The real estate development pro forma, after closing

A real estate development pro forma is the financial projection for a project before it exists: what it will cost to build, what it will earn, when the money moves, and what return that implies. It is the document the deal is approved on, and the one the lender and the equity read most carefully.

What is in one

The cost side follows the familiar structure of land and acquisition, hard costs, soft costs, financing costs, and contingency. Those are the same five buckets the working budget will use, and that shared structure is not a coincidence. It is what makes the comparison possible later.

The revenue side depends on the product. A for-sale condo pro forma projects unit prices and an absorption pace. A rental or mixed-use pro forma projects rents, vacancy, operating expenses, and a stabilized net operating income, then a value at exit from a capitalization rate.

Between the two sits the timeline, and the timeline is doing more work than it appears to. A development pro forma is a cash flow over time, so a schedule assumption is also a financing cost assumption. Push entitlement out two quarters and the return moves even if not one construction cost changes. That coupling is why the phases of development belong in the model rather than in a separate schedule document.

The part most guides skip

Almost every explanation of a pro forma stops at closing, as though the model's purpose ends when the deal is approved. In practice the more consequential half of its life starts there.

Once construction begins, the pro forma becomes the baseline. The original budget line in budget variance tracking is the pro forma's cost side, frozen. Every later number, the current budget after approved changes, the committed costs, the forecast at completion, is meaningful only because there is a fixed starting point to compare it against. Unfreeze the baseline and variance stops meaning anything, because a budget that quietly re-baselines itself is always on budget.

The honest practice is to keep two things at once: the original pro forma, untouched, and a current re-forecast that moves as reality does. The gap between them is the project's actual story. Firms that keep only the second one lose the ability to say how far the project has moved, and firms that keep only the first are reporting a number that stopped being true months ago.

Holding both at once, per project and then across a portfolio, is harder than it sounds once a firm is running six deals. It is the problem PlotSlate is being built around. PlotSlate, part of Composed Studio, is in development and not yet generally available.