ARGUS Expense Recovery Help
Hey folks,
I'm just getting started setting up ARGUS models with more detailed expense recovery structures, and I'm having some issues. I'm supposing this has less to do with the limitations of ARGUS and more to do with the limitations of my pea sized brain. Any guidance is greatly appreciated. So here's the situation.
I have a series of office tenants with the same recovery structure. They are to reimburse their pro-rata share of controllable and non-controllable expenses over a stop amount of $9/sf. The caveat is that their is a cap on the annual increase of controllable expenses. This cap is 5%. Unfortunately, with how I currently have it setup, I'm unsure as to how I can apply the stop amount to the sum of controllable and non-controllable expenses.
Expense Groups:
**Controllable Expense Group**
-Reference Expense 1
-Reference Expense 2
**Non-Controllable Expense Group**
-Reference Expense 1
-Reference Expense 2
-Reference Expense 3
Recovery Method:
-Group: Controllable Expenses, $9/sf stop amnt, Net, 5% cap amnt
-Group: Non-Controllable Expenses, $9/sf stop amnt, Net
Obviously, the issue I'm running into is this is creating a total stop amount of $18/sf. I'm sure there is a way to circumvent this issue, but it really has me stumped. Thanks in advance!
Is there a reason you can't just use a single expense group for the reimbursement calcs?
Yes. Because the 5% cap only applies to controllable expenses. If I grouped all expenses together, I’d be applying the 5% cap to everything in the recovery method tab.
By 5% cap, do you mean there is a cap of 5% annual increases per year? If so, is your expense growth rate more or less than 5%? If it's less than 5% (not sure why it would be higher), then it's irrelevant.
Can you just make a reference only expense showing controllable and uncontrollable expenses being grown out the way you need and then group them for the reimbursement?
Some of the controllable expense are variable. Therefore, the annual increase could end up exceeding 5% regardless of the expense growth rate. For example, the the Mgmt Fee could fluctuate significantly based on shifts in occupancy and EGI.
I think you need to make a usage ref only line that tracks the controllable cap component. Then end up rolling it into one expense group that uses the $9 base year stop.
This is sounding hopeful. I'm going to noodle around with this.
Pm me
You can set up caps in the recovery structure of a tenant. Would ensure you have CY recovery set as well.
1. Go to Tenants and click on recoveries. Ensure that your tenants are showing up. Click on a tenant and you'll see their recovery methods in the box at the bottom of the screen.
2. Would pull up the expense groups (Controllable and Non-Controllable).
3. Specifically for the 5% cap on the controllable, go to "Max (Ceiling) Amount Units" and hard code the actual amounts (would have a separate work sheet that ties to your underwriting) as the max amount (cap) for each calendar year. You can also use "Max (Ceiling Amount) Inflation %" and enter 5%; I'm just OCD and ensure that the cap is exactly the amount I've modeled.
4. Go to Audit Reports and then Recovery Audit. Detail into the tenant, periods, and the expense pools to ensure it's passing through and capping where you want it.
Best of luck!
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