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Orientation, definitions and answers for the Cadence underwriting suite. Written for people who know CRE and are new to this tool.

01

Getting started

  1. 1. Start a new underwriting. Use New Underwriting in the header of the deals page. You can also load the sample deal to explore a fully populated model first.
  2. 2. Pick a model type. Acquisition, Development or Disposition. This decides which modules the deal opens with.
  3. 3. Pick an asset class. Income property types (office, medical office, retail, industrial, multifamily and so on) plus Development Land and Timberland, which route to purpose-built land flows.
  4. 4. Build out the deal. Work left to right in the deal sidebar: Setup, then Rent Roll and Operating, then Financing, then Analysis tabs (Pro Forma, Scenarios, Sensitivity, Scorecard) and Output (Export, Notes, History).
  5. 5. Track the deal. Move the stage bar from Prospect through Underwriting, LOI, PSA, Due Diligence to Closed as the deal progresses.
02

Model types explained

Acquisition

You are buying an existing income property. Cadence builds a monthly cash flow grid from the rent roll and operating assumptions, sizes debt off price or value, and reports levered and unlevered returns through an assumed exit.

Development

You are building. The model runs a construction budget and draw schedule against an interest-only construction loan sized by loan-to-cost, then hands off to a stabilized property. Exit either at completion or hold and refinance.

Disposition

You already own it and are testing the sale. The focus is exit valuation — cap rate, price per square foot or a stated price — plus a hold-versus-sell comparison and a check of the exit price against implied value.

03

Key terms

Cap rate
Net operating income divided by value or price — the unlevered annual yield a buyer accepts on a stabilized income stream.
Unlevered IRR
The annualized return on total project cost, ignoring debt: purchase and capital outflows against property cash flow and net sale proceeds.
Levered IRR
The same calculation after debt — equity contributions out, cash flow after debt service and net proceeds after loan payoff back in.
Equity multiple
Total dollars distributed to equity divided by total equity invested. 2.0x means you got twice your money back in total, not in profit.
Cash-on-cash
Cash flow after debt service in a given year divided by equity invested — the annual current return, distinct from IRR which is time-weighted.
DSCR
Debt service coverage ratio: NOI divided by annual debt service. Below 1.00x the property does not cover its loan payments from operations.
LTV
Loan-to-value: loan balance divided by property value or purchase price. Used to size permanent debt on an acquisition.
LTC
Loan-to-cost: construction loan proceeds divided by total development cost (land basis plus all hard, soft and carry costs). Used to size construction debt.
Yield on cost
Stabilized NOI divided by total project cost. Compared against the market cap rate, the spread between them is the development profit margin.
Implied value
What the asset is worth on your assumptions — either stabilized NOI capitalized at a market cap rate, or the present value of projected cash flows plus terminal value at your discount rate. Cadence reports your price as a premium or discount to it.
04

Frequently asked

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