplete-data-guidance.md to disclose gaps explicitly.
• Keep in-place, stabilized, and sponsor case assumptions separate. Blending them obscures the real risk transfer from present cash flow to future execution.
• Use references/market-benchmarks.md and references/typical-deal-parameters.md to calibrate assumptions, not to substitute for property-specific facts.
• When standard CRE frameworks may be unreliable, consult skills/credit-memo-generator/references/analytical-limitations.md and state the limitation directly.