Annual returns on a construction scenario, where there is almost all negative cash flow in the earlier periods, are not very accurate. This has to do with the return calculation only considering one period per year (i.e. it only uses the net of an entire year’s cash flow as of the last day of that year), in a situation where the cash flow in the earlier years is highly volatile.
The monthly cash flow and returns will provide the more accurate answer, and in fact, Spencer discourages even considering the annual figures on construction scenarios; hence the reason he hid the IRR Matrix when the development module is turned on.
To your second question. The drop-down should be the year of stabilization. So in the case of a core acquisition, year 1. In the case of a value-add or development, some year out into the future. Spencer made the cell an optional input (i.e. orange font), with a default formula that attempts to estimate the first stabilized year.