Commercial Lease Modelling - Help
Hi all, I am preparing for a commercial RE case study next week and have a question about modelling commercial leases. When presented with a property which has leases with break dates and review dates, would the correct prodcedure be to model the rent up to the expiry date of the lease (and not the break date) and increase the rent to ERV (if it is not already) at the date of the rent review. Or would best practice to be to assigned a probability of renewal/ break at the break date instead?
Also if there is no escalations stated in the modelling briefing document, is it best to assume an inflation factor and state the assumption or keep the leases at flat rent levels.
Background: I have experience in multifamily, so what may seem obvious to some is not for me.
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