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Distressed Office Lease-Up

Build the complete distressed office lease-up model from a near-blank sheet: the in-place bridge and going-in cap rate, the occupancy ramp and effective-rent roll, the operating pro forma, the leasing capital funded at close, a full loan amortization schedule, the stabilized exit, and the equity cash flow that drives both levered MoIC and levered IRR.

REPE · Advanced · about 120 minutes · 49 guided steps

Lesson outline

Suite Abstract (In-Place Rent Roll)

  1. Step 1: Occupied SF by Suite
  2. Step 2: Annual Base Rent by Suite
  3. Step 3: Stack: Total Rentable SF
  4. Step 4: Stack: Total Occupied SF
  5. Step 5: Stack: In-Place Gross Rent
  6. Step 6: Stack: Weighted Average In-Place Rent
  7. Step 7: Vacant SF at Acquisition
  8. Step 8: Blended Occupancy
  9. Step 9: SF Rolling Inside the Hold
  10. Step 10: In-Place Rent Rolling Inside the Hold
  11. Step 11: Rollover as % of Leased SF

In-Place Bridge (Year 0)

  1. Step 12: In-Place Occupied SF
  2. Step 13: In-Place Gross Rent
  3. Step 14: In-Place Operating Expenses
  4. Step 15: In-Place NOI
  5. Step 16: Going-In Cap Rate

Financing & Lease-Up Ramp

  1. Step 17: Loan Amount
  2. Step 18: Annual Debt Service
  3. Step 19: Occupancy Ramp per Year

Operating Pro Forma

  1. Step 20: Occupancy
  2. Step 21: Occupied SF
  3. Step 22: Effective Rent PSF
  4. Step 23: Gross Rent
  5. Step 24: Operating Expenses
  6. Step 25: Net Operating Income
  7. Step 26: Less: TI/LC Reserve
  8. Step 27: Levered Cash Flow

Leasing Capital & Equity

  1. Step 28: Newly Leased SF
  2. Step 29: Gross Leasing Requirement
  3. Step 30: Total Leasing Capital
  4. Step 31: Leasing Capital on the Gross Requirement
  5. Step 32: Leasing Capital Coverage
  6. Step 33: Total Uses
  7. Step 34: Initial Equity

Debt Amortization Schedule

  1. Step 35: Loan: Opening Balance
  2. Step 36: Loan: Interest
  3. Step 37: Loan: Principal Amortization
  4. Step 38: Loan: Ending Balance

Forward (Year 6) & Exit

  1. Step 39: Forward (Year 6) Effective Rent PSF
  2. Step 40: Forward (Year 6) Gross Rent
  3. Step 41: Forward (Year 6) Operating Expenses
  4. Step 42: Forward (Year 6) NOI

Returns

  1. Step 43: Gross Sale Price
  2. Step 44: Net Sale Proceeds
  3. Step 45: Exit Equity
  4. Step 46: Total Operating Distributions
  5. Step 47: Levered MoIC

Equity Cash Flow & IRR

  1. Step 48: Equity Cash Flow
  2. Step 49: Levered IRR