I've been working in MF acquisitions for less than a year and I've started seeing more mixed use (i.e. 5 - 50 retail/office units in a resi. building) recently. Our current model has no way of accounting for commercial tenants so I feel like I have to reinvent the wheel every time I run into one of these. I want to create a template for commercial tenants but I have no idea how to format the necessary inputs. How are you guys formatting commercial into your MF models? What info is necessary for the rent roll? How are you tracking base rent steps, additional rent, renewal options, etc? Does anyone have an example of what a commercial rent roll in a similar situation would even look like?
Any help would be appreciated.
this can get overly complicated and hairy pretty quick...What I would do is either: 1) run an argus model...take the total revenue/expenses and add a respective line into your income statement...Thus you would have the same IS for your MF...but at the bottom of rev would be "Commerical Income" and same logic for expenses. Don't forget to pad your capex reserve accordingly. 2) Have a very very basic set of underwriting inputs. Assume the property is NNN, and quote your inputs based on that. All you really need is SF, $PSF/rental rates, sale year and exit cap. Just keep it simple and get to a NCF number. Then just layer this in to your NOI statement like mentioned in scenario #1.
If this is a development, you need to have your budgets ultimately roll up into a single gross cost number. I do think it's beneficial to keep them separate, and just total at the bottom. This way your capitalized interest, etc., wont require much tweaking.
In the end, definitely don't overthink it...KISS principle.
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