Lease Modeling Flashcards
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Read the first 7 Lease Modeling flashcards as text
In ARGUS Enterprise, which lease input primarily drives the 'market rent growth' applied to vacant space projections?
Answer: Market rent inflation rate set in the global assumptions or MLA
The market rent inflation rate in global or MLA assumptions governs how ARGUS projects future market rents for spaces being re-leased after vacancy.
A tenant lease in ARGUS has a 'gross-up' provision. What does this mean for expense recovery calculations?
Answer: Expenses are adjusted as if the building were fully occupied so that variable costs are not under-recovered
Gross-up clauses normalize variable operating expenses to 100% occupancy so the landlord fully recovers those costs regardless of actual vacancy levels.
In ARGUS Enterprise, what does the 'downtime' assumption between leases primarily affect?
Answer: The length of vacancy between lease expiration and the next tenant's commencement
Downtime sets the number of months a space remains vacant between the end of one lease and the start of the next, directly reducing projected revenue.
When modeling a sale-leaseback transaction in ARGUS Enterprise, how is the property typically structured?
Answer: The prior owner becomes a tenant under a long-term net lease, providing stable cash flow to the new buyer
In a sale-leaseback, the seller monetizes the asset while remaining as a long-term NNN tenant, giving the acquiring investor a credit-tenanted income stream to model.
In ARGUS Enterprise, how are 'recovery caps' on a tenant's lease typically entered?
Answer: As a maximum annual increase percentage or absolute dollar limit on the tenant's expense reimbursement
Recovery caps limit how much a tenant's expense reimbursement can grow year-over-year, protecting the tenant from large operating cost spikes.
Which ARGUS Enterprise feature allows a user to model multiple lease scenarios and compare their impact on value?
Answer: Scenario Manager, which lets users toggle between different assumption sets
ARGUS Enterprise's Scenario Manager enables users to create and compare alternative leasing assumptions, market conditions, or deal structures within the same file.
In ARGUS Enterprise, a lease with a 'natural breakpoint' for percentage rent is calculated how?
Answer: Annual base rent divided by the percentage rent rate equals the sales threshold
The natural breakpoint is the sales level at which percentage rent exactly equals base rent (base rent ÷ percentage rate), above which additional rent kicks in.