Industrial Warehouse and Logistics Real Estate Model
Real Estate Financial Model (Free Excel Download)
Underwrite industrial warehouse assets with leasable area, tenant roll, rent escalations, vacancy, operating costs, capex, financing, and exit valuation.
professionals from Deloitte
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About this model
This project finance model values an industrial warehouse acquisition (150k sqm, multi-tenant NNN) by forecasting net rent escalation, CAM recovery, operating expense pass-through, and calculating unlevered and levered IRR over a 7-year hold. Answer: do rent escalations and tenant rollover mark-to-market growth (15–25%) support 8–11% unlevered IRR and 12–16% levered IRR at 65% LTV?
The workbook projects warehouse base rent (£8.50/sqf, 93% occupancy Year 1, 5% vacancy Years 2–7) and office rent (£18/sqf, 90% occupancy, modified gross structure). Both escalate 3% annually per lease. CAM recovery (92% of operating expenses) offsets landlord opex, leaving 8% non-recoverable + 4% management fee deducted before NOI. Property taxes (£1.20/sqf), insurance (£0.30/sqf), and maintenance (£0.50/sqf) are mostly recovered. Tenant improvement reserves (£0.75/sqf/year) and leasing commissions (3% on rollover) are funded but non-recoverable. Senior debt £9.6M (65% LTV on £14.8M purchase) at 6.5%, 25-year amortisation with 2-year IO period. Exit: forward NOI (Year 8) / 6.5% cap rate.
Used by logistics and real estate sponsors, institutional investors deploying capital in e-commerce-driven warehouse space, and lenders underwriting industrial CRE mortgages. The model captures Prologis economics: 94–97% institutional occupancy, 70–75% NOI margin (NNN pass-through), negative working capital (collect rent before paying suppliers). Rent growth on rollover (15–25%) is the primary return lever in secondary markets; entry-exit cap rate differential (25–50 bps expansion) is the key risk. Benchmarks: Prologis trades 5.0–5.75% entry cap in primary markets, 5.75–6.5% in secondary; hold periods typically 5–7 years.
What every model includes
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
What's inside the Industrial Warehouse and Logistics Real Estate Model
- Tenant mix by industry (3PL, e-commerce fulfillment, manufacturing, cold storage)
- Net lease rates and escalation schedules (typically 3% annual)
- Operating expense reimbursement and NNN triple-net lease structures
- Vacancy and leasing assumptions including turnaround time and commission
- Cap rate valuation and leveraged cash flow analysis
- Maintenance capex and tenant improvement reserves
How the Industrial Warehouse Model Forecasts NNN Logistics Returns
This industrial warehouse model evaluates a multi-tenant logistics acquisition over a seven-year hold. It blends triple-net warehouse rents, office income, and CAM recoveries, then layers debt and exit assumptions to produce unlevered and levered returns.
Use it to understand how lease escalations, rollover timing, and capital reserves interact. Rates and financial results described here reflect illustrative model settings, not industry benchmarks.
Revenue Drivers: Warehouse, Office, and CAM Recoveries
Revenue separates into three streams. Warehouse rent is driven by warehouse square footage, a per-square-foot rate, and an annual escalator, with occupancy ramping from 93% to 95%.
- Office rent follows the same structure on a smaller footprint, but with a modified gross lease where the landlord covers insurance and some maintenance. CAM recoveries reimburse most property taxes, insurance, maintenance, landscaping, and parking costs, with a recovery ratio that leaves a small uncollectable share.
- A single major rollover at Year 4 assumes half the warehouse tenants re-sign at a market premium, creating a step-up in rental income.
Operating Expenses and the Net Operating Income Bridge
Because this is a triple-net structure, direct landlord costs are modest. Property management, property taxes, insurance, CAM, and landscaping are modelled, but most flow through to tenants via CAM recovery.
- Non-recoverable items include the management fee and a structural repair reserve. The model explicitly shows gross operating expenses, then subtracts CAM recoveries to reach net landlord operating expenses.
- NOI is calculated as effective gross income minus total operating expenses, and the resulting NOI margin is checked against an industry benchmark range.
Debt, Capital Reserves, and Equity Cash Flows
A single-asset SPV structure uses senior debt sized at 65% loan-to-value on a derived purchase price. The loan carries a fixed interest rate, a two-year interest-only period, a twenty-five-year amortisation schedule, and a seven-year term with a balloon balance at exit.
- Capital reserves sit below NOI and cover tenant improvements, leasing commissions, and ongoing capital expenditure. Unlevered free cash flow subtracts these reserves from NOI.
- Levered free cash flow then deducts interest and principal, with DSCR tracked against a lender covenant. Exit value is based on forward NOI capitalised at an exit cap rate.
Practical Use and Model Validation
The model is built for evaluating whether a warehouse acquisition clears institutional return hurdles. It provides a structured way to test how occupancy, escalations, rollover assumptions, and exit cap rates affect levered returns.
- Validation checks confirm debt declines during amortisation, DSCR stays above covenant, NOI remains positive, and levered IRR exceeds unlevered IRR. A checks sheet also verifies that exit proceeds cover loan payoff and that the equity multiple is at least 1.0.
- This makes the template useful for sensitivity analysis on core-plus industrial acquisitions, not as a live forecasting tool.
Formatted to IB standards
Named theme colors repaint the whole workbook in one click, on top of an investment-banking structure with clear input, output, and cross-sheet reference styling - brand-ready, institutional-grade, and fully auditable.
Created by ex-finance professionals
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Frequently asked
What cap rates are typical for industrial warehouse properties?+
Modern Class A industrial cap rates range from 3.5-5.5% depending on location, tenant quality, and lease terms. Class B/C assets trade at 5.5-7.5%, with prime logistics markets commanding lower cap rates.
How should I model operating expense recovery?+
NNN leases pass through property taxes, insurance, and CAM to tenants as a base year plus escalation. Model the base year, an inflation escalator (typically CPI or 3%), and a cap on recoverable expenses.
What rent escalation should I assume on renewal?+
Market rent growth for industrial is typically 2-4% annually in stable markets and higher in tight markets. Renewal rents are often 5-10% above expiring rent if market-driven.
Who uses industrial warehouse financial models?+
Real estate investors, logistics REITs, warehouse owners, and industrial developers use these models for portfolio acquisition, tenant renewal strategy, and capital structure analysis.
Can this model handle both net and gross lease structures?+
Yes. The model separates NNN and gross lease tenants, applies different expense recovery mechanics to each, and consolidates to a single NOI and cap rate valuation.
Have more financial modelling questions? Contact us
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