Sale Stream

Component 6: Scenario Analysis

Component 6 is FeasiBuild's stress-testing engine for for-sale developments. It allows you to apply "shocks" to key financial drivers and instantly see how those changes cascade through your entire model — affecting construction costs, sales revenue, debt sizing, escrow mechanics, and ultimately both your Unlevered Project IRR and Levered Equity IRR.

Key Difference from Operational Stream:Sale Stream shocks are tailored for development-for-sale projects. Instead of operational metrics like ADR and Occupancy, you'll see development-specific drivers like Sales Price/GDV, Sales Velocity, Pre-Sales Achievement, and LTC Reduction.

Overview

The Scenario Analysis page is divided into four main sections:

1. Base Case Metric Sources

Shows your current base case metrics (Unlevered Project IRR, Levered Equity IRR, Peak Equity, Loan Repayment) sourced from Components 3-5. This is your "starting point" before any shocks are applied.

2. Scenario Presets

One-click presets for Base Case, Downside, and Upside scenarios. Downside/Upside presets apply pre-configured shocks across pricing, velocity, costs, duration, LTC, and rates.

3. Adjust Shock Values

Interactive sliders for each shock factor. Each slider shows the current shock value, the impact on Unlevered IRR, and the impact on Levered IRR.

4. Scenario Comparison & Tornado Chart

A comparison table showing Base vs Current vs Downside vs Upside for key metrics, plus a Tornado Chart showing IRR sensitivity ranked by driver impact (most impactful at the top).

Base Case Metric Sources

Before applying any shocks, FeasiBuild displays your base case metrics. These are sourced directly from the calculations in Components 3-5:

Unlevered Project IRR (15.93%)

Sourced from Component 3 (Project IRR). This is the IRR calculated on the project's unlevered cash flows (before debt service). It represents the pure project return independent of financing structure.

Levered Equity IRR (11.52%)

Sourced from Component 5 (Project IRR - Levered). This is the IRR calculated on the equity investor's cash flows (after debt service). It reflects the actual return to the equity investor given the financing structure from Component 4.

Peak Equity (63.0M)

Sourced from Component 4 (Financing). This is the maximum cumulative equity injection required during the construction phase, calculated using the dynamic gap-fill mechanism.

Loan Repayment (M31)

Sourced from Component 4 (Financing). The month when the construction loan is fully repaid, typically after sales collections cover the outstanding balance.

Scenario Presets

FeasiBuild provides three one-click scenario presets:

Base Case

All shocks reset to 0%. This is your current model with no modifications.

Downside

Applies pre-configured negative shocks. For sale developments, this typically includes: Sales Price -10%, Sales Velocity -25%, Pre-Sales Achievement -30%, Construction Cost +5%, Soft Costs +10%, LTC Reduction +8%.

Upside

Applies pre-configured positive shocks. For sale developments, this typically includes: Sales Price +10%, Sales Velocity +25%, Pre-Sales Achievement +30%, Construction Cost -5%, Soft Costs -10%, LTC Reduction -8%.

Sale-Specific Shock Factors

Unlike the Operational Stream which focuses on operational metrics, the Sale Stream features development-specific shock factors that directly impact the feasibility of for-sale projects:

Sales Price / GDV (±20%)

Applies a percentage multiplier to the average sales price per sqft from Component 2. This is the single most impactful driver for sale developments.

Impact Chain: Lower sales price → Lower Gross Development Value (GDV) → Lower net proceeds → Lower Unlevered IRR → Lower Levered IRR. Also affects LTV calculations in Component 4, potentially reducing debt capacity.

Sales Velocity (±50%)

Applies a percentage multiplier to the sales uptake curve from Component 2. A -25% shock means sales happen 25% slower than the base case.

Impact Chain: Slower sales → Delayed cash inflows → Higher peak funding gap → More equity required → Higher interest costs → Lower Levered IRR. Critical for projects with tight cash flow timing.

Pre-Sales Achievement (±50%)

Applies a percentage multiplier to the pre-sales percentage from Component 2 (Step 8). Pre-sales are units sold before construction begins, typically 6 months before M0.

