Issue with Leasing Commissions double counting?

[Anonymous]

5 years, 9 months ago #2476

I’m having an issue with the leasing commission while using the office module (ORI). I noticed that if I input the LC in the RR tab it goes towards an operating shortfall which is included in the overall construction price estimate AND it is deducted from the first month of operations. For testing purposes, I removed the LC in the RR tab and added it in the budget tab during the same period. It is then counted correctly, just as one expense. I’ve attached the two saved proformas for a side by side comparison. The leasing commission is for $250,000 and occurs during month 8, I removed income for testing purposes. If anyone can take a look and give me some advice, it’d be much appreciated. I just want to see if it’s an error in Excel or something I’m doing incorrectly. I’m on Beta v0.5.9.

[Spencer Burton]

5 years, 9 months ago #2878

Hi Robert,

Thanks for pointing this out! The intention of the ‘TI $’ and ‘LC $’ inputs on the RR tab are for the user to account for unpaid leasing costs most common to acquisition deals. For development deals, I recommend leaving those cells (columns AD:AE of the ORI-RR tab) blank and modeling 1st generation tenant improvements and leasing commissions in the development budget (‘Budget’ tab).

With that said and as you noticed, you can model 1st generation TIs and LCs for development deals on the ORI-RR tab. However, if there is insufficient operating cash flow in the period that the TIs/LCs are due, the negative cash flow will be added to the development budget (i.e. capitalized) as operating shortfall (row 52 of the Budget tab). This is to ensure there are sufficient sources to cover the shortfall. However, in the current version this results in double counting the TIs and LCs. I’ll work on a fix for this in the upcoming version in case users add TIs and LCs on the ORI-RR tab on development deals.

Thanks again!

Spencer