Real estate development
The financial model that helped secure land for a major travel center expansion
An operator asked for a working model of a travel center acquisition in three days. About six months later, the same model was carrying an expansion plan, an accounting review and a negotiation for the land next door.
Model used to secure the neighboring parcel for a larger development
from the request to the first working model
of operating performance modeled
of property valuation scenarios
projects awarded by the same principal
Before and after
A travel center deal with assumptions in separate files and three days to decide
- Still in use six months later
- Held up in the accounting firm's review
- Used to secure the neighboring parcel
The effect
The request
The client was acquiring an existing highway retail property and planning a larger travel center on the site. He had assumptions for each piece, but nothing connecting revenue, operating costs, development timing, cash flow and property value. He needed a working model within three days, and we delivered it on time.
What we built
One model covering the current property and the larger development in two phases. The client can change sales volume, margins, lease income, opening dates, operating costs or cap rates and see the effect across the whole project immediately, including cash flow, operating profit and estimated property value.
Inside the model
- Current property and a two-phase development
- Monthly and annual cash flow
- Separate revenue and cost schedules
- Tenant lease income
- 10-year operating forecast
- 5-year property valuation schedule
From a three-day model to a land deal
The same model carried the project for months after the first version, through every change below.
- Day 1
The request
An acquisition and a planned expansion, with assumptions for each piece and nothing connecting them.
- Day 3
Working model delivered
Revenue, operating costs, development timing, cash flow and property value in one model, on the deadline.
- About 6 months
The plan changes
A planned restaurant would now be leased to a tenant instead of run by the owner. We flagged it, moved that space to lease income and kept the open lease terms as a separate input to replace once final.
- Review
The accounting firm checks the numbers
Their follow-up asked for source support on a few assumptions, not a rebuilt forecast. The sources and open items were already documented.
- Negotiation
The land next door is secured
The operator used the model with the neighboring owner to show how the combined development would perform, and secured the parcel.
- Since then
Two more projects
The development has grown to more parcels and building conversions, and the same principal brought us into two further projects.
Why it kept working
One model handled acquisition analysis, expansion planning, scenario testing, outside review and long-term valuation. The client changed inputs as the deal moved instead of paying for a new forecast for every conversation.
He kept working with us because we understood the business, questioned the financial logic and built the model around the decision he actually had to make.
Client name withheld. Figures are rounded and describe the scope of work delivered by AB Analytics. Forecast outputs are projections produced by the model and are not realized results. Reference conversations can be arranged for some engagements.