How do you get Argus to apply a renewal probability to a tenant option?
I am building an Argus model for a property for which a number of tenants have renewal options. Argus lets you process a renewal option for a specific tenant in the rent roll by going to upon expiration>option, and you can put in the terms of the options. However, I want to make the execution of the option subject to the tenant's renewal probability. Argus seems to just be processing the option with 100% certainty. I basically want Argus to apply a 65% probability to the option being executed, and a 35% probability to the tenant not exercising the option and assuming market rent with standard absorption costs.
If anyone has any idea how to do this, please let me know. Thanks!
Could you add a different market rent specified for that tenant? Have the renewal be 65% for the option rent?
You have to set up a separate MLA for that option\tenant. No good answer.
As flipcre has alluded to, in argus an option assumes a 100% renewal. If you want to create an option that assumes 65% renewal, set it in the MLA, it will function in the same manner.
But if you set the option details/rent in MLA, with 65% renewal, there is still no way to incorporate the going market rent, right? It will either be at the option rent, or a blend of the option rent and "continue prior" if you select that, which in my case the prior rent is below-market. So Argus is not capable of doing 35% at market and 65% chance of the option rent, right? If so, that is pretty pathetic for a valuation software that charges as much as they do. I should also mention that market rent is triple-net and the option is mod gross, with below market escalations, further complicating this.
Set New Rent in the MLA to market rent, set Renew Rent to whatever the option rent is supposed to be.
For the recoveries, you cannot blend two separate recovery structures. You'll need to make a concession of some sort there.
Roll to Market instead of Option and set up their option with a renewal probability as an MLA. Can just leave a note for the tenant stating that the MLA assumes they pop their option with X% probability.
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