Argus Interview Test

Hey Guys,

I have a test from a firm to complete an Argus Enterprise modelling test as part of an analyst interview. They basically sent DD materials in a dropbox for a shopping center and want to see what kind of model I can build. I'm familiar with the program but have a couple of questions. If anyone can answer some of them would be very grateful:
1) I see values on the T-12 for expenses (CAM, Insurance, Non-reimbursable, etc.) The amount changes every year. What's the best way to put it into Argus? How do I know what percentage is fixed? What value would I use to input? The most recent year? They gave me some expense bills also.
2) A lot of items don't match (Tax bill does not match t-12), (CAM recovery does not match what's specified in the lease), etc. Which value do I use? What's in the t-12/RR or what's in the lease?
3) Assumptions need to be made (inflation, market leasing, etc.) What's the best source(s) to use? There's an existing loan but do I just assume a new acquisition loan?
4) Info is missing. Capex reserve, management fees, non-rental income isn't consistent. How do I get that into Argus?

If anyone could help out with some of these please dm or comment...you would be a huge help.

 
Most Helpful

1)I see values on the T-12 for expenses (CAM, Insurance, Non-reimbursable, etc.) The amount changes every year. What's the best way to put it into Argus? How do I know what percentage is fixed? What value would I use to input? The most recent year? They gave me some expense bills also.

If I were modelling this for a client, I would use the most recent year and grow it by 3%. You could also look at the trend over the past several years and see the avg % growth and then use that amount. Whatever you do, just make sure you are able to justify it if they ask. You would enter this in ARGUS in the EXPENSES>OPERATING TAB. Just enter the amount and then leave it as the default option on Expense inflation rate. Use the MARKET TAB> INFLATION to then key in your expense inflation rate.

Regarding what expense % is fixed, you can do this 1 of 2 ways, either just assume that it is 100% fixed. Or take the expenses that are likely to vary with occupancy ( trash, utilities, cleaning, etc) and make those anywhere from 30-50% fixed. Typically for retail, I would just model the prior and not the later.

2) A lot of items don't match (Tax bill does not match t-12), (CAM recovery does not match what's specified in the lease), etc. Which value do I use? What's in the t-12/RR or what's in the lease?

This is because the tax bill is semiannually, so it will be half of the 2020-2021 bill and half of the prior year bill. Depending on the location you are in, In California the taxes will reset on purchase price, and I don’t know if they are testing you on this. If they are, you would need to enter a purchase price in the INVESTMENT tab and set your prop tax expenses to the PROP 13A, and make sure that in the modelling options it is set to calculate on Prop 13A. Otherwise just take prior years tax.

Always got off what is in the lease if you have it, too many times I have seen property managers fat finger the RR and enter in error.

3) Assumptions need to be made (inflation, market leasing, etc.) What's the best source(s) to use? There's an existing loan but do I just assume a new acquisition loan?
 

Inflation: 2-3%

Market leasing: you will need to make assumptions for each suite based on current/ market rents. Downtime, TI’s and Term will vary by market, LC’s you can use 6%/3%

Unless you are going to assume the existing loan, you would model a new loan on acquisition.

4) Info is missing. Capex reserve, management fees, non-rental income isn't consistent. How do I get that into Argus?

Capex reserve: depends on the condition of the property. If it is relatively new, throw in .20-.30 per sf. in the EXPENSES>CAPITAL

Mgmt. fee: unless otherwise stated 3% of EGR is pretty common

Non rental income: REVENUE tab> MISCELLANEOUS

 

My goodness, you don't even know how much you helped, thank you so much. Just one more. For the vacant spaces, do I model them in getting leased up (showing occupancy at 100%), or just keep them vacant?

 

Commodi exercitationem nam eos nostrum. Ut voluptate ipsam ex sed. Nulla dolor rerum et vero.

Corporis repudiandae est nemo quasi et. Et magnam dolores doloremque placeat. Suscipit voluptate est cumque est.

Nisi dolore molestiae libero cum delectus officiis quia. Impedit odit reiciendis molestias. Ea ut vero et nobis.

Esse itaque qui reprehenderit. Omnis alias perspiciatis quia cum sunt provident neque non. Quam placeat neque distinctio.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
DrApeman's picture
DrApeman
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”