A parking pro forma is the forward financial model of a facility: revenue by product, operating expenses, capital reserves and debt service, projected over the expected holding period.
The pro forma disciplines every design decision that adds cost or capacity. It is where ratios, rates and utilization meet money, and where a lender or investor decides whether the project is worth funding.
What goes into it
- Revenue by product. Transient, monthly, event, validation and reservation income, each with its own rate, volume and growth assumptions.
- Other income. EV charging, advertising, cellular leases and retail.
- Operating expenses. Staffing, utilities, maintenance, insurance, technology and management fees. See operating expenses.
- Capital reserves. Annual set-asides for structural repair, sealers, equipment replacement and lighting.
- Financing. Debt service and the coverage ratio lenders require.
- Exit. Value at the end of the hold, usually NOI divided by a cap rate.
Stress-testing demand
Honest pro formas stress-test demand, not just expenses. Run the model with lower occupancy, slower ramp-up and flat rates, and check that the project still meets its debt obligations.
The Parkonomics view
If it does not pencil in the pro forma, it will not pencil in the garage.
Related terms: Financial Feasibility Study, Cap Rate, Operating Expenses, Return on Investment, Parking Demand Analysis, Net Operating Income, Debt Service Coverage Ratio