Market comparable analysis for Newport Beach replacement property, adjusting for thin sale volume, ground leases, and Fashion Island pricing.
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Lender preflight coordination for Newport Beach exchangers, testing leasehold financing, DSCR, and appraisal timing before identification is.
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Boot calculation support for Newport Beach exchangers, covering cash boot, debt relief, and non-like-kind personal property such as STR permits.
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Form 8824 preparation support for Newport Beach exchangers, organizing dates, values, and California Form 3840 records for the tax preparer.
ExploreA trailing-12 financial statement sets the baseline for underwriting a Newport Beach replacement candidate, but the figures a seller provides usually need to be recast before they can be trusted against a purchase decision. Skipping this step is one of the more common ways an investor overpays relative to what the property will actually generate under new ownership.
A seller's trailing-12 often includes one-time capital repairs booked as operating expense, owner-specific line items like a management fee that will change under new ownership, and revenue timing that does not match the actual lease terms in place. Recasting strips these distortions out so the resulting net operating income reflects what a new owner would actually experience.
A recast should also flag any revenue that depends on a relationship specific to the current owner, such as a below-market related-party lease, since that income may not continue once the property changes hands.
A recast trailing-12 is also the right place to separate percentage rent, parking income, and any signage or antenna revenue from base rent, since a seller's summary sometimes bundles these together in a way that overstates the durability of the base rent figure a lender will actually rely on when sizing a loan.
Property tax is the category most likely to change materially after a sale, since Newport Beach's high per-square-foot values mean a reassessment at the new purchase price can move this line well above the seller's trailing figure. Insurance costs for coastal and harbor-adjacent property also deserve separate review given exposure factors tied to location near the water.
Utility costs also deserve a second look on older coastal buildings, since aging mechanical systems near the water can run less efficiently than the seller's trailing figures suggest, particularly if major equipment has not been replaced in several years.
Repair and maintenance expense on harbor-adjacent buildings should be reviewed for a full multi-year window rather than a single trailing-12 snapshot, since salt air exposure can concentrate major exterior and mechanical repair costs into occasional larger years rather than spreading them evenly, which a single year of data can either overstate or understate depending on when it falls in that cycle.
Retail candidates near Fashion Island or Corona del Mar should have their CAM reconciliation history checked against the trailing-12 figures, since an estimated CAM charge that has not been trued up can overstate collected income relative to what tenants actually owe.
On coastal multifamily candidates, the trailing-12 should be checked against rent-cap applicability by unit before projecting rent growth, and on office candidates along MacArthur Boulevard, expense reimbursement should be reconciled against each tenant's specific base year rather than averaged across the building.
A recast trailing-12 that shows materially lower net operating income than the seller's marketing package is a reason to revisit a candidate's position on the identification letter, and the final recast figures should be shared with the lender and the investor's tax advisor before the closing statement is prepared.
Where the gap between marketed and recast income is small, it may simply reflect normal estimating differences, but a large gap is worth resolving with the seller's broker directly before the property advances further in the process. Documenting the specific line items driving the gap, rather than citing a single adjusted total, gives the seller's broker something concrete to respond to instead of a general disagreement over value.
Seller-prepared figures often include one-time capital repairs, owner-specific costs, and revenue timing that will not carry forward to a new owner, so the numbers need to be adjusted to reflect actual ongoing operations. A second set of eyes on the trailing-12, separate from the listing broker, is generally worth the time this recasting takes.
High per-square-foot values mean a reassessment at the new purchase price can move the property tax line well above what the seller's trailing figures show. This gap should be modeled explicitly in the underwriting rather than assumed to match the seller's current tax bill.
If common area charges have been estimated but not reconciled against actual expenses, collected CAM income on the trailing-12 may not match what tenants ultimately owe, which changes the effective net operating income.
No, percentage rent should be checked against reported tenant sales across the full trailing period, since a single strong quarter can overstate what a tenant will pay on an annual basis.
That is a signal to revisit the candidate's position on the identification letter and to share the recast figures with the lender and tax advisor before the closing statement is finalized.