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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
MODIFIED GROSS LEASE
TENANT PAYS PRO RATA SHARE OF SOME REIMBURSABLE OPERATING EXPENSES
26
MFG LEASE FORMULA
SELECT REIMBURSABLE EXPENSES _X PRO RATA SHARE_ **MFG REIMBURSEMENT**
27
BASE YEAR STOP
TENANT PAYS PRO RATA SHARE OF EXPENSES ABOVE BASE YEAR AMOUNT
28
BYS FORMULA
CY EXPENSES _- BASE YEAR EXPENSES_ **EXPENSE INCREASE** _X PRO RATA SHARE_ **BYS EXPENSE REIMBURSEMENT**
29
3 COMMON OPERATING EXPENSES | (TIC)
TAXES INSURANCE COMMON AREA MAINTENANCE (CAM) SOURCE: https://aquilacommercial.com/learning-center/commercial-real-estate-operating-expenses-op-ex-definition/
30
SINGLE NET LEASE
TENANT PAYS BASE RENT + PR UTILITIES +PR 1 OF TIC
31
DOUBLE NET LEASE
TENANT PAYS BASE RENT PR UTILITIES PR OF 2 TIC
32
TRIPLE NET LEASE
TENANT PAYS BASE RENT + PR UTILITIES + PR TIC
33
ABSOLUTE NET
TENANT PAYS BASE RENT +PR UTILITIES + PR TIC +PR MGT FEE & CAPITAL RESERVES
34
COMMON AREA MAINTENANCE | (CAM)
EXPENSES FOR SERVICES ALL TENANTS BENEFIT FROM
35
CAM EXAMPLES
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
OPERATING EXPENSES
COST REQUIRED TO OPERATE PROPERTY
37
OPERATING EXPENSE EXAMPLES
TAXES INSURANCE REPAIRS & MAINTENANCE PROPERTY MANAGEMENT OTHER EXPENSES
38
FIXED OPERATING EXPENSES
REMAIN CONSTANT REGARDLESS OF OCCUPANCY LEVEL TAXES + INSURANCE + PROPERTY MANAGEMENT
39
VARIABLE OPERATING EXPENSES
VARY BASED ON OCCUPANCY LEVEL REPAIRS & MAINTENANCE + CAM + UTILITITES
40
NET OPERATING INCOME | (NOI)
INCOME AFTER OPERATING EXPENSES ARE PAID
41
NOI FORMULA
EFFECTIVE GROSS INCOME - OP EXP = NOI
42
CAPITAL EXPENSES
EXPENSES THAT IMPROVE USEFUL LIFE/VALUE OF THE PROPERTY
43
HOW ARE CAPITAL EXPENSES TREATED FOR ACCOUNTING PURPOSES?
CAPITALIZED + DEPRECIATED OVER # OF YEARS
44
CAPITAL EXPENSE EXAMPLES
TENANT IMPROVEMENTS LEASING COMMISSION CONSTRUCTION EXPENSES CAPITAL EXPENSE RESERVE
45
CAPITAL EXPENSES - MF TREATMENT
ABOVE THE LINE = OPERATING EXPENSE
46
CAPITAL EXPENSE - COMMERCIAL TREATMENT
BELOW THE LINE = AFTER NOI
47
TENANT IMPROVEMENT ALLOWANCE | (TI)
$ PAID BY LANDLORD TO HELP TENANT IMPROVE THEIR SPACE
48
LEASING COMMISION | (LC)
$ PAID TO BROKER FOR LEASING UP SPACE
49
HOW IS LEASING COMMISION USUALLY PAID?
PAID IN YEAR 1 OF LEASE + BASED ON BASE RENT FOR ALL YEARS OF LEASE
50
CAPITAL EXPENSE RESERVE
$ SET ASIDE FOR FUTURE CAPITAL REPAIRS/UPGRADES
51
CASH FLOW BEFORE DEBT SERVICE
$ RECEIVED BEFORE LOAN PAYMENT
52
CASH FLOW BEFORE DEBT SERVICE IS ALSO KNOWN AS THE...
UNLEVERED CASHFLOW | (CF BEFORE DEBT)
53
CF BEFORE DEBT SERVICE FORMULA
NOI _- CAPITAL EXPENSES_ **CF BEFORE DEBT SERVICE**
54
DEBT SERVICE
LOAN PAYMENTS
55
2 DEBT SERVICE COMPONENTS
INTEREST PAYMENT PRINCIPAL PAYMENT
56
CF AFTER DEBT SERVICE
CF AFTER LOAN PAYMENT
57
CF AFTER DEBT SERVICE IS ALSO KNOWN AS...
BEFORE TAX CF AKA = LEVERED CF (CF CONSIDERING DEBT)
58

CRE MODELING - BASICS (10 decks)

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