Reforecasting a logistics acquisition when rent follows landlord delivery

The existing tenant occupies the building through December 31. The replacement tenant has signed for all 486,000 square feet, preserving 100% leased status across the rollover. The initial schedule allows one month between surrender and substantial completion. Additional rent begins February 1, the four-month abatement runs through May and cash base rent begins June 1.

The work letter makes substantial completion conditional on more than possession. The landlord must deliver 2,000 amps of 480-volt service, 54 complete dock packages, 72 additional trailer stalls, the agreed paving and drainage work, and the required fire-protection scope. Punch-list items that do not interfere with use can remain. Incomplete permanent power or an undelivered trailer yard cannot.

The initial case follows the January GC schedule, prepared before the final utility service letter, 90% civil set and current dock proposals. Once those records are applied, substantial completion moves to May 15. The contractual sequence then determines every subsequent date; the four-month abatement does not continue to run from the superseded February delivery assumption.

The lease uses three economic dates. Substantial completion starts the term and the tenant's obligation to pay operating expenses. The abatement period then runs for four months. Cash base rent begins when that period ends. Early access for racking and automation does not start any of the three unless the landlord work satisfies the delivery standard.

The revised May 15 completion date therefore creates two separate carry periods. From January 1 through May 14, the landlord pays all property operating expenses. From May 15 through September 14, the tenant pays additional rent but base rent remains abated. Treating the entire period as generic free rent would overstate operating carry; starting recoveries on February 1 would understate it.

This timing also determines the reserve release. The construction reserve can fund completed work under the loan's draw conditions. The operating reserve is required until additional rent begins. The debt-service reserve remains until cash base rent begins. Each balance runs to a different milestone even though all three originate in the same delayed scope.

The initial budget carries $1.4 million for the service upgrade. The utility letter requires a new pad-mounted transformer, primary feeder work and a longer utility-led energization sequence. The revised electrical scope is $2.05 million and establishes May 15 as the earliest permanent-power date on the current schedule.

The 54 dock positions are priced as complete operating packages rather than door replacements. Levelers, restraints, seals, bumpers and electrical connections raise the dock scope from $810,000 to $1.08 million. The civil drawings add the paving, drainage and striping required to deliver 72 trailer stalls, moving the yard scope from $1.25 million to $1.85 million.

The fire-protection report adds $340,000 beyond the initial allowance for the tenant's storage configuration. Revised permits, design fees and contingency add another $290,000. The five workstreams reconcile to $6.65 million. More importantly, their predecessors and inspection dates reconcile to one delivery schedule rather than five independent completion percentages.

Annual base rent is $4.496 million. Under the initial schedule, seven months of cash base rent fall into Year 1, contributing $2.622 million. The revised September 15 commencement produces three and a half months, or $1.311 million. The rent does not remain in June merely because the signed rate and annual rent are unchanged.

Property operating expenses are $2.10 per square foot, or $1.021 million annually. The tenant pays those expenses from substantial completion even while base rent is abated. February 1 delivery produces $936,000 of Year 1 recoveries. May 15 delivery produces $638,000. The $298,000 difference is the additional operating carry before the premises satisfy the work-letter conditions.

The initial case generates $2.537 million of Year 1 cash NOI. The revised case generates $928,000. Stabilized NOI remains $4.496 million because the lease is net and the base-rent rate has not changed. The acquisition still reaches the same stabilized yield; it requires materially more cash to reach it.

The gross loan commitment remains $37.2 million because the stabilized lease and $4.496 million stabilized NOI are unchanged. The amount funded into the acquisition at closing does change. The lender withholds the remaining landlord-work budget, operating carry until additional rent begins and debt service until cash base rent begins.

In the initial case, the required reserves are $4.5 million for landlord work, $85,000 for January operating expense and $1.008 million for five months of debt service. The $5.593 million total leaves $31.607 million funded at closing. Purchase-price equity is $30.393 million before fees and other reserves.

The revised case reserves $6.65 million for landlord work, $383,000 for four and a half months of operating expense and $1.713 million for eight and a half months of debt service. Total reserves reach $8.746 million. Closing proceeds fall by $3.153 million and purchase-price equity increases by the same amount. The commitment did not shrink; more of it is unavailable until the building reaches the lease milestones.

The utility date remains the controlling variable in the current schedule, but the case does not need one unqualified date. Earlier permanent energization, delivery on temporary power and late permanent energization produce different work budgets, operating carry and debt-service reserves from the same signed lease.

Cap Orbit can work across the existing lease and surrender record, replacement lease, work letter, utility service letter, electrical plans, dock proposals, civil drawings, fire-protection report, GC budget and schedule, loan agreement and existing acquisition workbook in the same deal. The first step is tying each contractual delivery condition to the current scope, cost and predecessor date that satisfies it.

From there, you can have Cap Orbit rebuild the delivery schedule, revise remaining landlord work, move commencement and abatement under the actual lease language, and update the monthly property, debt and equity cash flow in the existing model. The contractual amperage, dock count, trailer-stall count, delivery standard and abatement retain their source trace. Temporary-power acceptance, utility timing and contingency remain visible underwriting assumptions.

The same deal record supports the delivery cases that matter here: permanent power in April, May or August; delivery on temporary service; a revised civil sequence; or a different contingency. Each case starts from the same signed replacement lease and returns the same connected outputs—substantial completion, commencement, recoveries, cash rent, Year 1 NOI, work reserve, debt-service reserve, closing proceeds and equity.

That is the standard for AI on this asset class. The useful result is not a summary that says the building is fully leased. It is an acquisition case in which the work letter, physical scope, utility date and loan reserves resolve into the same delivery and cash-rent schedule.