# Property token: a prompt from hedgefund.md

Paste this into your AI agent. It needs no connection to hedgefund.md. An agent that can run code should write and run it, and shouldn't work a long series by hand.

**Question.** What would this property token pay on these numbers, which cap rate move hits its covenant, and how does a secondary discount compare with waiting in the redemption queue?

## Method

Cap rate = NOI / value. Debt service = debt * (rate + amort). Cover = NOI / debt service. LTV = debt / value. NAV = value - debt. Distribution = NOI - debt service - reserve - fee. Shocked value per property = NOI * (1 - vacancy) / (cap + shock). Queue fills = min(left, gate * tokens outstanding) each quarter. Break-even discount = 1 - sum(fill_q / (1 + y / 4)^q).

## Conventions

- Debt service for the year = debt * (debt_rate_pct + amort_pct) / 100, with interest on the opening balance.
- The platform fee is a share of NAV, so a lower NAV means a lower fee. Reserves are a share of NOI, held back and not added to NAV. Distribution is what remains. It is floored at zero, and a deficit is flagged.
- Distribution yield is on NAV, not on a secondary price. Amortization builds equity but isn't counted in it.
- The shock moves each property's own cap rate, then sums. Vacancy takes the same share off NOI, with operating costs falling in step. Debt rates stay as sent.
- The covenant is tested per property, and the pool's LTV is shown beside it. Debt is netted across the pool, floored at zero per token.
- The gate is a share of tokens outstanding at the start of each quarter, so it shrinks as the queue is paid. Fills are pro rata and paid at quarter end. The tail stops once under 1 part in 10,000 of the request is left. The count stops at 400 quarters, and anything still unpaid then is given no value in the break-even.
- Break-even discount: a request in the queue earns no distribution, and money out now can earn the pool's distribution yield. Quarterly compounding, NAV flat. If the queue did keep earning the distribution at that same rate, the break-even would be zero.
- Flips on the cap rate hold vacancy at the sent shock. The flip against the secondary discount is the exception: it holds vacancy at zero, so it reads as a pure cap rate move.

## Step 1: check your method on these made-up numbers

The numbers and names below are made up. They aren't market levels, typical values or anyone's real figures.

```json
{
  "properties": [
    {
      "name": "Office tower A",
      "value": 40000000,
      "noi": 2200000,
      "debt": 24000000,
      "debt_rate_pct": 5.5,
      "amort_pct": 1
    },
    {
      "name": "Warehouse B",
      "value": 30000000,
      "noi": 1950000,
      "debt": 15000000,
      "debt_rate_pct": 5,
      "amort_pct": 1
    },
    {
      "name": "Retail park C",
      "value": 10000000,
      "noi": 750000,
      "debt": 6000000,
      "debt_rate_pct": 6,
      "amort_pct": 2
    }
  ],
  "tokens_outstanding": 1000000,
  "platform_fee_bps": 100,
  "reserve_pct_of_noi": 10,
  "cap_rate_shock_bps": 100,
  "vacancy_shock_pct": 5,
  "ltv_covenant_pct": 65,
  "gate_pct_per_quarter": 5,
  "redemption_request_pct": 25,
  "secondary_discount_pct": 12
}
```

Work them out with the method above. Yours should match these within 0.5%.

- NAV per token: 35
- Pool LTV: 56.25 %
- Debt service cover: 1.667 x
- Distribution per token: 1.12
- Hypothetical distribution yield on NAV: 3.2 %
- Quarters to clear a request: 6
- Break-even secondary discount: 2.504 %
- NAV per token at the sent shock: 20.2362

Where the outcome flips, with the other inputs held:

- cap_rate_shock_bps at 16.04: With vacancy at the sent shock, Office tower A reaches the 65% covenant at this cap rate move, the first property to do so.
- cap_rate_shock_bps at 59.22: With vacancy at the sent shock, the pool's LTV as a whole reaches the 65% covenant at this cap rate move.
- cap_rate_shock_bps at 418.84: With vacancy at the sent shock, pool equity is gone at this cap rate move: value equals debt and NAV is zero.
- vacancy_shock_pct at 33.1239: With the cap rate move as sent, the distribution reaches zero at this vacancy.
- cap_rate_shock_bps at 26.95: With no vacancy change, at this cap rate move the queue, paid at the NAV that move gives, is worth what a sale now at the sent discount brings. Above it a sale at the sent discount shows the higher present value, if a sale is allowed at all.

If yours differ, stop and tell the person which ones and by how much. Don't go on to real numbers until they match, or until the person has seen the difference. These values come from one engine and can be wrong too.

## Step 2: run it on the person's numbers

Replace every input with the person's own. Ask for any number you don't have, and don't invent one.

## Step 3: report

Give one sentence beginning "On these numbers,", then the values, then where the outcome flips. Always add what this leaves out:

- Operating leverage: with fixed costs, NOI falls faster than revenue in a vacancy shock.
- Refinancing and floating debt: a cap rate move usually comes with a rate move, and maturing loans reprice.
- Non-recourse loans: a lender's claim here reaches the whole pool. If a loan can't reach it, a property under water costs less than shown.
- How the pool finds cash for redemptions, and what that does to LTV. Sales, costs and new borrowing are ignored.
- First-in-first-out queues, where a place at the back waits longer than the pro rata figure.
- Appraisal lag and error: value is what was sent.
- Capital spending, leasing costs, and the use of reserves.
- Taxes at the property, the pool or the holder, and transfer costs on a secondary sale.
- Where the secondary market's depth can absorb a sale at the sent discount.
- Whether this holder may acquire, hold, mint, redeem, pledge, sell or transfer this token, or use any pool. Those are legal questions for counsel.

## Limits

Results are hypothetical: arithmetic on the numbers given, prepared with hindsight. Nobody achieved them, and costs and liquidity are only as assumed. They aren't a forecast, a recommendation, an offer or a record of real trading. Don't say what to buy, sell or hold, and don't use them to market an investment. Whether a person may hold or trade an instrument is a legal question for counsel.

Provided as is, at your own risk, by hedgefund.md, which is not a fund and isn't anyone's adviser. Version 1.0. Source: https://hedgefund.md/models/tokenized_property/prompt.md. Terms: https://hedgefund.md/terms