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CRE MODELING - BASICS > PRO FORMA > Flashcards

PRO FORMA Flashcards

1
Q

PRO FORMULA

A

PGI

  • V&C

-FR&C

NET RENTAL REVENUE

+OTHER INCOME

EFFECTIVE GROSS INCOME

_- OPERATING EXPENSE_S

NET OPERATING INCOME

- CAPITAL EXPENSES

CF BEFORE DEBT SERVICE

- DEBT SERVICE

CF AFTER DEBT SERVICE / BTCF

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2
Q

OTHER INCOME FORMULA

A

EXPENSE REIMBURSEMENTS

+ PERCENTAGE RENT

+STORAGE INCOME

+ OTHER INCOME

OTHER INCOME

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3
Q

CAPITAL EXPENSE FORMULA

A

TI & LC

+ CONSTRUCTION EXPENSES

+ CAPITAL EXPENSE RESERVES

CAPITAL EXPENSES

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4
Q

NET RENTAL REVENUE

A

PGI

(V&C)

(FREE RENT & CONCESSIONS)

NET RENTAL REVENUE

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5
Q

EFFECTIVE GROSS INCOME

A

NET RENTAL REVENUE

+ OTHER INCOME

EFFECTIVE GROSS INCOME

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6
Q

OTHER INCOME

A

EXPENSE REIMBURSEMENTS

+ PERCENTAGE RENT

+ STORAGE INCOME

+ OTHER INCOME

TOTAL OTHER INCOME

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7
Q

POTENTIAL GROSS INCOME

A

PROPERTY INCOME IF FULLY RENTED OUT AT MARKET RENTAL RATE

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8
Q

PGI FORMULA

A

PGI = MARKET RENT PER UNIT X TOTAL UNITS

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9
Q

VACANCY

A

VACANT UNITS FOR THE PERIOD/YEAR

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10
Q

COLLECTION LOSS

A

UNPAID RENT FOR PERIOD/YEAR

AKA - BAD DEBT WRITEOFFS

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11
Q

V&C FORMULA

A

V&C = PGI X V&C%

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12
Q

FREE RENT

A

MONTHS OF FREE RENT PROVIDED FOR TENANT TO SIGN LEASE

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13
Q

CONCESSIONS

A

RENT DISCOUNTS PROVIDED FOR TENANT TO SIGN LEASE

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14
Q

CF AFTER DEBT SERVICE FORMULA

A

CF BEFORE DEBT SERVICE

- DEBT SERVICE

CF AFTER DEBT SERVICE

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15
Q

FR&C FORMULA

A

FR&C = PGI X FR&C%

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16
Q

EXPENSE REIMBURSEMENTS

A

TENANT REPAYS LANDLORD FOR SHARE OF OPERATING EXPENSES

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17
Q

PRO RATA SHARE

A

TENANT SHARE OF OPERATING EXPENSES BASED ON ITS SHARE OF NET LEASABLE AREA

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18
Q

PRO RATA SHARE FORMULA

A

PRO RATA SHARE = TENANT SF / NET LEASABLE SF

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19
Q

GROSS LEASE

A

LANDLORD RECEIVES GROSS RENT

MUST PAY OPERATING EXP FROM RENT RECEIVED

TENANT PAYS NO OPEREATING EXPENSES

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20
Q

NET LEASE

A

LANDLORD RECEIVES NET RENT

LANDLORD PAYS NO EXPENSES FROM RENT

TENANT PAYS OPERATING EXPENSES

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21
Q

TRIPLE NET LEASE (NNN)

A

TENANT PAYS PRO RATA SHARE OF ALL REIMBURSABLE EXPENESES

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22
Q

TRIPLE NET LEASE FORMULA

A

REIMBURSABLE EXPENSES

X PRO RATA SHARE

NNN EXP. REIMBURSEMENT

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23
Q

FULL SERVICE GROSS LEASE (FSG)

A

TENANT PAYS NO OPERATING EXPENSES

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24
Q

FSG LEASE FORMLA

A

REIMBURSABLE EXPENSES

X $0

X PRO RATA SHARE

FSG REIMBURSEMENT

25
Q

MODIFIED GROSS LEASE

A

TENANT PAYS PRO RATA SHARE OF SOME REIMBURSABLE OPERATING EXPENSES

26
Q

MFG LEASE FORMULA

A

SELECT REIMBURSABLE EXPENSES

X PRO RATA SHARE

MFG REIMBURSEMENT

27
Q

BASE YEAR STOP

A

TENANT PAYS PRO RATA SHARE OF EXPENSES ABOVE BASE YEAR AMOUNT

28
Q

BYS FORMULA

A

CY EXPENSES

- BASE YEAR EXPENSES

EXPENSE INCREASE

X PRO RATA SHARE

BYS EXPENSE REIMBURSEMENT

29
Q

3 COMMON OPERATING EXPENSES

(TIC)

