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home/Knowledge Base/I have a question about a model.../Self Storage Development Model/Why does cell Y83 discount the cash flow almost 90% of the total revenue and slowly burn off?
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Why does cell Y83 discount the cash flow almost 90% of the total revenue and slowly burn off?

4 views 0 August 10, 2020 Updated on November 26, 2022

Line 83 is ‘Gain/Loss-to-Lease’. This is a concept commonly seen in modeling short-term leases that tracks the difference between asking rent and actual rent at a property. Spencer uses the concept here to track both potential rent vs actual rent in order to calculate economic occupancy (row 72), as well as track the difference between in-place rents and market rents.

Or in other words, during lease-up the Gain/Loss-to-Lease line, in this case, tracks the amount of actual vacant space so as to compare Total Rental Income to Gross Rent (i.e. economic occupancy).

So if you open up a fresh copy of the model, you’ll note in column Y that Gross Rent (i.e. Rent as if property was 100% occupied) = 63,950 where as ‘Gain/Loss-to-Lease’ = (57,555). What this is saying is that the property is only 10% leased (1 – 57555/63950). As the property leases up (see row 71), the ‘Gain/Loss-to-Lease’ decreases to the point where it is only tracking (at stabilization column AI) the difference between in-place rents and market rents.

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Self Storage Development Model

  • Why does cell Y83 discount the cash flow almost 90% of the total revenue and slowly burn off?
  • I need help to modify (customize) the model
  • Cell I54 seems hard-keyed or a value copy error from a previous version. I see where this pulls – I202 – but they don’t connect.
  • Why is the Equity amount (cell I54) left as a hard-coded value?
  • I’m not able to get the model to convert debt from I/O to amortizing
  • How do I make the hold period 10 years?
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  Why is the Equity amount (cell I54) left as a hard-coded value?

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