I recently received my ARGUS certification. I have limited real world modeling experience except for case studies I have done via courses and from interviews. I recently built out an ARGUS model with information from an offering memorandum (broker provided) for a multi-tenant industrial opportunity where the business plan was to mark to market leases that were coming up for expiration. After building out the model I was curious.... Is there a need for excel in these cases? Why would I export the model to excel? Wouldn't it be easiest to have your director of acquisitions go directly into the argus program and scrutinize assumptions there? The only thing I can think of is for waterfall purposes.
My goal with this is to be able to go into interviews and show them that I have taken initiative to model potential investments and be able to prove I can walk through a real world example.
Thanks in advance for any helpful information!
Firms will typically have an excel template where you drop the cash flows and the leasing information from Argus. The template will also allow for inputs for purchase, financing, and exit assumptions, which you can can easily manipulate compared to what you’d need to do in Argus. I’d suggest you start building excel models from scratch, since most firms will test you that way and you’ll also have a better understanding of how the aforementioned inputs will affect your cash flows and your overall return metrics.
im fairly confident on building simplistic models from scratch, but confused when its multi-tenant industrial. If you have varying lease expirations and are very dependant on your "market leasing profile" and varying rent growths etc... I am unsure how you can build a model in excel to sensitize all of that information when its fairly easy to do in ARGUS. This could all be coming from a lack of real experience but any additional info would be appreciated!
So you are correct in assuming that it’s easier to put together all of those assumptions and model out a cashflow via Argus. What most groups will do is build out all of the cash flows before debt service in Argus (which includes your market leasing, rent bumps, NNN recoveries, TI, commissions, etc).
Then, that Argus cash flow report will be exported into an excel file and dumped into an excel model to test/see the returns. Eg. Testing different purchase price, interest rates, financing structure, and building out waterfalls. If you need to make changes to leasing assumptions or update expenses, you would go back into the argus and do that there, re-export the cashflow, and dump that into your model again.
All debt service/ closing costs are modeled outside of argus since those are usually less related to the operations of the asset which is what argus does best.
I think original commenter was saying is that you should practice building out waterfall models since those are what you will be tested on instead of your argus skills. Saying you know how to model a property in Argus is great, but its not rocket science and most of it can be learned on the job. Showing you know how to model an aquisition / knowing how different financing/assumptions affect your irr/em/yield is arguably more impressive and important
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