Metrics for Redevelopment Projects

What metrics do you use to compare large-scale redevelopment projects for long-term holding period i.e. no windfall? To make it more complicated, every project is in a different phase - some can be in early market research while some are already 25% complete. 

A few metrics off the top of my head: 

  • IRR - IMO it doesn't work since there are no sale proceeds once the project is completed 

  • Cash on Cash (stabilized rent over total project cost) the best metrics? Or CAGR of stabilized NOI against cost of capital

 
Most Helpful

Work at a long term hold family owned development shop. Yield on cost (NOI/Total Project Cost) is our go to metric for long term hold project. We look for yield on cost to be baseline 150 bps above prevailing cap rates. 

 

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