Cubedup Flex Underwriting · Investment committee
Small-bay industrial, flex and IOS

Illustrative small-bay flex park

Methodology: Cubedup Flex Underwriting (CFU), small-bay industrial, multi-tenant flex, contractor bays and outdoor storage. Contents: Summary, Lease stack, Financing, Risk register.

The lease is the asset. Revenue is in-place contract rent; mark-to-market is credited only as leases roll. Ceiling is the lowest of four values: direct capitalization, a lease-by-lease DCF, the price a lender sizes on a stressed roll, and replacement cost. Inputs shown are illustrative, not a live transaction.

1. Transaction

Property Asking price Rentable building SF (county verified) Market and class Thin market or month-to-month premium, bps Deferred capex, deducted from price Replacement cost, new shell all-in, USD/SF

Replacement cost working range 2026: USD 85 to 130 per SF (T4). Replace with live local GC pricing.

2. Lease stack Certified rent roll

In-place base rent, USD/yr Expense recoveries billed, USD/yr Yard and other income (permitted only) Month-to-month share of rent, % WALT, leased portion, years Peer median asking rent, USD/SF/yr (0 = unknown) Mark-to-market capture, % NNN share of income, % (0 = all IG/MG)

Use the peer median, never the average. Under IG or MG leases every dollar of tax and insurance reset lands on NOI. Month-to-month rent is repriced over 3 years; leased rent over about twice the WALT.

3. Net operating income Institutional load

Vacancy and downtime, % Credit loss, % Management, % of EGI Opex ex. mgmt, insurance, tax TI and LC reserve, USD/SF/yr Capital reserve, USD/SF/yr Insurance, buyer basis Insurance evidence FEMA flood zone Flood premium, USD/yr

Small bay: vacancy and downtime 5 to 8%, credit loss 2 to 3%, management 3 to 5%, TI and LC 0.75 to 1.50 per SF, capital reserve 0.15 to 0.30 per SF (T4).

4. Property tax

Treatment In-place tax, USD/yr Effective rate on value, % Reset at % of price

Pull the parcel's own bill and district millage. The increase passes through only on the NNN share.

5. Capital markets and debt

Rates as of 10-yr Treasury, % 5-yr Treasury, % Lender spread over 10-yr, % Amortization, years Maximum LTV, % Minimum DSCR, x Debt yield floor, %

The lender sizes on a stressed roll: month-to-month rent is haircut 10%. Terms are T3 until a term sheet.

6. Hold assumptions

Escalations and growth, %/yr Unlevered discount rate, % Exit cap over going-in, % Hold, years

7. Scorecard

Factor	Weight	Points

Framework A (stabilized: 90%+ leased, WALT over 2 years) bar 80/100. Framework C (value-add, heavy month-to-month or rent below 85% of market) bar 75/100 with hard floors.

Recommendation

Valuation USD

Direct capitalization
Lease-by-lease DCF
Debt-supported value, stressed roll
Replacement cost
Cubedup ceiling (lowest)
Market-clearing price
Opening bid
Ceiling as % of ask

Valuation range

Returns at ceiling

Lease stack

Sources and uses At ceiling

Sensitivity DCF value, USD M

Rows: share of the mark-to-market gap captured. Columns: exit cap change in basis points. Shaded cell is 65% capture at the base exit.

Capital markets

Risk register

Risk	Exposure	Status	Mitigant

Conditions and open items

Financing structures

Price to finance (blank = ceiling) Hold, years NOI growth, %/yr Exit cap over going-in, % Closing costs, % of price SOFR, % Prime, %

Seller note offered Down payment, % Note rate, % Note amortization, yrs (0 = IO) Balloon, years Buyer discount rate, %

Assumable loan Balance, USD Rate, % Remaining amortization, yrs Years to maturity Mezzanine on CMBS, combined LTV %

Financing flags and warnings

Lender terms are market conventions, October 2026 (T3/T4): bank 5-yr Treasury + 2.75%, 25-yr, 70% LTV, 1.25x; credit union + 2.50%; SBA 7(a) prime + 2.75% (cap prime + 3.00%), 25-yr, 90% LTV, FY2026 guaranty fee 3.5%/3.75% of the guaranteed portion; SBA 504 bank 50% + CDC 35% at 6.97% (Oct 8 2026 debenture sale), 15% equity; CMBS 10-yr + 2.25%, 30-yr, 65% LTV, 1.30x, 9% debt yield, 2 yrs IO; life company 10-yr + 1.75%, 60% LTV, 1.40x, 9.5% debt yield; bridge SOFR + 4.50%, interest-only, 75% LTV. Replace with a term sheet before any LOI. Seller paper is valued at the buyer's discount rate to give a cash-equivalent price.