This is mainly for those working in asset management, but anyone feel free to chime in.
When it comes to analyzing commercial leases, there seem to be multiple methods. I've seen analyses where analysts calculate metrics like payback period and show the actual rents/TIs/LCs compared to proforma or budget, calculating the NOI based on effective rent and capping that and then comparing to the building value PSF, and NPV analyses.
What do you think is the most comprehensive method? My thought is an NPV would be the most thorough way of analyzing a lease. With an NPV you are effectively showing how much incremental value the lease is adding to the asset. Thoughts?
npv on the net cash flow is typically what I do
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