Impact Chain: Lower pre-sales → Less cash collected upfront → Higher initial funding gap → More equity/debt required early → Higher interest costs. Pre-sales are critical for reducing the peak funding requirement.

Construction Cost (±25%)

Applies a percentage multiplier to all construction costs from Component 1 (including land, hard costs, soft costs, POWC).

Impact Chain: Higher construction costs → Higher Total Development Cost (TDC) → Lower net surplus → Lower Unlevered IRR. Also increases debt requirement (if LTC stays constant) and equity requirement, reducing Levered IRR.

Soft Costs + POWC (±20%)

Applies a percentage multiplier to soft costs and pre-opening working capital from Component 1.

Impact Chain: Higher soft costs → Higher TDC → Lower net surplus → Lower IRR. Soft costs are typically 15-20% of construction, so a 10% shock has a meaningful but not catastrophic impact.

Construction Duration (±3 months)

Applies a month adjustment to the construction period from Component 1. A +3 month shock means construction takes 3 months longer than planned.

Impact Chain: Longer construction → Delayed sales collections → Higher interest costs (IDC) → Higher total debt → Lower Levered IRR. Also increases the risk of market timing issues (selling into a weaker market).

LTC Reduction (±20%)

Applies a percentage reduction to the Loan-to-Cost ratio from Component 4. A +8% shock means the bank reduces LTC by 8 percentage points (e.g., from 65% to 57%).

Impact Chain: Lower LTC → Less debt available → More equity required → Lower leverage → Lower Levered IRR (but also lower risk). This shock simulates tighter lending conditions or bank risk aversion.

Interest Rate (±300bps)

Applies a basis point adjustment to the interest rate from Component 4. Affects both construction interest (IDC) and any operating interest expense.

Impact Chain: Higher interest rate → Higher debt service → Lower cash flow to equity → Lower Levered IRR. Also increases total debt if IDC is capitalized.

Scenario Comparison Table

The Scenario Comparison table shows key metrics across four scenarios side-by-side:

Metric	Base	Current	Downside	Upside
Unlevered Project IRR	15.93%	1.35%	-10.17%	49.21%
Unlevered Payback (months)	42	30	30	26
Levered Equity IRR	11.52%	0.42%	-6.46%	28.58%
Levered Payback (months)	35	42	35	28
Peak Equity Required	63.0M	69.5M	77.4M	59.7M
Loan Repayment (month)	M31	M31	M37	M28

Warning: Downside Equity IRR is below 12%. Project may be unfinanceable in a stress case.

Upside Equity IRR is 25% or higher. Project has strong upside potential.

IRR Sensitivity Tornado Chart

The Tornado Chart ranks shock factors by their impact on Levered Equity IRR. The most impactful driver appears at the top, with the least impactful at the bottom. This helps you identify which assumptions matter most for your project's success.

How to Read the Tornado Chart

Green Bar: Shows the range of Levered Equity IRR when the driver moves from its minimum shock to maximum shock (one at a time, holding all other factors constant).
Range Values:Shown to the right of each bar (e.g., "0.42% – 2.82%"). This is the IRR range when only that driver is shocked.
Ranking: Drivers are sorted by the width of their bar (widest = most impactful). In the example, Sales Price / GDV has the widest bar, meaning it has the largest impact on IRR.
Axis: The x-axis shows the Levered Equity IRR range. All bars are plotted on this common axis for comparison.

Typical Ranking for Sale Developments

Sales Price / GDV — Most impactful; directly affects revenue and GDV
Sales Velocity — Affects cash flow timing and funding gap
Pre-Sales Achievement — Critical for reducing initial equity requirement
Construction Cost — Affects TDC and net surplus
Soft Costs + POWC — Moderate impact on total costs
Construction Duration — Affects interest costs and timing
LTC Reduction — Affects leverage and equity requirement
Interest Rate — Affects debt service costs

Methodology: How Shocks Affect IRR

When you apply a shock factor, FeasiBuild recalculates the entire financial model in real-time. Here's the step-by-step methodology:

Step 1: Apply Shock Multiplier to Base Assumption

Each shock factor applies a multiplier or adjustment to the corresponding base case assumption from Components 1-4.

