The last stage of a development deal answers one question: what happens at the end? DealWorthIt's construction model keeps that answer deliberately honest — there are exactly two exit strategies, and every return metric traces back to which one you chose.
The two exit strategies
- No exit (model the horizon only) — the analysis prices the build, the funding and (if there's an operating phase) the lease-up, and stops. Without an exit there is no IRR and no equity multiple: those are round-trip metrics, and there's no round trip to measure.
- Sale at stabilization — the project is sold once it's stabilized. This unlocks the sale inputs: sale month, exit cap rate and selling costs.
That's the whole list. A refinance-and-hold exit — paying off the construction loan with permanent debt and operating long-term — is not modeled in this release, which is also why you won't find DSCR or debt yield on a construction analysis: the construction loan accrues rather than amortizes during the modeled period, so a period coverage ratio doesn't exist to be displayed. If your plan is to refi and hold, model the development here and underwrite the stabilized operation as its own deal.
How the sale is priced
- Exit NOI basis is fixed: forward 12 months of NOI at stabilization — the only supported basis, shown as a declaration rather than a choice so there's no ambiguity about what the value rests on.
- Stabilized value = forward-12 NOI ÷ exit cap rate. The exit cap rate is yours to defend; the model won't suggest one.
- Selling costs come off the gross price, and the loan is paid off from proceeds: net sale proceeds = gross sale price − selling costs − debt payoff. Each of those lines is shown separately in the Exit & return group.
The sale month is disciplined
The sale month must be at or after the detected stabilization month — the engine never moves it for you. If your thresholds are never met inside the horizon, a sale at stabilization has nothing to price and the calculation reports exactly that instead of quietly selling an unstabilized building. The fix is real: faster absorption, a longer horizon, or different stabilization thresholds.
What the exit feeds
- IRR (annualized) and the equity multiple — computed from equity going out and distributions coming back, so they exist only when there's an exit to distribute from. They also require a fully funded project: on a calculation that isn't fundable as entered, no sale executes and these read as unavailable rather than zero.
- Yield on cost and the development spread — the stabilized lens: forward-12 NOI against total development cost, and that yield against your exit cap rate. The spread is the developer's margin stated in basis points — it exists even before you commit to a sale price.
- Total distributions and net sale proceeds — the cash story behind the ratios.
Common questions
- "Where's IRR?" — Check the exit strategy: with no exit modeled, there's no IRR or equity multiple to show, and the section header says so up front.
- "Why can't I set the sale before stabilization?" — The only supported sale basis is stabilized value, so selling before the project stabilizes would price the sale off an NOI that doesn't exist yet. The model refuses rather than pretends.
- "Can I model keeping the property?" — Not as a construction exit in this release. Choose no exit to study the build itself, or underwrite the stabilized property as a separate deal.
