Frontiers · Oceanfront Estates · Model methodology
Appraisal methodology.
Model conventions
Select a geography for research context; it does not alter the financial inputs.
| Measure | Calculation |
|---|---|
| Initial equity | Purchase + acquisition costs + refurbishment + ring-fenced cash − acquisition debt |
| Available nights | Maximum of zero and 365 − owner-use nights − event closure nights |
| Gross rent | Available nights × occupancy × average nightly rate |
| NOI | Gross rent − management/channel fees − insurance − property tax − routine maintenance − other costs − vehicle administration |
| Net operating cash | NOI − annual capital renewal − annual debt service − net uninsured repair cost |
| Net exit | Appreciated property × (1 − discount) × (1 − selling costs) − remaining debt + initial reserve |
| Break-even occupancy | Normal year-1 fixed costs plus debt payment ÷ [(365 − owner nights) × ADR × (1 − management rate − renewal rate)] |
| Equity multiple | All positive cash flows divided by initial and subsequent negative contributions |
| NPV | Annual USD cash flows discounted at the selected nominal USD required return |
Debt, reserves and currency
Debt is a fixed-rate loan with equal annual payments over the selected term. Payments stop once repaid; any balance is repaid on sale. Actual monthly loan schedules differ. All asset-level cash flows and debt are in the same assumed local currency. Inputs begin at their USD-equivalent acquisition values; annual FX changes convert future cash flows into USD.
The initial cash reserve earns no interest, is not used for deficits and is returned at exit. Annual capital renewal is cash spent, not an accumulated reserve. Negative operating cash is funded by additional equity. No financing default, refinancing or limited-liability cap is simulated.
Growth and event timing
Nightly rates grow annually; occupancy and owner nights are fixed. Other costs rise at operating-cost inflation, while insurance uses its own growth rate. The one-off event reduces available nights and adds a net repair bill in the selected year. It has no effect if the event year is outside the holding period. The model assumes uniform nights and does not distinguish peak-season owner use or storm timing.
Interpretation and exclusions
Income and capital-gains taxes, withholding, tourist taxes, transfer-specific structuring, refinancing, performance fees, seasonal working capital, probability distributions and detailed building-component schedules are not calculated. Add relevant acquisition costs and unrecovered operating charges to the corresponding inputs. Initial refurbishment adds no automatic resale premium.
IRR is reported only for a single cash-flow sign change and a root in the tested range (−99.99% to 1,000%). NPV remains available when IRR is not meaningful. The normal-year break-even figure excludes shock repairs and closures, and is not a safety threshold.