Hi all,
Facing a modelling test soon, need to fix a couple of things while training:
1. RENT REVIEW
Tenant 1:
Lease start 1/1/2019
Lease expiry 12/31/2028
Passing Rent PSF = 100
Current ERV = 110
Rent Growth = 1.5% during 3y then 2.0% during 2y then 2.5%...
Rent review "5 yearly"
Does that mean that after 5y we change its rent for ERV while applying rent growth each year or that we only apply growth after 5y? If so how does it work?
1/1/2024 -> 100*1.015 ?
2. Formula to include Break option + Renewal proba + Downtime + Rent Free…
Tenant 1:
Lease start 1/1/2019
Lease expiry 12/31/2028
Break option 1/1/2024 (No probability given let's call it 80/20)
Rent Free 24mths
Renewal (No probability given let's call it 50/50)
Should my rent be:
If before break option -> Passing Rent
If reaching break option -> (Passing Rent*80%) + ((0 Rent - Void Cost)*20%))
How do I model a potential break? I really don't get it, to me it's another scenario in which I would just cut let's say 6 months of rent then do -> 24mths rent free then ERV...
Any advice, link, template, quick excel analysis or anything would be great!
Thanks all
Best and relatively self-explanatory I've found so far:
I think the issue I have with the example from my original post must be the fact that there is room for interpretation? Screenshot bellow:
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