Aug 29, 2012

Small question on cash flow modeling in CRE

If you wanted to build a cash flow forecasting model of an institutional grade property in Excel or Argus, how hard is the actual part where you're extracting the information from the leases (assuming you have them), income statements, etc, vs. the actual modeling in excel or argus?

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9 Comments

Prospect in VC

14y

Not hard. If you have the correct information, it is just a matter of knowing where to look in order to get that info.

Typically, you will want to know:
Annual Income
Annual Expenses
Capital Expenditures
Lease Terms (Dates, Rental Increases, Options, is it NNN, MG, or Gross, etc)

You will be able to get all of that information from the forms you stated above. If you know where and what to look for it wont take long.

Modeling in Excel and Argus: Again, depends on how complex/how well you know Argus. Many times your model should already have some amount of a template in excel

If you ask something more specific in regards to those, I can be more specific as well.

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Authored by: Certified Venture Capital Professional - 3rd+ Year AnalystCertified Venture Capital Pro

econcomputingCRE

14y

Thanks. I just mean -- if you've never seen a lease for space in institutional grade properties, how long would it take to dig out all the relevant information? Or in other words, assuming you know the Excel/Argus modeling piece very well (at least for tenant cash flow, not necessarily debt modeling), how hard is the other part?

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Prospect in VC

14y

Best Response

econcomputingCREThanks. I just mean -- if you've never seen a lease for space in institutional grade properties, how long would it take to dig out all the relevant information? Or in other words, assuming you know the Excel/Argus modeling piece very well (at least for tenant cash flow, not necessarily debt modeling), how hard is the other part?

I cannot really answer this since I dont know your background, prior real estate knowledge, how sharp you are... I would say for the average person to go through an average lease and dissect it so you have the correct information out of it, it should take 20 minutes give or take. The "hardest" part of reading a lease, is reading the lease...some legal jargon in there you might have to reread to make sure you understand it. It's really not difficult though.

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econcomputingCRE

14y

Nobama88
econcomputingCREThanks. I just mean -- if you've never seen a lease for space in institutional grade properties, how long would it take to dig out all the relevant information? Or in other words, assuming you know the Excel/Argus modeling piece very well (at least for tenant cash flow, not necessarily debt modeling), how hard is the other part?

I cannot really answer this since I dont know your background, prior real estate knowledge, how sharp you are... I would say for the average person to go through an average lease and dissect it so you have the correct information out of it, it should take 20 minutes give or take. The "hardest" part of reading a lease, is reading the lease...some legal jargon in there you might have to reread to make sure you understand it. It's really not difficult though.

Thanks. I just wasn't entirely sure on the answer because your first response seemed qualified with the statement "if you know where to look" or something like that. Thanks. I was just wondering--I've never seen the leases for institutional grade property and wondered if it was some legalese nightmare

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prospie

14y

econcomputingCREI was just wondering--I've never seen the leases for institutional grade property and wondered if it was some legalese nightmare

if you're really curious, i can easily send you a lease or two for some decent-sized tenants - just PM. they're not written in chinese or anything.

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econcomputingCRE

14y

prospie
econcomputingCREI was just wondering--I've never seen the leases for institutional grade property and wondered if it was some legalese nightmare
if you're really curious, i can easily send you a lease or two for some decent-sized tenants - just PM. they're not written in chinese or anything.

Thanks prospie, appreciate it for helping

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paulochunjing

12y

hi prospie， could u please send me a lease with multi tenants

Thanks

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sk8247365

14y

"...how hard is the other part?"

"Not hard."

Can you provide some background on your seemingly already answered question?

It should take 15min to find the rent roll and read over the expense addendum.

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Relinquis

14y

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Small question on cash flow modeling in CRE

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