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CRE MODELING - BASICS > REVENUE MODELING > Flashcards

REVENUE MODELING Flashcards

1
Q

OTHER INCOME - COMPONENTS

A

EXPENSE REIMBURSEMENTS

PERCENTAGE RENT

STORAGE INCOME

OTHER FEES

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2
Q

PERCENTAGE RENT

A

TENANT PAYS EXTRA RENT IF SALES EXCEED BREAKPOINT

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3
Q

PERCENTAGE RENT - BREAKPOINT

A

= BASE RENT / PERCENTAGE RENT RATE

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4
Q

PERCENTAGE RENT - FORMULA

A

= (ACTUAL SALES - BREAKPOINT) X % RENT RATE

ANNUAL SALES: $2,000,000

BASE RENT: $150,000

% RENT RATE: 10%

BREAKPOINT = $150,000 / 10% = $1,500,000

($2,000,000 - $1,500,000) X 10%

$500,000 X 10% = $50,000

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5
Q

PERCENTAGE RENT - EXCEL FORMULA

A

=MAX(PERCENTAGE RENT FORMULA, 0)

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6
Q

PRO RATA SHARE

A

% SPLIT BASED ON TENANT SF

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7
Q

PRO RATA SHARE - FORMULA

A

= TENANT SF / NET LEASABLE AREA

150,000 NLA

25,000 TENANT SF

25,000 / 150,000 = 17%

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8
Q

GROSS LEASE - LANDLORD PERSPECTIVE

A

LANDLORD RECEIVES GROSS RENT

MUST PAY EXPENSES FROM GROSS RENT

TENANT PAYS NO OPERATING EXPENSES

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9
Q

NET LEASE - LANDLORD PERSPECTIVE

A

LANDLORD RECEIVES NET RENT

DOES NOT PAY EXPENSES FROM RENT

TENANT PAY OPERATING EXPENSES

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10
Q

TRIPLE NET LEASE (NNN)

A

TENANT PAYS PRO RATA SHARE OF ALL REIMBURSABLE OPERATING EXPENSES

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11
Q

NNN- EXPENSES

A

TAXES

INSURANCE

COMMON AREA MAINTENANCE

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12
Q

NNN REIMBURSEMENT - FORMULA

A

= REIMBURSABLE OP EXP X PRO RATA SHARE

REIMBURSABLE OP EXP: $450,000

PRO RATA SHARE: 35%

$450,000 X 35% = $157,500

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13
Q

FULL SERVICE GROSS LEASE

(FSG)

A

TENANT PAYS NO REIMBURSALBE EXPENSES

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14
Q

FSG - FORMULA

A

= REIMBURSABLE OP EXP X PRO RATA SHARE X 0

REIMBURSABLE OP EXP: $450,000

PRO RATA SHARE: 35%

$450,000 X 35% X 0 = 0

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15
Q

MODIFIED GROSS LEASE

(MG)

