Base Year – Expense Recovery

[Anonymous]

5 years, 2 months ago #2748

I understand that the current model does not allow you to detail out specifics of expense recovery (such as base year). How would you tackle using the percentages of pro-rate share for a base year lease?

Thanks again!

[Spencer Burton]

5 years, 2 months ago #3290

Sorry for the delayed response here – February has been a very busy month for me!

Modeling leases with a base stop lacks precision with the All-in-One. Nonetheless, you can approach a decent approximation using columsn AG:AU of the ORI-RR tab.

To model a Base Year stop. First, set the expense reimbursement ‘Detail’ to ‘Yes’ in column AG. Adjust the ‘Pro Rata Share of OpEx’ in column AH if necessary. Then in columns AK:AU, approximate what percentage of the reimbursable operating expenses the tenant would likely reimburse in each year. If the tenant begins it’s lease in year 1 and the expense stop is a base year stop, the reimb % in year 1 would be 0%. Then, if operating expenses are set to grow at 2% per year (on the ORI-OpSt tab), then set year 2 to 2%, year 3 to 4%, year 4 to 6%, and so forth.

For 1st generation tenants, you can get a pretty close approximation. 2nd generation tenants become more problematic, and so my recommendation is to set future generation tenants to NNN (i.e. 100% Reimb. %) and adjust the market rent accordingly.

Hope this (belated) response is helpful!

Spencer