REVENUE MODELING Flashcards
OTHER INCOME - COMPONENTS
EXPENSE REIMBURSEMENTS
PERCENTAGE RENT
STORAGE INCOME
OTHER FEES
PERCENTAGE RENT
TENANT PAYS EXTRA RENT IF SALES EXCEED BREAKPOINT
PERCENTAGE RENT - BREAKPOINT
= BASE RENT / PERCENTAGE RENT RATE
PERCENTAGE RENT - FORMULA
= (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
PERCENTAGE RENT - EXCEL FORMULA
=MAX(PERCENTAGE RENT FORMULA, 0)
PRO RATA SHARE
% SPLIT BASED ON TENANT SF
PRO RATA SHARE - FORMULA
= TENANT SF / NET LEASABLE AREA
150,000 NLA
25,000 TENANT SF
25,000 / 150,000 = 17%
GROSS LEASE - LANDLORD PERSPECTIVE
LANDLORD RECEIVES GROSS RENT
MUST PAY EXPENSES FROM GROSS RENT
TENANT PAYS NO OPERATING EXPENSES
NET LEASE - LANDLORD PERSPECTIVE
LANDLORD RECEIVES NET RENT
DOES NOT PAY EXPENSES FROM RENT
TENANT PAY OPERATING EXPENSES
TRIPLE NET LEASE (NNN)
TENANT PAYS PRO RATA SHARE OF ALL REIMBURSABLE OPERATING EXPENSES
NNN- EXPENSES
TAXES
INSURANCE
COMMON AREA MAINTENANCE
NNN REIMBURSEMENT - FORMULA
= REIMBURSABLE OP EXP X PRO RATA SHARE
REIMBURSABLE OP EXP: $450,000
PRO RATA SHARE: 35%
$450,000 X 35% = $157,500
FULL SERVICE GROSS LEASE
(FSG)
TENANT PAYS NO REIMBURSALBE EXPENSES
FSG - FORMULA
= 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
MODIFIED GROSS LEASE
(MG)
TENANT PAYS PRO RATA SHARE OF SELECT REIMBURSABLE OPERATING EXPENSES
MG - FORMULA
= SELECT REIMBURSABLE EXP. X PRO RATA SHARE
SELECT REIMBURSABLE EXP: $150,000
PRO RATA SHARE: 35%
$150,000 X 35% = $52,500
ABSOLUTE NET LEASE
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
BASE YEAR STOP
TENANT PAYS PRO RATA SHARE OF EXPENSES EXCEEDING BASE YEAR AMOUNT
BASE YEAR STOP - FORMULA
= (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
BASE YR STOP - EXCEL FORMULA
=IF(ACTUAL EXP - BASE YR EXP > $0, THEN CALCULATE BASE YR STOP; OTHERWISE SHOW $0
EXPENSE RATIO
OPERATING EXPENSES AS % OF EGI
% OF EGI NEEDED TO COVER OPERATING EXPENSES
OPERATING EXPENSE RATIO - FORMULA
= OPERATING EXPENSES / EGI
OP EXP: $250,000
EGI: $750,000
$250,000 / $750,000 = 33%
BREAK EVEN RATIO
OPERATING EXPENSES & DEBT SERVICE AS % OF PGR
% OF PGR NEEDED TO COVER OPERATING EXPENSES & DEBT SERVICE
BREAK EVEN RATIO - FORMULA
= (OP EXP + DEBT SERVICE) / PGR
POTENTIAL GROSS REVENUE
(PGR)
ALL REVENUE TO THE PROPERTY
PGR - FORMULA
= PGI + OTHER INCOME
RENEWAL PROBABILITY
PROBABILITY TENANT WILL RENEW LEASE
RENEWAL PROBABILITY - FACTORS
BASE RENT - ALL YEARS
LEASING COMMISSION - YR 1
TI ALLOWANCE - YR 1
DOWNTIME - YR 1
BASE RENT - RENEWAL PROBABILITY
= (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
LEASE COMMISSION - FORMULA
(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%)
TI ALLOWANCE - FORMULA
(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
DOWNTIME
TIME SPACE WILL BE EMPTY AFTER CURRENT TENANT MOVES OUT
DOWNTIME - FORMULA
(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
DOWNTIME - APPLICATION
BASE RENT YR1 X (DOWNTIME MONTHS / 12)
LEASE COMMISSION - APPLICATION
= BASE RENT ALL YRS X LC RATE
TI ALLOWANCE - APPLICATION
TI ALLOWANCE PER SF X TENANT SF
