Scenario Stress Testing

Scenario Stress Testing

Framework for constructing downside scenarios and sensitivity analyses. Used by /downside-case, /bid-envelope, and /hold-sell.

Standard Stress Scenarios

Rent Stress

• Mild: Market rents -5%, rent growth -100bp from base
• Moderate: Market rents -10%, rent growth -200bp, 3-month additional downtime on rollover
• Severe: Market rents -15%, flat rent growth, 6-month additional downtime

Vacancy Stress

• Mild: +200bp structural vacancy
• Moderate: +500bp, largest tenant vacates
• Severe: +1000bp, two largest tenants vacate, extended downtime

Exit Cap Stress

• Mild: +25bp exit cap rate
• Moderate: +50bp exit cap rate
• Severe: +100bp exit cap rate

Capital Stress

• Mild: +20% capex / TI/LC
• Moderate: +50% capex, major system replacement
• Severe: +100% capex, full repositioning needed

Financing Stress

• Mild: +100bp interest rate
• Moderate: +200bp rate, 5% lower LTV
• Severe: +300bp rate, 10% lower LTV, no IO period

Breakeven Analysis

Identify the assumption value at which:

• IRR = 0%
• Equity multiple = 1.0x (return of capital only)
• Cash-on-cash = 0% (no distributable cash flow)

All calculations via underwriting-standards scripts. Do NOT solve breakeven by reasoning.

Output Format

Scenario	Exit Cap	Rent Growth	Vacancy	IRR	Multiple
Base Case	5.50%	3.0%	5.0%	12.4%	1.85x
Mild Down	5.75%	2.0%	7.0%	10.1%	1.65x
Moderate	6.00%	1.0%	10.0%	7.2%	1.42x
Severe	6.50%	0.0%	15.0%	3.1%	1.15x
Breakeven	7.25%	-1.0%	18.0%	0.0%	1.00x