Hi,
Please excuse my ignorance in advance. I have been learning Argus, but haven't been able to figure out how to properly structure expense inputs/expense groups/etc to reflect the scenario below.

My primary question is: In Argus Enterprise, if a tenant that has an an expense cap on controllable expenses, but the expenses that make up controllable expenses have different recovery denominators, how do you create the structure to achieve this within Argus. My understanding is that you arent able to include the various expenses in one singular expense group due to the difference in denominators across recoverable expenses. Any help would be greatly appreciated. Example below.

Retail Tenant: 10,000 sf
Initial CAP on controllable CAM items: \$3.50/sf (year 1 cap of \$35,000)
Thereafter, CAP on controllable grows 3.5% non cumulative (Ie if expenses are 28,000 in year one, year 2 cap is 28,000 * (1+.035))

Controllable CAM consists of:

**Expense Group A **
Denominator: 135,000 sf
Multiple expenses
- Expense 1
- Expense 2
- Expense 3

Expense B:
Denominator: 122,000 sf
Single Expense

Expense C:
Denominator 107,000 sf
Single Expense

How do I input into Argus to reflect the CAP that applies against the aggregate total of Expense Group A, Expense B and Expense C, all of which have different denominators?

Comments (4)

You can create different "area measures" within enterprise.

create the various expense groups as detailed above.

When creating the actualy reimbursement structure at the tenant rent roll level. create different line items for the different expense groups and reference the applicable area measure to be used.

make sense?

Thanks, that makes sense and I think I have done that.

I think the issue that I am experiencing when doing that is that I need the total expense CAP to apply to the aggregate of expense group A + expense item B + expense C, but cant find a way to do it. If i apply the cap to each one, or even try to prorate the cap it across categories it wouldnt necessarily achieve the end result of total cap vs sum of expense recovery from A, B and C.

Ie. is there a way to have the cap apply against the sum of the expenses?

If they were all grouped under one expense group it would be simple, but it appears that I cant create a group with different denominators without disrupting the pro- rata share?

Thanks again for the previous response.

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Most Helpful

I have to model deals like this all the time. I'm actually working on 2 right now that have this type of structure. Here is the best way to work through it:

Create an expense group with all the expenses from Expense Group A, as well as expense B & C
Within the expense group go to the percentage recoverable column. All of these default to 100%. Leave all the expenses within expense group A as 100%. For expense B, make the recoverable percentage 110.66% and for expense C, make it 126.17%. - This step accounts for the denominator discrepancies and can be calculated by dividing the the standard denominator (135,000) by the reduced denominators (122,000 and 107,000)
Once you finish creating the expense group, make sure the area measure drop down on the recovery structure detail is set to 135,000 SF

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