Financial Pro Formas

The financial pro forma is the “financial engine” that drives any community; it is a very sensitive barometer of revenue and expenses. The pro forma should detail both the initial one-time capital needs and realistic monthly operating expenses to show how the community will perform over the long run. The pricing, which has been established and confirmed by a market feasibility study, provides the revenue side of the pro forma. The market feasibility study and financial pro forma should be closely integrated and synchronized. The pro forma is heavily influenced by the initial design and overall development business plan. It should, however, have the flexibility to run sensitivity scenarios or to be modified in response to future project changes, such as project cost changes or pricing changes, during the overall development and planning process.  There should also be a closed loop philosophy which insures that any changes made to the pro forma are also reflected in the market feasibility study to confirm that these changes are appropriate and will be acceptable in the marketplace.