Hotel with Retail and Apartments Mixed-Use Proforma

Three-component mixed-use is the most error-prone proforma in commercial real estate. Each use trades on different fundamentals and demands its own cap rate. In 2026, apartment caps in most U.S. gateway markets sit in the 4.75–6.0% range, ground-floor retail in 6.5–7.5%, and hotel in 8.0–10.0%. Combining them properly typically produces a blended cap of 6.5–7.5% — but you should never pick that number directly. Always cap each component, then sum.

The model intentionally separates the three so you can interrogate each. If a partner or lender disputes your apartment cap by 25 bps, you can see the dollar impact instantly without redoing the whole proforma.

Developers use it during land-acquisition pencils for vertical mixed-use towers (typically 200,000–700,000 SF total) where the program is set but financing is not yet locked. Acquisition teams use it to underwrite stabilized assets — branded-residential towers attached to luxury hotels are the canonical example.

Lenders use it to validate borrower proformas, especially the cap-rate stack and the DSCR sizing. Brokers use it for opinion-of-value letters where a full ARGUS-Enterprise run is overkill but a single-cap quick-and-dirty would understate value.

Consider a 350-unit branded-residential tower above a 200-key lifestyle hotel above 12,000 SF of street-level retail. Apartments at $4,500/month average with 5% vacancy generate roughly $18.0M of EGI, $5.4M of OpEx, and $12.6M of NOI. At a 5.0% apartment cap, the apartment value is $252M.

The hotel runs $325 ADR at 70% occupancy with $8,000/key in F&B and ancillary: about $17.0M rooms plus $1.6M ancillary, $11.5M OpEx, $7.1M NOI. At a 7.5% hotel cap, hotel value is $94M.

Retail at $50 PSF with $12 CAM recovery and 96% occupied: roughly $716K EGI, $129K OpEx, $587K NOI. At a 6.75% retail cap, retail is worth $8.7M.

Combined value is $355M with a blended cap of about 5.7%. At 60% LTV the loan is $213M; at 6.5%/30 the annual debt service is roughly $16.2M and DSCR is 1.25× — exactly at the lender floor, meaning you'd negotiate lower LTV or a longer amort.

The first mistake is double-counting parking revenue. Vertical mixed-use buildings usually have a single shared garage. Pick one component (typically retail or apartments) and put the parking net income there — don't add it to all three.

The second mistake is allocating master-policy insurance and property taxes evenly. Property taxes follow assessed value, and assessed value follows the use mix. Apartments often qualify for a property-tax abatement that retail and hotel do not — split taxes by component value before splitting the rest of OpEx pro-rata.

The third mistake is using a single occupancy ramp. Hotels stabilize over 24–36 months. Apartments stabilize over 12–18 months. Retail stabilizes when the anchor opens, which can be year 3 or 4 of the development. Underwrite each to its stabilized year — not the same year — and discount to today separately if you need a DCF view.

Finally, branded-residential apartments do not necessarily trade at the local apartment cap rate. A Four Seasons or Aman branded condo can sell at a 75–150 bps premium (i.e., a tighter cap) because of the brand's pricing power. Adjust the apartment cap rate input accordingly.