skills/cim-teardown/references/overlay-real-estate-heavy.md

# Overlay: Real Estate Heavy

Use for property-centric businesses or assets where occupancy, lease terms, rent roll quality, operating expense burden, and maintenance capex dominate the underwriting.

## Table of contents
1. Decision lens
2. Driver tree
3. Mandatory denominators
4. Typical gating items
5. Kill criteria examples
6. Evidence asks
7. Owner mapping
8. External triangulation when thin
9. Red flags

## Decision lens
- Is the reported NOI or cash yield supported by the rent roll and real operating costs?
- Are occupancy and tenant quality durable?
- Is deferred maintenance or capital replacement understated?
- Are zoning, taxes, or property-specific constraints a hidden drag?

## Driver tree
Default equation:

`occupied units/square feet x effective rent - operating expenses - reserves - maintenance capex burden`

## Mandatory denominators
- occupied units, square feet, or rooms
- gross rent, concessions, and effective rent
- occupancy, turnover, and lease rollover
- tenant concentration and credit quality where relevant
- taxes, insurance, utilities, repairs, and HOA/common-area costs
- recurring capital reserve needs and deferred maintenance
- zoning, entitlement, and permit status for planned improvements

## Typical gating items
- Reported NOI excludes recurring operating costs or reserves.
- Occupancy or rent assumptions do not match lease-roll reality.
- Deferred maintenance or near-term capital needs are missing from the case.
- Taxes, insurance, or utilities are moving against the story.
- Upside depends on zoning, permits, or tenant repositioning with weak support.

## Kill criteria examples
- `hard pass`: normalized NOI cannot support the required cap rate or leverage.
- `price reset`: capital reserve needs or near-term capex materially reduce cash yield.
- `pause`: legal, zoning, or title-related issues impair the planned use or improvement case.

## Evidence asks
- rent roll with lease start/end, rate, concessions, and arrears
- trailing 12-month property P&L
- tax bills, insurance policies, and utility summaries
- repairs and maintenance logs
- capex history and engineering or property-condition reports
- zoning, permit, and title materials

## Owner mapping
- property manager or asset manager
- CFO, controller, or bookkeeper
- leasing lead or broker
- assessor, utility provider, or municipality
- engineering or maintenance vendors

## External triangulation when thin
- assessor and parcel records
- zoning and permit portals
- comparable rent and occupancy context from reputable local sources
- environmental and code-enforcement checks where relevant

## Red flags
- NOI is presented without a reserve for recurring capital needs.
- Occupancy is quoted without lease-roll support.
- Tax or insurance resets are ignored in the forward case.
- Improvement upside is claimed without entitlement support.