REFM Commercial Real Estate Comparative Lease Analysis Tutorial Slides

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REFM Commercial Real Estate Comparative Lease Analysis Tutorial Slides

  1. 1. Real Estate Financial Modeling’s Comparative Lease Analysis From Both  Landlord and Tenant Perspectives www.GetREFM.com Copyright © 2009 – 2013 by Real Estate Financial Modeling, LLC.  All Rights Reserved. 
  2. 2. CLICK TO EDIT MASTER TITLE STYLE GetREFM.com Goals 1. Understand what the major variables are 2. Understand how they differ from  perspective of Landlord and Tenant across  different lease types 3. Run an analysis from both perspectives 4. Compare the results 2
  3. 3. CLICK TO EDIT MASTER TITLE STYLE GetREFM.com Major Economic Variables In A Commercial RE Lease 3 Size of the space, and its physical condition upon delivery to tenant Lease length (“Term”) Costs to operate and maintain Costs to rent
  4. 4. CLICK TO EDIT MASTER TITLE STYLE GetREFM.com Operating and Maintenance Costs Examples 4 • Electricity • Water and Sewer Utilities • Cleaning • Repairs & Maintenance • Lot, Landscaping and Trash • Security • General & Administrative • Management Fee • Insurance • Real Estate Taxes Incurred by Landlord as a cash cost whether the space is occupied or not
  5. 5. CLICK TO EDIT MASTER TITLE STYLE GetREFM.com Economic Variables: Landlord vs. Tenant 5 Lease length (“Term”) Costs to operate and maintain Costs to rent Same for both LL and Tenant Often shared between LL and Tenant through Reimbursement and/or Direct Billing Impacted by sharing of costs
  6. 6. CLICK TO EDIT MASTER TITLE STYLE GetREFM.com 6 Lease length (“Term”) Costs to operate and maintain Costs to rent Same for both LL and Tenant Impacted by sharing of costs Often shared between LL and Tenant through Reimbursement and/or Direct Billing Economic Variables: Landlord vs. Tenant
  7. 7. CLICK TO EDIT MASTER TITLE STYLE GetREFM.com 7 Lease length (“Term”) Costs to operate and maintain Costs to rent Same for both LL and Tenant Impacted by sharing of costs Often shared between LL and Tenant through Reimbursement and/or Direct Billing Economic Variables: Landlord vs. Tenant
  8. 8. CLICK TO EDIT MASTER TITLE STYLE GetREFM.com Spectrum of Tenant Discrete Cost Responsibility Triple Net (NNN) Double  Net (NN) Net (N) Modified  Gross Gross * Full  Service  (FS) * Operating &  Maintenance Yes Yes Yes RE Taxes Yes Yes Yes Electric Yes Yes Yes Cleaning Yes Yes Yes Utilities Yes Yes Insurance Yes Yes Roof and  structure Yes * Gross and Full Service sometimes refer to the same lease type. In other cases, Gross leases do not require the reimbursement of electric, whereas Full Service do.
  9. 9. CLICK TO EDIT MASTER TITLE STYLE GetREFM.com Go To The Excel

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