The FORT Podcast: How to Underwrite an Industrial Deal & Create Investment Memos LP’s Love

On this episode, Fort Capital CEO Chris Powers outlines the underwriting process on industrial deals from start to finish making it simple to understand whether you’re green or a seasoned veteran. This episode will provide an outline for how these deals get done and the mistakes that a lot of people make along the way so you can deal smarter in the future.  Enjoy!

Click here to view our Investment Memo template.

Click here for Fort Capital’s ’11 Simple Steps to Creating a Successful Investment Memo’.

(01:07) – What is Underwriting?

(02:14) – Variables that Contribute to the Value in Underwriting

(02:40) – Market, Demographic and their Respective Trends

(03:50) – Purchase Price

(04:15) – Expenses

(05:04) – Modeling Expenses Out in a 5-Year Model

(05:21) – Taxes & Insurance

(06:15) – Tenants

(07:03) – Where Rent is Today vs. the Market Rate

(07:59) – Tenant Renewal Probability

(09:55) – Current Vacancies

(10:42) – Capital Expenditure Requirements

(11:44) – Tenant Improvement Costs

(12:26) – Underwriting the Capital Structure & Refinance Scenarios

(13:49) – What does an exit scenario look like?

(15:15) – Things People Miss and Mistakes We’ve Missed Along the Way

(18:45) – How Fort Capital Thinks About the Process of Doing a Deal

(19:59) – How Long the Underwriting Process Should Take

(20:42) – Where We Get Most of Our Data

(21:12) – Where does information live when underwriting? How is it communicated to the team & non-team?

(22:58) – Final Thoughts on Underwriting

(23:58) – Writing an Investment Memo

(25:10) – What We Think about Presenting in Our Memos

(26:12) – Reasons to Acquire

(26:38) – Location Overview

(27:09) – The Property Itself

(27:35) – Tenant Overview

(28:10) – Sources and Uses of Funds

(29:02) – Financial Summary & What Investors Can Expect in Return

(30:22) – Partnership Terms

(31:48) – Models & Return Summary

(32:17) – Property Photos & Market Map

(33:02) – Conclusion & Free Resources from Fort Capital

The FORT with Chris Powers is produced by Straight Up Podcasts