In this post and corresponding video, I am going to walk you through a revamped tenant health worksheet that I shared a long time ago on the site. I spent some time giving it a makeover and decided to put together a video walkthrough for it.
Publicly Traded Tenant Analysis
Valuable Insights At Your Fingertips and Why This Analysis is Important
It’s not only important to understand if your tenants are healthy at the property level and are profitable at your property, understanding the health of the entirety of the company that is leasing space in your building is critical to effectively underwriting the risks of a commercial real estate asset; whether that be office, industrial, or retail. Just imagine purchasing a property with a well performing store only to find out after the acquisition of the property that this tenant is potentially on the verge of bankruptcy.
In particular, publicly traded tenants have a wealth of information readily available for us to analyze. And in this post, we will do just that.
The Tenant Analysis Tool
This tool can be used for any publicly traded tenant you might have in your building that you are underwriting. It allows you get a benchmark understanding of how they size up relative to their industry. Now this tool has a retail focus with industry benchmark data on only four retail subsets, but I view this as a starting point for me to continue to develop over the years and also for anyone to take as a base and go more in depth with it.
By no means is this meant to be an end all be all analysis and I’m curious to hear from you all about other potential metrics that might make sense to add.
The module comes with two tabs, one is blank template and the second tab is the completed template from the video.
It has 3 section for inputs, the first section is where you will put the tenant name and industry sub-type. The second section is where you can drop credit ratings from the 3 major credit rating agencies: S&P, Moody’s, and Fitch. Below that is where you’ll input all the financial data from the financial reports. And finally, on the right, is where the metrics spit out and you can do your analysis.
Publicly Traded Tenant Analysis Video
In the video below, I’ll use real live 10-k from Burlington Coat Factory downloaded from their website.
What I’ll do in this video is first provide a walkthrough of how it works, then go to the 10-K and fill in the inputs, and finally review the results.
To download the Burlington Stores, Inc., 10-k, you can click here and click 2020 annual report.
Download the Publicly Traded Tenant Analysis Tool
To make this model accessible to everyone, it is offered on a “Pay What You’re Able” basis with no minimum (enter $0 if you’d like) or maximum (your support helps keep the content coming – typical real estate development models sell for $100 – $300+ per license). Just enter a price together with an email address to send the download link to, and then click ‘Continue’. If you have any questions about our “Pay What You’re Able” program or why we offer our models on this basis, please reach out to either Mike or Spencer.
We regularly update the model. Paid contributors to the model receive a new download link via email each time the model is updated.
- Initial release
- Changed ‘Interest Expenses (negative input)’ line item to ‘Investment Income (Loss) and Interest Expenses’ to account for minor differences in 10-K reportings.
- Updated the Interest Coverage Ratio formula to no longer show a negative when there is positive investment cashflow and to note the same.