The Modified Internal Rate of Return, often just called the MIRR, is a powerful and frequently used investment performance indicator. Yet, it’s commonly misunderstood by many finance and commercial real estate professionals. In this post, we’ll take a deep dive into the concept of the MIRR. We’ll define the MIRR, look at the logic and intuition …
The Net Present Value (NPV) is one of the most important and widely used concepts in finance and commercial real estate. In this article, you’ll learn: What Is Net Present Value (NPV)? Net Present Value (NPV) is an investment performance measure widely used in finance and commercial real estate. NPV is the difference between the present …
In finance and commercial real estate it’s simply expected that you know how to use a financial calculator. Yet, it’s surprising how many commercial real estate and finance professionals still don’t know how to properly use a financial calculator. Sometimes it’s because they didn’t learn it correctly the first time, and other times it’s because they …
What’s the difference between a recourse vs. non-recourse loan? In commercial real estate both types of loans are common depending on the stage and type of financing. In this article, we’ll take a closer look at recourse and non-recourse commercial real estate loans, as well as the “bad boy guaranty.” What is a Recourse Loan? …
In commercial real estate, a common lease structure is the triple net lease, often abbreviated as “NNN Lease”. Despite its popularity, the triple net lease structure is still commonly misunderstood. In this article, we’ll take a deep dive into the triple net lease and cover: What is a Triple Net Lease (NNN)? What is a …
The operating expense ratio provides a lot of useful insight into a commercial property analysis, but it’s not as widely used as it ought to be. The operating expense ratio is a simple ratio that’s easy to calculate and in this article we’ll take a closer look at how to calculate the operating expense ratio, …
In commercial real estate the tenant estoppel often comes up during the due diligence phase of an acquisition or during the underwriting of a loan. What exactly is a tenant estoppel and how does it work? Let’s dive in and take a closer look at the tenant estoppel. What is a Tenant Estoppel? What exactly is …
Typically an interest rate is given as a nominal, or stated, annual rate of interest. But when compounding occurs more than once per year, the rate of interest actually realized will be higher than the nominal rate of interest. This actual, realized rate is known as the Effective Annual Rate (EAR). In this article we’ll …
NPV in Excel is widely used but commonly misunderstood. Even top MBA grads commonly misuse NPV in Excel. In this short article, we’ll look at the problem with NPV in Excel, show you where most people go wrong, and we’ll also walk through the correct way to use the NPV function in Excel, step-by-step. The Problem With NPV in …
Ground leases are an important component of many commercial real estate deal structures. Yet for a lot commercial real estate professionals ground leases are rarely encountered and are poorly understood. In this article we’ll shed some light on how ground leases work, explain what typical ground lease structures look like, and we’ll also clear up some …