![]() ![]() An example of the “back of the napkin” pro forma expanded into a detailed schedule projection is shown in Table 1. ![]() Each line item must, however, be originally estimated or based on realistic information and professional assumptions. Sophisticated shopping center developers today are using microcomputers to develop more careful forecasts. Hard construction $ 40.67 per square foot Here is how a “back of the napkin” pro forma may shape up for a typical 220,000 square-foot strip center in northern New Jersey. The total development cost must be carried via some combination of borrowed monies and equity, and the developer must factor in an expense and vacancy factor to project the profit picture. Those elements, which add up to the total cost, are: Large or small, the same four elements of development are estimated, added, carried, and compared to an average income projection to create a quick “feel” for feasibility. Shopping center development feasibility calculations often begin “on the back of a napkin” when a developer meets the land owner and begins to negotiate a price. Reprinted With The Permission From The Real Estate Finance Journal The Shopping Center Development Pro Forma ![]()
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