A

TENANT PAYS PRO RATA SHARE OF SELECT REIMBURSABLE OPERATING EXPENSES

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16
Q

MG - FORMULA

A

= SELECT REIMBURSABLE EXP. X PRO RATA SHARE

SELECT REIMBURSABLE EXP: $150,000

PRO RATA SHARE: 35%

$150,000 X 35% = $52,500

17
Q

ABSOLUTE NET LEASE

A

TENANT PAYS PRO RATA SHARE OF REIMBURSABLE EXPENSES + MGT FEE + CAPITAL RESERVES

REIMBURSABLE EXP: $450,000

MGT FEE: $250,000

CAPITAL RESERVES: %150,000

TOTAL EXP: $850,000

PRO RATA SHARE: 35%

$850,000 X 35% = $297,500

18
Q

BASE YEAR STOP

A

TENANT PAYS PRO RATA SHARE OF EXPENSES EXCEEDING BASE YEAR AMOUNT

19
Q

BASE YEAR STOP - FORMULA

A

= (CY EXP - BASE YR EXP) X PRO RATA SHARE

CY EXP: 200,000

BASE YR EXP: 150,000

PRO RATA SHARE: 15%

=(200,000 - 150,000) X 15%

=50,000 X 15%

=7,500

20
Q

BASE YR STOP - EXCEL FORMULA

A

=IF(ACTUAL EXP - BASE YR EXP > $0, THEN CALCULATE BASE YR STOP; OTHERWISE SHOW $0

21
Q

EXPENSE RATIO

A

OPERATING EXPENSES AS % OF EGI

% OF EGI NEEDED TO COVER OPERATING EXPENSES

22
Q

OPERATING EXPENSE RATIO - FORMULA

A

= OPERATING EXPENSES / EGI

OP EXP: $250,000

EGI: $750,000

$250,000 / $750,000 = 33%

23
Q

BREAK EVEN RATIO

A

OPERATING EXPENSES & DEBT SERVICE AS % OF PGR

% OF PGR NEEDED TO COVER OPERATING EXPENSES & DEBT SERVICE

24
Q

BREAK EVEN RATIO - FORMULA

A

= (OP EXP + DEBT SERVICE) / PGR

25
Q

POTENTIAL GROSS REVENUE

(PGR)

A

ALL REVENUE TO THE PROPERTY

26
Q

PGR - FORMULA

A

= PGI + OTHER INCOME

27
Q

RENEWAL PROBABILITY

A

PROBABILITY TENANT WILL RENEW LEASE

28
Q

RENEWAL PROBABILITY - FACTORS

A

BASE RENT - ALL YEARS

LEASING COMMISSION - YR 1

TI ALLOWANCE - YR 1

DOWNTIME - YR 1

29
Q

BASE RENT - RENEWAL PROBABILITY

A

= (RENEWAL BASE RENT X RENEWAL PROBABILITY)

+

(NEW BASE RENT X NEW PROBABILITY)

RENEWAL BR: $1,000; RENEWAL PROB: 35%

NEW BR: $1,500; NEW PROB: 65%

=($1,000 X 35%) + ($1,500 X 65%)

$350 + $975 = $1,325

30
Q

LEASE COMMISSION - FORMULA

A

(RENEWAL LC X RENEWAL PROB)

+

(NEW LC X NEW PROB)

RENEWAL LC: 5%; RENEWAL PROB: 45%

NEW LC: 7%; NEW PROB: 55%

=(5% X 45%) + (7% X 55%)

.0225 + .0385 = .0610 (6.10%)

31
Q

TI ALLOWANCE - FORMULA

A

(RENEWAL TIA X RENEWAL PROB)

+

(NEW TIA X NEW PROB)

RENEWAL TIA: $0; RENEWAL PROB: 75%

NEW TIA: 25; NEW PROB: 25%

= (0 X 75%) + ($25 X 25%)

0 + $6.25 = $6.25/SF

32
Q

DOWNTIME

A

TIME SPACE WILL BE EMPTY AFTER CURRENT TENANT MOVES OUT

33
Q

DOWNTIME - FORMULA

A

(0 DOWNTIME MONTHS X RENEWAL PROB)

+

(# DOWNTIME MONTHS X NEW PROB)

RENEWAL PROB: 35%

4 MONTHS DOWNTIME, 65% NEW PROB

(0 MONTHS X 35%) + (4 MONTHS X 65%)

0 MONTHS + 2.60 MONTHS = 2.60 MONTHS

34
Q

DOWNTIME - APPLICATION

A

BASE RENT YR1 X (DOWNTIME MONTHS / 12)

35
Q

LEASE COMMISSION - APPLICATION

A

= BASE RENT ALL YRS X LC RATE

36
Q

TI ALLOWANCE - APPLICATION

A

TI ALLOWANCE PER SF X TENANT SF

CRE MODELING - BASICS (10 decks)

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