Renewal Percentage in MF Module Not Working

  • Lizzie Boyer
    Keymaster
    7 years, 9 months ago #2442

    When reviewing the new all-in-one model I started to review the MF component. I noticed that even though you can input a renewal percentage (in MF-RR), it doesn’t have a down steam affect on the model as I would have thought.

    Once a unit type is leased up (MF-Calc, starting in cells FY12), it stays leased up. However, the Concession calculation uses the delta between months to determine if anything should be applied in the MF-OpSt. Therefore, concessions are applied as the project is leased up, but once stabilized there are not any concessions in the MF-OpSt even though the renewal percentage may be 50%.

    I’m not sure if the model was suppose to be dynamic as I initially thought, or if I’m overlooking something, but wanted to shoot you a quick note. I do know there are limitations, and this could be one of them.

    Spencer Burton
    Keymaster
    7 years, 9 months ago #2814

    Thanks for the note and great catch! The ‘Free Rent on 2nd Gen. Leases’ option in column AP of the MF-RR tab is meant to give the user the option to model concession either only during initial lease-up or into perpetuity.

    So to answer your question, yes the model is meant to be dynamic in terms of concessions but isn’t working properly. I’ll troubleshoot the bug and include a fix in next weekend’s release.

    Appreciate you reaching out!

    Spencer Burton
    Keymaster
    7 years, 9 months ago #2816

    Quick follow-up.

    I believe I’ve fixed the issue. I had modeled correctly the Free Rent per unit (MF-Calc Column AGI+), which takes into account renewal probability and whether free rent should be taken on 2nd generation leases. However, the Total Free Rent section (MF-Calc Column ALR+) – which is meant to consider the number of leased units, multiple that by the Free Rent per unit, and divide by 12 (assumed typical lease length in months) – had been modeled incorrectly.

    One thing to note. Because rental income cash flows are modeled by unit type rather than by individual unit, concessions do not precisely match the rollover schedule. Concessions are, instead, calculated on an annual basis and then divided by 12 for a monthly estimate.

    Lizzie Boyer
    Keymaster
    7 years, 9 months ago #2818

    I saw that when digging through the back-end formulas. Thanks for the quick reply and for the work you do.

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