// Example: Sales Price -10% shock

adjustedSalesPrice = baseSalesPrice × (1 - 0.10)

// Example: Construction Cost +5% shock

adjustedConstructionCost = baseConstructionCost × (1 + 0.05)

// Example: LTC Reduction +8%

adjustedLTC = baseLTC - 0.08

Step 2: Recalculate Affected Component

The adjusted assumption flows through the relevant component:

Sales Price/Velocity/Pre-Sales shocks → Recalculates Component 2 (Sales Revenue) → New net proceeds, new cash flow timing
Construction Cost/Duration shocks → Recalculates Component 1 (Development Financials) → New TDC, new monthly construction cash flows
LTC Reduction/Interest Rate shocks → Recalculates Component 4 (Financing) → New debt sizing, new interest expense

Step 3: Recalculate Downstream Components

Changes cascade through dependent components:

// Example: Sales Price -10% cascade

Component 2: Net proceeds decrease by 10%

↓

Component 3: Lower net proceeds → Lower Unlevered IRR

↓

Component 4: Lower GDV → Lower LTV → Potentially lower debt capacity

↓

Component 5: Lower net proceeds + potentially higher equity → Lower Levered IRR

Step 4: Recalculate Project IRR (Unlevered)

Project IRR is calculated on the unlevered cash flows (before debt service):

// Unlevered Cash Flow = Sales Proceeds - Development Costs

UnleveredCF[t] = SalesProceeds[t] - DevelopmentCosts[t]

// Project IRR = IRR of [-InitialInvestment, UnleveredCF[1], ..., UnleveredCF[n]]

ProjectIRR = IRR(unleveredCashFlows)

Step 5: Recalculate Equity IRR (Levered)

Equity IRR is calculated on the levered cash flows (after debt service):

// Levered Cash Flow = Unlevered Cash Flow - Debt Service

LeveredCF[t] = UnleveredCF[t] - (Interest[t] + Principal[t])

// Equity IRR = IRR of [-EquityInvestment, LeveredCF[1], ..., LeveredCF[n]]

EquityIRR = IRR(leveredCashFlows)

Step 6: Calculate Delta vs Base Case

The impact is shown as the difference between the shocked IRR and the base case IRR:

// Impact on Project IRR

ProjectIRRImpact = shockedProjectIRR - baseProjectIRR

// Impact on Equity IRR

EquityIRRImpact = shockedEquityIRR - baseEquityIRR

// Example: If base Equity IRR = 11.52% and shocked Equity IRR = 0.42%

EquityIRRImpact = 0.42% - 11.52% = -11.10pp (negative impact)

Important: All shocks are applied independently (one at a time) when calculating the Tornado Chart. When multiple shocks are active simultaneously (in the Scenario Summary), they are applied together and the combined impact is calculated.

Tips & Best Practices

Start with Downside/Upside Presets

Use the one-click presets to quickly see the range of possible outcomes, then fine-tune individual shocks using the sliders.

Focus on Sales Price and Velocity

The Tornado Chart will likely show Sales Price/GDV and Sales Velocity as the top two drivers. Focus your due diligence on validating these assumptions with market data and comparable sales.

Watch the Warning Messages

If the Downside Equity IRR drops below 12%, the system warns that the project may be unfinanceable. This is a critical red flag — lenders typically require minimum returns to justify the risk.

Test Pre-Sales Sensitivity

Pre-sales achievement is often underestimated in feasibility studies. Test a -30% to -50% shock to see how sensitive your funding gap is to pre-sales performance.

Use Custom Shocks for Unique Risks

If your project has unique risks (e.g., regulatory approval delays, infrastructure cost overruns), create custom shock drivers to model their impact.

← Component 5: Project IRR (Levered)Feasibility Study →