The RTAF Model reverses the RTA Model back to the prototypical project feasibility analysis report design because, at this stage of the process, the value of the site and/or assets (i.e.: the acquisition price of the site or the acquisition price of the site, improvements and operations for an existing property) is already known as it is either cited in a purchase agreement or is already held in fee-simple title.
The RTA process allowed the developer/sponsor to choose the intended-use scenario that will be the target of the development program, so no other intended-use scenarios are run under the RTAF program model approach. That being the case, the purpose of the RTAF is to provide documentation of potential market opportunity for the resulting project, thus making the RTAF conform to the classical project feasibility study structure. This approach is used to create the outcome of the market analysis process via the testing of the market feasibility analysis key empirical assumptions and conclusions. The reasoning is simple: the analyst must determine if these assumptions and conclusions would have a reasonable expectation of creating the opportunity for the sponsor to achieve their stated financial goal requirements that are the condition precedent to moving forward with the investment opportunity represented by the proposed business transaction.
Accordingly, the RTAF model is designed to solve for the expected-case internal rate of return on the sponsor’s investment of capital over an assumed 5-year holding period under the expected-case business operating scenario condition assumptions. If this process is successful, then the project opportunity is ready to move to the next stage with the creation of the RTU report model.