Occupancy Scenarios

1. Scenario Overview

Key Assumptions

Scenario Definitions

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2. Conservative Scenario

Occupancy Trajectory

Assumptions:

• 25% occupancy at Month 1 (5 suites pre-leased)
• 5%/month ramp during lease-up phase
• Reach 70% at Month 10, stabilize
• Mature to 80% by Year 2

Conservative Scenario Summary

Key Milestones:

• Break-even month: Month 9 (65% occupancy)
• Cash-flow positive month: Month 10 (70% occupancy, costs fully covered)
• Cumulative break-even: Month 22 (recover Year 1 losses)

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3. Base Case Scenario

Occupancy Trajectory

Assumptions:

• 35% occupancy at Month 1 (6 suites pre-leased through competitor waitlist capture)
• 7%/month ramp during active lease-up
• Reach 85% at Month 9, stabilize
• Maintain 85% through Year 2-3

Base Case Scenario Summary

Key Milestones:

• Break-even month: Month 5 (63% occupancy)
• Cash-flow positive: Month 5 (operating above break-even from Month 5)
• Year 1 profitable: Yes ($9,809 gross profit)

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4. Aggressive Scenario

Occupancy Trajectory

Assumptions:

• 50% occupancy at Month 1 (9 suites pre-leased through active pre-opening marketing)
• 8%/month ramp during accelerated lease-up
• Reach 90% at Month 6, stabilize
• Maintain 90-92% through Year 2-3

Aggressive Scenario Summary

Key Milestones:

• Break-even month: Month 2-3 (58-66% occupancy)
• Cash-flow positive: Month 2 (operating above break-even immediately)
• Year 1 gross profit: $36,408

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5. Scenario Comparison

Side-by-Side Summary

Occupancy Trajectory Visualization

Occupancy % by Month:

100%|
 90%|                              ▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓ Aggressive
 80%|                    ░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░░ Conservative Y2+
 70%|             ████████████████████████████████████████████ Conservative Y1 end
 60%|      ▓▓▓▓▓▓▓
 50%|   ▓▓▓
 40%|  ██
 35%| ▓█
 25%|█
    +--------------------------------------------------
      M1  M3  M5  M7  M9  M11 M13 M15   ...   M36

Legend: █ Conservative  ▓ Base Case  ░ Aggressive (all converge Y2+)

Revenue Trajectory (Monthly)

Revenue ($K/month):

$22K|                                          ▓▓▓▓▓▓ 100% = $22.6K
$20K|                    ░░░░░░░░░░░░░░░░░░░░░░░░░░░░░ Aggressive
$19K|              ▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓▓ Base Case
$18K|         ████████████████████████████████████████ Conservative Y2+
$16K|      ████
$14K|  ▓▓▓▓
$12K| ▓▓
$10K|░▓
 $8K|█░
 $6K|█
     +--------------------------------------------------
       M1  M3  M5  M7  M9  M11 ...   Y2   Y3

Legend: █ Conservative  ▓ Base Case  ░ Aggressive

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6. Sensitivity Analysis

6.1 Impact of 3-Month Delay in Reaching Targets

What if ramp-up takes 3 months longer than projected?

Delayed Scenario - Base Case Detail:

Adjusted Year 1: Base Case with 3-month delay = $157,831 revenue, ($17,105) loss

6.2 Impact of 10% Lower Blended Rate

What if market pressure forces $283/week instead of $315/week?

Base Case at Lower Rate:

Key Finding: A 10% rate reduction pushes Year 1 to a loss in the Base Case and increases break-even occupancy by 7 points.

6.3 Combined Downside Scenario

3-month delay + 10% lower rate:

Implication: Even in combined downside, facility generates positive 3-year cumulative profit. However, Year 1 cash requirements increase significantly.

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7. Cash Flow Timing

Pre-Opening Capital Needs

Maximum Cash Shortfall by Scenario

*Base Case goes positive cumulatively by end of Year 1

Working Capital Recommendation

Recommendation: Plan for $35,000-$50,000 working capital reserve in startup funding to cover Conservative scenario plus unexpected costs.

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8. Scenario Probability Assessment

Probability Weighting

Expected Value Calculation

Year 1 Expected Gross Profit:

E[Profit] = (0.20 × -$35,691) + (0.55 × $9,809) + (0.25 × $36,408)
          = -$7,138 + $5,395 + $9,102
          = $7,359

3-Year Expected Cumulative Profit:

E[3-Year] = (0.20 × $49,125) + (0.55 × $121,793) + (0.25 × $180,996)
          = $9,825 + $66,986 + $45,249
          = $122,060

Risk-Adjusted Summary

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9. Break-Even Analysis Summary

Break-Even by Scenario

Cash Flow Break-Even (Monthly Positive)

Cumulative Break-Even (Recover All Losses)

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10. SBA Presentation Summary

For Loan Application

Primary Scenario (Base Case):

• Year 1 Revenue: $184,745
• Year 1 Gross Profit: $9,809
• Break-even: Month 5
• 3-Year Cumulative Profit: $121,793

Downside Scenario (Conservative):

• Year 1 Revenue: $139,245
• Year 1 Loss: ($35,691)
• Break-even: Month 9
• 3-Year Cumulative Profit: $49,125

Key Risk Mitigants:

1. Break-even at 62% occupancy - well below market stabilized rates (85-90%)
2. Competitor waitlists indicate unmet demand
3. Quality-Value positioning targets underserved market segment
4. Owner-operated model reduces fixed costs vs. management overhead
5. Pre-leasing strategy reduces ramp-up risk

Capital Request Justification:

• Working capital reserve of $35,000-$50,000 covers Conservative scenario
• Even worst-case (combined downside) achieves positive 3-year cumulative
• Debt service capacity validated in Phase 8 Plan 02

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Occupancy Scenarios Complete - Ready for Facility P&L Projections (Task 2) Phase 8: Facility Financial Model - Task 1 Complete