The deal works, but not at the model's numbers. The workbook's math is clean — every output verified to the dollar, zero formula errors — but the $15.99M ceiling only clears the 18% hurdle because Chauncey's excess return subsidizes a Plaza price that fails the hurdle on its own.
Three corrections drive the recommendation: Plaza is worth ~$5.0M, not $5.83M; true peak equity is ~$11.2M, not $6.0M; and the workbook has a wiring flaw that will corrupt the next scenario run.
Included seller ask to recommended open — one scale, all positions.
At $14.0M the bear case still returns 12.7% unlevered and the base returns 28% — a genuinely asymmetric entry. At $15.99M the bear drops to 8.7% and leverage adds nothing (debt at 7.25% against an 8.7% asset is pure risk). The ~$900K gap between the model ceiling and the recommended one is entirely the Plaza allocation.
The entire 60-month engine was rebuilt independently and matched the workbook exactly: $17.18M max offer, 21.8% / 27.5% IRRs, $51,088 stabilized monthly NOI. Confirmed clean:
Seven findings, ranked. Tap to expand.
Two parallel offer-case tabs exist. Inputs!B38 (the price) pulls from Current Offer Case, but the operating engine — Plaza unit count, rent, exit $/SF, and capex in Unit Pools D7/P7/T7/W7 and AI6:AI9 — still pulls from Revised Offer Case.
Values match today, so outputs are correct. But edit Plaza capex to $225K in Current Offer Case B11 and the price falls while the model keeps running $175K — lower price and artificially higher IRR. Changing Plaza rent in Current B13 does nothing at all; no formula references it.
The dashboard's $6.02M is only the day-one check: 35% of price + closing costs + loan fee. Debt is sized on price only — no capex facility — so $4.59M of capex and ~$1.4M of pre-stabilization deficits (portfolio NOI is negative for the first ~5 months) come out of equity month by month.
Cumulative levered cash flow bottoms at −$11.24M in month 13 and doesn't turn positive until month 34. Budget $11.5M+ or negotiate a capex tranche into the loan. This is the most important correction for capital planning and any LP conversation.
Offer Calc deducts $204K (4 months × stabilized NOI) for missing the August 1 cycle — but the operating model already starts at a December close with 10%/5% initial occupancy and 8–12 month lease-up. The weak first season is already in the cash flows. Keep the $204K as seller-facing ammunition; don't stack it as economics.
The $5.83M Plaza price = net exit × (1 − 25%) − capex − 4 months' carry. No discounting — but the real cash flows are a 12-month hold, a 36-month sellout starting month 13, and four years of HOA/taxes on the tail.
Run through the actual monthly engine: Plaza standalone at $5.83M returns 13.8% unlevered — below the 18% hurdle — and 2.7% in the bear case. Chauncey standalone at $7.1M returns 36.0% base / 17.8% bear. The blended 21.8% is Chauncey carrying Plaza.
Plaza's standalone-clearing prices: $5.06M for 18% base; $3.46M to hold 12% in the bear.
The model rents Chauncey's 51 suites as-is at $1,690 and exits as-is at $475/SF with $12.5K/unit — while assuming Plaza's 56 physically similar suites are worthless until combined at $175K/converted unit. Both can't be right without a physical reason (kitchenettes?). Verify unit by unit.
The closed sales say the quiet part: 530 SF Plaza units (907, 1007) sold at $528 and $600/SF in 2021/2023, and the 43-sale downtown dataset shows small units (≤800 SF) at a $501/SF median. An as-is case ($1,550 rent, $420/SF exit, $15K/unit) returns ~29% standalone at $5.83M.
All $3.92M of conversion capex is spent in months 1–4 while units earn rent from month 1. Combining 56 suites into ~22 units — demo, MEP re-stacks, kitchens, life-safety, HOA review, permits — is realistically 9–18 months with little rent during construction. Stretching the timing barely moves IRR but raises peak equity to ~$11.5M and pushes leasing into another off-cycle. The bigger risk: $175K/unit is a placeholder with no contractor bid behind it, and it swings ±3 IRR points at ±$50K.
The tax roll shows exactly 19 units per floor on levels 4–6 (401–419, 501–519, 601–619) = 57 parcels; seller pricing says 56. Units 405/505/605 carry materially lower tax bills — likely smaller units. Chauncey ties out at 51 (no x08 on level 5).
Also: a Chauncey Unit 400 commercial parcel ($37.1K/yr taxes) appears in no seller pricing row, and the 101-201 restaurant/bowling parcel appears in no tax roll. The commercial tax picture is incomplete. Resolve the Plaza schedule before PSA pricing.