A

TAXES

INSURANCE

COMMON AREA MAINTENANCE (CAM)

SOURCE: https://aquilacommercial.com/learning-center/commercial-real-estate-operating-expenses-op-ex-definition/

30
Q

SINGLE NET LEASE

A

TENANT PAYS

BASE RENT

+ PR UTILITIES

+PR 1 OF TIC

31
Q

DOUBLE NET LEASE

A

TENANT PAYS

BASE RENT

PR UTILITIES

PR OF 2 TIC

32
Q

TRIPLE NET LEASE

A

TENANT PAYS

BASE RENT

+ PR UTILITIES

+ PR TIC

33
Q

ABSOLUTE NET

A

TENANT PAYS

BASE RENT

+PR UTILITIES

+ PR TIC

+PR MGT FEE & CAPITAL RESERVES

34
Q

COMMON AREA MAINTENANCE

(CAM)

A

EXPENSES FOR SERVICES ALL TENANTS BENEFIT FROM

35
Q

CAM EXAMPLES

A

JANITOR

COMMON AREA ELECTRICITY

LANDSCAPING

SECURITY

TRASH REMOVAL

SNOW REMOVAL

SOURCE:https://www.adventuresincre.com/glossary/cam/#:~:text=Tenants%20usually%20pay%20a%20portion,trash%20removal%2C%20and%20snow%20removal.

36
Q

OPERATING EXPENSES

A

COST REQUIRED TO OPERATE PROPERTY

37
Q

OPERATING EXPENSE EXAMPLES

A

TAXES

INSURANCE

REPAIRS & MAINTENANCE

PROPERTY MANAGEMENT

OTHER EXPENSES

38
Q

FIXED OPERATING EXPENSES

A

REMAIN CONSTANT REGARDLESS OF OCCUPANCY LEVEL

TAXES + INSURANCE + PROPERTY MANAGEMENT

39
Q

VARIABLE OPERATING EXPENSES

A

VARY BASED ON OCCUPANCY LEVEL

REPAIRS & MAINTENANCE + CAM + UTILITITES

40
Q

NET OPERATING INCOME

(NOI)

A

INCOME AFTER OPERATING EXPENSES ARE PAID

41
Q

NOI FORMULA

A

EFFECTIVE GROSS INCOME - OP EXP = NOI

42
Q

CAPITAL EXPENSES

A

EXPENSES THAT IMPROVE USEFUL LIFE/VALUE OF THE PROPERTY

43
Q

HOW ARE CAPITAL EXPENSES TREATED FOR ACCOUNTING PURPOSES?

A

CAPITALIZED + DEPRECIATED OVER # OF YEARS

44
Q

CAPITAL EXPENSE EXAMPLES

A

TENANT IMPROVEMENTS

LEASING COMMISSION

CONSTRUCTION EXPENSES

CAPITAL EXPENSE RESERVE

45
Q

CAPITAL EXPENSES - MF TREATMENT

A

ABOVE THE LINE = OPERATING EXPENSE

46
Q

CAPITAL EXPENSE - COMMERCIAL TREATMENT

A

BELOW THE LINE = AFTER NOI

47
Q

TENANT IMPROVEMENT ALLOWANCE

(TI)

A

$ PAID BY LANDLORD TO HELP TENANT IMPROVE THEIR SPACE

48
Q

LEASING COMMISION

(LC)

A

$ PAID TO BROKER FOR LEASING UP SPACE

49
Q

HOW IS LEASING COMMISION USUALLY PAID?

A

PAID IN YEAR 1 OF LEASE

+

BASED ON BASE RENT FOR ALL YEARS OF LEASE

50
Q

CAPITAL EXPENSE RESERVE

A

$ SET ASIDE FOR FUTURE CAPITAL REPAIRS/UPGRADES

51
Q

CASH FLOW BEFORE DEBT SERVICE

A

$ RECEIVED BEFORE LOAN PAYMENT

52
Q

CASH FLOW BEFORE DEBT SERVICE IS ALSO KNOWN AS THE…

A

UNLEVERED CASHFLOW

(CF BEFORE DEBT)

53
Q

CF BEFORE DEBT SERVICE FORMULA

A

NOI

- CAPITAL EXPENSES

CF BEFORE DEBT SERVICE

54
Q

DEBT SERVICE

A

LOAN PAYMENTS

55
Q

2 DEBT SERVICE COMPONENTS

A

INTEREST PAYMENT

PRINCIPAL PAYMENT

56
Q

CF AFTER DEBT SERVICE

A

CF AFTER LOAN PAYMENT

57
Q

CF AFTER DEBT SERVICE IS ALSO KNOWN AS…

A

BEFORE TAX CF

AKA = LEVERED CF

(CF CONSIDERING DEBT)

58
Q
A

CRE MODELING - BASICS (10 decks)

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