Deal type
Office, retail, industrial, mixed-use
A building is its leases. Every one has a start, a term, an escalation schedule, a recovery structure and a probability it renews, and the difference between a good deal and a bad one is usually what happens when three of them roll in the same year. A mixed-use building is the same roll with different kinds of tenant in it: retail on the ground floor on NNN, offices above on a base year, each lease on its own terms.
Leases that actually roll
A lease runs its term, and then something happens. It renews at a probability you set, or it does not and the suite sits empty for a downtime you set, and either way it re-lets at market grown to that month.
- Every expiry in the hold is listed and dated, with what the assumptions produce there: the next lease’s dates, its rent, the months expected vacant. Where you know better (a renewal signed, a tenant leaving), you say so for that expiry alone.
- Escalation steps by lease year or by date, as a percentage or a $/SF amount, recurring or one-off. Pick the date of an increase off the lease abstract and the lease year and month fill themselves in.
- CAM caps per lease, non-cumulative or cumulative, on controllable expenses only. Each expense says whether it counts, and taxes, insurance and utilities don’t by default. What the caps cost you is its own line under recoveries, not a quiet reduction in one.
- Percentage rent off sales. A rate on the tenant’s sales above the natural breakpoint (base rent divided by the rate, so it moves when the rent steps) or above a stated figure, with sales growing by year. A renewal pays it at the odds the tenant stays.
- Admin fees and gross-ups. A lease can add an administrative fee to what it recovers, on CAM alone or on all of it. Variable expenses gross up to a stated occupancy, so a half-empty building bills its tenants as though it were 95% full. An expense stop is typed in $/SF.
- TI and commissions priced per event, at renewal rates and new-lease rates separately, because they are not the same number.
- A suite with no lease start is vacant. It carries area, costs nothing to hold, and is never in NOI until it lets.
One tenant, start to sale
Open a tenant and a bar across the top draws the space for the whole hold: the lease in place, each renewal or new tenant after it, the months it sits empty, and the sale. It is drawn from the same chain the cash flow prices, so it moves as you type.
- Renewal and new-tenant terms side by side, each with its probability, and one line stating the blend the model actually uses.
- Lease options: renewal at a % of market, a fixed rent, an increase over the last rent or the greater of market and last; early termination with its fee; expansion into a vacant suite. Each is exercised, not exercised, or weighted by the renewal probability.
- Four tabs: this lease, what happens at expiry, recoveries and charges, notes.
Several buildings, one deal
Group the suites by building, and each building’s tenants recover its own expenses plus its share of the site’s, split by area. Each building has its own NOI and its own value at the exit, on one deal with one loan.
- Sell one partway through the hold and it is priced on its own NOI for the next twelve months, at its own cap rate and cost of sale.
- Give one its own exit cap and the exit is priced building by building: each one held to the end at its own cap rate and cost of sale, the rest at the deal’s.
- The lender releases its share of the loan, by its share of the price or a stated amount, and the exit sells what is left.
- Its own returns beside the others: an unlevered IRR and multiple for each building, and a statement of its own.
- When to sell each one is a lever on the Analysis tab, solved like the exit cap or the rent.
Sized the way a lender sizes it
A bank quotes an LTV and then sizes to whichever of debt service coverage or debt yield binds first. On most deals under twenty million, one of them binds well before the LTV does, so a model that can only express the constraint that did not bind sizes every loan too large.
- Both coverage tests size the loan, not just report on it afterwards. Size to 1.25x and the statement reads 1.25x.
- Interest-only sizing uses the amortizing payment, deliberately: sizing on the IO payment produces a loan that fails its own covenant the month IO ends.
- One covenant, typed once. Set the lender’s minimum DSCR and the tile, the warning, the chart of coverage by year and the memo all test against it.
- Draws pro-rata against cost, or on a permanent loan at closing. A mid-hold refinance sized the way a term sheet quotes it: on LTV, on coverage, on debt yield, or on whichever of them is lowest.
- Or take over the seller’s loan. Enter the note as it stands (the balance at closing, its rate, the date it started, its amortization and maturity) and the model runs what is left of it, with the assumption fee at closing and its prepayment terms counted by the note’s year.
- Prepayment on both loans. Step-down, yield maintenance or defeasance on the original loan, and terms of its own on a refinance loan, each charged when its loan is repaid early.
A statement that foots
Gross potential rent down to levered cash flow, every month of the hold. Tap any cell and it tells you where the number came from: the terms it is made of, and the figures behind each one.
- Every row is explainable from the rows above it. That is a property the test suite asserts on thousands of generated deals, not a claim on a marketing page.
- Recoveries by tenant, expenses by line, TI and commissions by the lease that triggered them.
- A note written on a lease (the free rent in the LOI) shows on that tenant’s rent in the statement, and you can note or flag any line or single figure.
A new deal is empty
It does not arrive as an eight-million-dollar building with three tenants already in it. Every figure on a new deal is one you entered, which is the only way a memo built from it is defensible.
- Each step says what breaks without it ("there is no sale price without one, so no IRR either") rather than just naming the field.
- Tap one and it takes you to the field, on whichever tab holds it. When the list runs out the panel goes away.
And afterwards
Close a deal and the model you closed on is pinned. Enter what actually happened month by month, and the variance is measured against that revision rather than against whatever the assumptions have drifted to since.
- Expenses and recoveries line by line (taxes, insurance, CAM, management), each against its own budget, with one line for spend nobody underwrote, and a chart of what moved NOI.
- A month missing from the middle of the run, a month entered but not finished, and a month past the end of the hold are each reported rather than quietly averaged in.
Honest
What it does not do
A page that only lists strengths is a page you have to check somewhere else.
- One loan at a time. New or assumed, and a refinance can replace it, but there is no second position or mezzanine beside it.
- One recovery method per lease. NNN, base year, expense stop, fixed or gross, applied to the whole pool. A lease that pays taxes net but CAM over a base year is not modeled line by line.
- Not an appraisal tool. Exit on a cap rate applied to forward NOI. No valuation-date engine, no present-value matrices.