Single-variable impact on unlevered IRR at the $15.99M ceiling (base = 21.8%). The $1,650 rent anchor everyone worries about costs ~0.5 points; a Chauncey capex surprise costs ~5. Diligence dollars belong in unit walks and a real Plaza conversion budget, not rent studies.
| Price | Bear | Base | Bull |
|---|---|---|---|
| $14.0M (recommended open) | 12.7% · 13.9% | 28.1% · 36.0% | 40.3% · 54.7% |
| $14.5M | 11.6% · 12.6% | 26.4% · 33.7% | 38.1% · 51.8% |
| $15.19M (model opening) | 10.2% · 10.8% | 24.2% · 30.8% | 35.3% · 48.0% |
| $15.99M (model ceiling) | 8.7% · 8.8% | 21.8% · 27.5% | 32.3% · 43.8% |
Bear: Chauncey $1,500 / $425/SF / $25K capex / 48-mo sellout / 85% occ; Plaza $2,250 / $400/SF / $225K / 48-mo / 85% / 18-mo lease-up. Bull: Chauncey $1,900 / $525 / $12.5K / 24-mo / 95%; Plaza 28 converted units / $3,250 / $480 / $150K / 24-mo / 93%.
| Structure | Levered IRR | Peak equity |
|---|---|---|
| 65% LTV / 7.25% (model) | 27.5% | $11.2M |
| 70% / 7.25% | 28.4% | $10.5M |
| 65% / 8.50% | 26.9% | $11.4M |
| 55% / 7.25% | 26.0% | $12.7M |
| 50% / 8.50% | 25.0% | $13.5M |
Leverage is a modest return lever here because sales sweep the loan quickly; its real job is reducing peak equity. Two unmodeled items matter more than rate: partial-release pricing (a lender demanding 110–125% of allocated loan per release chokes the sellout engine — the model assumes a frictionless 100% sweep) and condo warrantability (single owner of 79+ units + hotel history + commercial concentration is an agency problem for the retail buyers' financing, which attacks the $440–475/SF exits directly).
| Component | Seller ask | Model | Recommended |
|---|---|---|---|
| Chauncey hotel — 51 suites Cap validated: 36% standalone base, ~18% bear. Open $6.5M. | $9,690,000 | $7,100,000 | $7,100,000 |
| Plaza hotel — 56 suites → ~22 units $5.06M is the standalone 18%-clearing price. Open $4.5M. | $10,080,000 | $5,829,971 | $5,000,000 |
| Plaza other resi + parking Two of four anchor comps are foreclosures at the very ask; 15% off, not 10%. | $1,799,600 | $1,619,640 | $1,530,000 |
| Chauncey 1007 / 1107 1007 is itself a foreclosure listing at $453/SF; 10% holds. Confirm availability. | $1,599,800 | $1,439,820 | $1,440,000 |
| Commercial — all units See Section 04. | $8,887,206 | $0 | $0 |
| Total | $23,169,400 | $15,989,431 | ≈ $15,070,000 |
Why these two numbers. $15.1M only requires the base case to be roughly right; $15.99M requires it to be exactly right — and its two load-bearing assumptions ($175K Plaza capex, $440–475/SF exits) currently have no contractor bid or appraisal behind them.
Pair the price with structure: pre-closing leasing license (already in the January LOI — worth real money at a December close); seller pays HOA/taxes through closing off actual bills; earnest money stays refundable until the Plaza conversion budget and HOA consents are in hand; price adjusts per unit if the 56/57 schedule resolves against you.
The $8.89M of hard-to-price commercial carries brutal fixed costs the residential model never sees: the tax roll shows $241K/year across Chauncey 300/301/400/403, plus ~$167K/year HOA on the four Chauncey commercial rows — $400K+/year of carry before a dollar of TI, commission, or downtime.
The two shells (301, 403) at seller's $195/SF ask are worth their residual after $50–80/SF TI, 12–24 months' downtime, and commissions — plausibly $60–120/SF. The RSM office is worth its actual lease NOI at an 8.5–9.5% cap, which requires the rent roll you don't have.
GreenState is a credit union holding foreclosed inventory with $488K/year of taxes + HOA bleeding on the included pools alone — every quarter of delay costs them ~$120K plus reserve pressure. The script:
| Model | Recommended | |
|---|---|---|
| Opening bid | $15.19M | $14.0M |
| Walk-away / ceiling | $15.99M | $15.1M |
| Chauncey cap | $7.1M | $7.1M — unchanged |
| Plaza allocation | $5.83M | $5.0M ceiling / $4.5M open |
| Equity to budget | $6.0M | $11.5M+ (peak, mo. 13) |
| Base return at ceiling | 21.8% / 27.5% | ~24% / ~31% |
| Bear return at ceiling | 8.7% / 8.8% | ~10–11% unlevered |
Before any further scenario work in the workbook itself: repoint the Unit Pools links from Revised Offer Case to Current Offer Case — otherwise the next sensitivity run will quietly lie to you.