Underwriting Summary
Cap Rate Stress Test
Valuation impact of cap rate movement on a NOI-constant basis.
| Scenario | Cap Rate | Implied Value | Equity Impact |
|---|---|---|---|
| −50bps | 5.40% | $17.2M | +9.3% |
| Base Base | 5.90% | $15.7M | 0.0% |
| +50bps | 6.40% | $14.5M | -7.8% |
| +100bps | 6.90% | $13.4M | -14.5% |
DSCR Rate Sensitivity
Coverage ratio under interest rate shock scenarios.
| Rate Scenario | DSCR | Status |
|---|---|---|
| Current Rate Current | 1.19x | Marginal |
| +100bps | 1.05x | Marginal |
| +200bps | 0.94x | Below Threshold |
Threshold: 1.25x (agency standard) · 1.0x (minimum acceptable)
Rent Comps
Comparable properties within the submarket. Market rent per unit/month.
| Address | Market Rent | Year Built | Distance |
|---|---|---|---|
| 3900 Charlotte Ave | $1,650/mo | 2015 | 0.5 mi |
| 5200 Charlotte Pike | $1,590/mo | 2010 | 0.8 mi |
| 4100 Harding Pike | $1,720/mo | 2019 | 1.2 mi |
| 2800 Elliston Pl | $1,800/mo | 2021 | 2.1 mi |
Sample comps generated for illustration. Live deals show actual market data from CoStar/Rentometer.
Risk Flags
- DSCR of 1.19x leaves minimal cushion — any NOI slip risks covenant breach
- Nashville near-term supply: 9,400 units delivering 2024–2025
- LTV at 75% at the top of the acceptable range
- Occupancy at 91% — below market average; investigate concessions
Investment Rationale
Nashville at 74 is a story of trophy market, tighter underwriting. The Charlotte Pike corridor is a supply-heavy submarket within a supply-heavy MSA, and the 5.9% cap rate reflects the institutional premium Nashville commands rather than an above-market yield. DSCR of 1.19x is the primary concern — under a +100bps interest rate shock, coverage drops to a tight 1.05x.
The score also reflects occupancy at 91%, below the 94% market average for this submarket. The seller is almost certainly being asked to explain 300bps of occupancy gap. This could reflect deferred maintenance, rent positioning above market, or a tenant quality issue. None of these are disqualifying, but each warrants physical diligence and a review of the T12 rent roll.
The Nashville thesis is supply-cycle, not fundamental. If a buyer can acquire this asset and hold through 2026, when the current supply wave fully absorbs, the NOI recovery to 94%+ occupancy adds ~$55,000 in annual income — enough to revalue the asset at approximately $17.2M on a 5.5% exit cap. That represents ~11% upside on current equity, which is acceptable but not exceptional for the risk taken.
This is a sample analysis. Live deal rationale is generated by the Clearfield agent at deal ingestion using real financial data.
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