PRO FORMA Flashcards
PRO FORMULA
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
OTHER INCOME FORMULA
EXPENSE REIMBURSEMENTS
+ PERCENTAGE RENT
+STORAGE INCOME
+ OTHER INCOME
OTHER INCOME
CAPITAL EXPENSE FORMULA
TI & LC
+ CONSTRUCTION EXPENSES
+ CAPITAL EXPENSE RESERVES
CAPITAL EXPENSES
NET RENTAL REVENUE
PGI
(V&C)
(FREE RENT & CONCESSIONS)
NET RENTAL REVENUE
EFFECTIVE GROSS INCOME
NET RENTAL REVENUE
+ OTHER INCOME
EFFECTIVE GROSS INCOME
OTHER INCOME
EXPENSE REIMBURSEMENTS
+ PERCENTAGE RENT
+ STORAGE INCOME
+ OTHER INCOME
TOTAL OTHER INCOME
POTENTIAL GROSS INCOME
PROPERTY INCOME IF FULLY RENTED OUT AT MARKET RENTAL RATE
PGI FORMULA
PGI = MARKET RENT PER UNIT X TOTAL UNITS
VACANCY
VACANT UNITS FOR THE PERIOD/YEAR
COLLECTION LOSS
UNPAID RENT FOR PERIOD/YEAR
AKA - BAD DEBT WRITEOFFS
V&C FORMULA
V&C = PGI X V&C%
FREE RENT
MONTHS OF FREE RENT PROVIDED FOR TENANT TO SIGN LEASE
CONCESSIONS
RENT DISCOUNTS PROVIDED FOR TENANT TO SIGN LEASE
CF AFTER DEBT SERVICE FORMULA
CF BEFORE DEBT SERVICE
- DEBT SERVICE
CF AFTER DEBT SERVICE
FR&C FORMULA
FR&C = PGI X FR&C%
EXPENSE REIMBURSEMENTS
TENANT REPAYS LANDLORD FOR SHARE OF OPERATING EXPENSES
PRO RATA SHARE
TENANT SHARE OF OPERATING EXPENSES BASED ON ITS SHARE OF NET LEASABLE AREA
PRO RATA SHARE FORMULA
PRO RATA SHARE = TENANT SF / NET LEASABLE SF
GROSS LEASE
LANDLORD RECEIVES GROSS RENT
MUST PAY OPERATING EXP FROM RENT RECEIVED
TENANT PAYS NO OPEREATING EXPENSES
NET LEASE
LANDLORD RECEIVES NET RENT
LANDLORD PAYS NO EXPENSES FROM RENT
TENANT PAYS OPERATING EXPENSES
TRIPLE NET LEASE (NNN)
TENANT PAYS PRO RATA SHARE OF ALL REIMBURSABLE EXPENESES
TRIPLE NET LEASE FORMULA
REIMBURSABLE EXPENSES
X PRO RATA SHARE
NNN EXP. REIMBURSEMENT
FULL SERVICE GROSS LEASE (FSG)
TENANT PAYS NO OPERATING EXPENSES
FSG LEASE FORMLA
REIMBURSABLE EXPENSES
X $0
X PRO RATA SHARE
FSG REIMBURSEMENT
MODIFIED GROSS LEASE
TENANT PAYS PRO RATA SHARE OF SOME REIMBURSABLE OPERATING EXPENSES
MFG LEASE FORMULA
SELECT REIMBURSABLE EXPENSES
X PRO RATA SHARE
MFG REIMBURSEMENT
BASE YEAR STOP
TENANT PAYS PRO RATA SHARE OF EXPENSES ABOVE BASE YEAR AMOUNT
BYS FORMULA
CY EXPENSES
- BASE YEAR EXPENSES
EXPENSE INCREASE
X PRO RATA SHARE
BYS EXPENSE REIMBURSEMENT
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/
SINGLE NET LEASE
TENANT PAYS
BASE RENT
+ PR UTILITIES
+PR 1 OF TIC
DOUBLE NET LEASE
TENANT PAYS
BASE RENT
PR UTILITIES
PR OF 2 TIC
TRIPLE NET LEASE
TENANT PAYS
BASE RENT
+ PR UTILITIES
+ PR TIC
ABSOLUTE NET
TENANT PAYS
BASE RENT
+PR UTILITIES
+ PR TIC
+PR MGT FEE & CAPITAL RESERVES
COMMON AREA MAINTENANCE
(CAM)
EXPENSES FOR SERVICES ALL TENANTS BENEFIT FROM
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.
OPERATING EXPENSES
COST REQUIRED TO OPERATE PROPERTY
OPERATING EXPENSE EXAMPLES
TAXES
INSURANCE
REPAIRS & MAINTENANCE
PROPERTY MANAGEMENT
OTHER EXPENSES
FIXED OPERATING EXPENSES
REMAIN CONSTANT REGARDLESS OF OCCUPANCY LEVEL
TAXES + INSURANCE + PROPERTY MANAGEMENT
VARIABLE OPERATING EXPENSES
VARY BASED ON OCCUPANCY LEVEL
REPAIRS & MAINTENANCE + CAM + UTILITITES
NET OPERATING INCOME
(NOI)
INCOME AFTER OPERATING EXPENSES ARE PAID
NOI FORMULA
EFFECTIVE GROSS INCOME - OP EXP = NOI
CAPITAL EXPENSES
EXPENSES THAT IMPROVE USEFUL LIFE/VALUE OF THE PROPERTY
HOW ARE CAPITAL EXPENSES TREATED FOR ACCOUNTING PURPOSES?
CAPITALIZED + DEPRECIATED OVER # OF YEARS
CAPITAL EXPENSE EXAMPLES
TENANT IMPROVEMENTS
LEASING COMMISSION
CONSTRUCTION EXPENSES
CAPITAL EXPENSE RESERVE
CAPITAL EXPENSES - MF TREATMENT
ABOVE THE LINE = OPERATING EXPENSE
CAPITAL EXPENSE - COMMERCIAL TREATMENT
BELOW THE LINE = AFTER NOI
TENANT IMPROVEMENT ALLOWANCE
(TI)
$ PAID BY LANDLORD TO HELP TENANT IMPROVE THEIR SPACE
LEASING COMMISION
(LC)
$ PAID TO BROKER FOR LEASING UP SPACE
HOW IS LEASING COMMISION USUALLY PAID?
PAID IN YEAR 1 OF LEASE
+
BASED ON BASE RENT FOR ALL YEARS OF LEASE
CAPITAL EXPENSE RESERVE
$ SET ASIDE FOR FUTURE CAPITAL REPAIRS/UPGRADES
CASH FLOW BEFORE DEBT SERVICE
$ RECEIVED BEFORE LOAN PAYMENT
CASH FLOW BEFORE DEBT SERVICE IS ALSO KNOWN AS THE…
UNLEVERED CASHFLOW
(CF BEFORE DEBT)
CF BEFORE DEBT SERVICE FORMULA
NOI
- CAPITAL EXPENSES
CF BEFORE DEBT SERVICE
DEBT SERVICE
LOAN PAYMENTS
2 DEBT SERVICE COMPONENTS
INTEREST PAYMENT
PRINCIPAL PAYMENT
CF AFTER DEBT SERVICE
CF AFTER LOAN PAYMENT
CF AFTER DEBT SERVICE IS ALSO KNOWN AS…
BEFORE TAX CF
AKA = LEVERED CF
(CF CONSIDERING DEBT)
