Disciplined Acquisition Framework • Algonquian Real Estate, LLC

Underwriting Process

Every acquisition is evaluated through structured financial modeling, conservative assumptions, and long-term risk controls.

Underwriting Philosophy

Algonquian Real Estate, LLC evaluates each opportunity using stabilized income assumptions and conservative expense modeling.

Our underwriting approach prioritizes:

Cash-flow durability at acquisition
Conservative rent projections
Verified operating expenses
Debt coverage discipline
Liquidity preservation

We emphasize performance on day one rather than speculative upside.

Blue Tesla at Algonquian Real Estate office

Acquisition Analysis Process

1. Initial Screening
• Asset class confirmation (2–6 units)
• Connecticut market validation
• Rent roll review
• Preliminary price-to-income ratio

2. Income Verification
• In-place rent validation
• Market rent comparison
• Vacancy stress modeling (5–8%)
• Other income confirmation

3. Expense Review
• Historical operating expense validation
• Property tax confirmation
• Insurance quote verification
• Maintenance and capital reserve assumptions

4. Debt Modeling
• Current interest rate assumptions
• Amortization structure review
• DSCR stress testing
• Sensitivity modeling at higher rate scenarios

5. Risk Evaluation
• Deferred maintenance review
• Code compliance risk
• Structural and mechanical exposure
• Market stability analysis

Acquisitions proceed only if internal underwriting thresholds are satisfied.

Debt Service Coverage Standards

Minimum stabilized DSCR: 1.25x
Preferred coverage range: 1.25x–1.35x

Coverage is modeled using conservative income and expense assumptions and stress-tested against interest rate movement.

Leverage Parameters

• Conservative loan-to-value thresholds
• Liquidity maintained at acquisition
• Reserve allocation prior to distributions
• No reliance on short-term refinancing assumptions

Leverage supports stability — not expansion speed.

Underwriting Boundaries

The Company does not pursue:

Speculative rent growth without market support
High-leverage capital stacking
Interest-only dependency structures
Heavy structural redevelopment exposure outside scope
Short-term flip strategies

Risk mitigation precedes return optimization.

Disciplined Investment Standards

Structured underwriting protects capital and supports long-term ownership in Connecticut small multifamily markets.