In commercial real estate, one of the key metrics investors and lenders use to assess a property’s stability and risk is the Weighted Average Lease Term (WALT). WALT measures the average remaining lease term of tenants in a property, weighted by their rental income contribution or square footage occupied. A longer WALT indicates more predictable …
The XIRR formula, included with Excel and other spreadsheet programs, is commonly used to measure investment performance in commercial real estate. The XIRR formula is popular because, unlike the IRR function, XIRR can handle irregular cash flow patterns. However, although XIRR is widely used, it is also widely misunderstood. In this article, we will take …
Effective gross income is a line item on a real estate proforma that is commonly used by appraisers, investors, and other commercial real estate professionals. Although the effective gross income is easy to understand conceptually, the calculation itself can sometimes be confusing. In this article, we’ll take a closer look at effective gross income and clear …
Year over Year (YoY) analysis is a powerful tool for financial analysis that provides a direct comparison of performance between two periods of time. In this article, we will explore what YoY analysis is, how it is calculated, and why it is useful. We will also look at the advantages and disadvantages of YoY analysis …
When working with a commercial real estate data set, there are occasions where it is necessary to create a sum for a range of values, but only if they meet certain criteria. Fortunately, there is an easy way to accomplish this task using a built in Microsoft Excel function known as “SUMIF.” In this article, the SUMIF function …
Suppose that a medium sized accounting firm is looking to expand its footprint by leasing office space in a new city. After touring several spaces, they have narrowed it down to two options. The options have similar rental rates, but the firm wants to conserve capital so they need to figure out which one is less …
The development spread is a back of the envelope calculation widely used by real estate developers. It is a fast and easy way to size up the financial feasibility of a real estate development project, before completing a more in-depth analysis. In this article, we’ll take a closer look at the development spread and walk …
There is a wide spectrum of lease types in commercial real estate. To make it easier to communicate with others, it is not uncommon for complicated leases to be described using simple language. The ‘double net lease’ in commercial real estate is a term that describes a certain type of lease agreement, but it’s not …
In the commercial real estate industry there are a variety of lease types and also various names used to describe those leases. The term “single net lease” is sometimes used in commercial real estate to describe a lease where the tenant is responsible for paying one particular expense. In this article we’ll discuss the single …
Last week we surveyed our audience about the immediate impacts of the Coronavirus pandemic on commercial real estate professionals. Below are the results and we will update with additional survey data over time.