Valuation Workbook: Using the OAR - Capitalization Rates sheet

  Available on Plans Essentials Professional  Enterprise

This guide will teach you how to use the OAR - Capitalization Rates sheet in the Valcre Valuation Workbook.  

Table of Contents

  1. Market Extraction Method table
  2. NOI/SF & Capitalization Rate table
  3. National Investor Survey
  4. Market Interviews table
  5. Market Cap Rate
  6. Rate and Growth Analyses
  7. Capitalization Rate Summary

Prerequisites 

  1. Subscription Tier: Professional or Enterprise
    • AI add-in required for Narrative Writer
  2. Current Valcre Valuation Workbook downloaded and set up
  3. Completed SALE1 | SALE2 (if applicable) sheets
  4. Completed DIRCAP sheet
  5. Completed CMA1 Sheet

 


Access the OAR - Capitalization sheet in your Valuation Workbook by selecting OAR from the bottom menu selector. 

Market Extraction Method table

This table contains information based on your selection in Step 1, which is brought in via the completed SALE1 and/or SALE2 sheet. 

Step 1: Select which Sales Comps you want to use in the Market Extraction Method table.

  • Sale1
  • Sale2
  • Both
Step 2: Select the total number of Comparables Analyzed to button up your table, removing excess space.

Step 3: Determine if you will be making adjustments to the comparables

  • Selecting Yes adds adjustment rows to the table such as, but not limited to, Market Conditions, Location, and Size

NOI/SF & Capitalization Rate table

This additional chart assists your analysis by displaying where the Net Operating Income falls in comparison to the Cap Rate.

 

Snag_60ad7b3.png Pro tip: This chart is moveable via click and drag, allowing you to adjust it to your liking or move it to a different location on the sheet. 


 

National Investor Survey Table

You must import your PwC US reports to use this table and subsequent chart. 

There are 2 ways of importing this data

  1. Utilizing the PwC US API subscription to add the range data automatically.
  2. Manual export from PwC US and upload into the subsequent market areas in the National Investor Survey table.

Import WITH the API integration to PwC US 

Step 1: Select Import from your Valcre Ribbon, then select PwC US Investor Survey, select the Property Type(s), and select Import.

The Markets selected will fill in the table below.

Snag_60ad7b3.png Pro tip: You may use the drop down for the Market to reorder the list. 

Step 2: Using the drop-down next to the Market, select the submarket you would like to bring PwC data from. 

Snag_60ad7b3.png Pro tip: The Submarket feature requires Workbook Version 1.6.2 + Add-in version 2.0.10.0 or higher.  

Step 3: Set up the National Investor Survey sheet

  • Determine if you wish to hide the Range Columns and/or Charts.Snag_60ad7b3.png Pro tip: If you are hiding the ranges, there is no need to use the import function as it fills in those data points automatically.
  • The Number of PwC markets dynamically updates based on the markets selected in the import. (When using Workbook Version 1.6.2 + Add-in version 2.0.10.0 or higher.)

 

Learn more about our PwC US joint business relationship here

Step 4 (if applicable): To show a retrospective quarter, adjust the quarter to the desired end quarter. This will modify the table to show a Retrospective quarter line and be reflected appropriately in the National Investor Survey Chart below.

Snag_60ad7b3.pngPro tip: Select Reset YR/QTR to bring your table and chart back to the most recent quarter. 

Import WITHOUT the API integration to PwC US

Step 1: Access PwC US using the link on the table and export your relevant reports. Be sure they are reflecting the same number of periods. 

Snag_60ad7b3.png Pro tip: You will need a separate file from PwC US for each market you are reporting on.

Snag_ce938b.png

Step 2: Select the Number of PwC US Markets you are importing.

  • This will add the appropriate number of markets and the ability to import the appropriate PwC US report by market. 
Step 3 (if applicable): Select Hide Range Columns if you don’t have or wish to display the data for these columns present. 

Step 4: Select if you wish to show charts based on the number of periods you want reflected. 

  • Note: This does not need to match the PwC US import. For example, if you have imported a 25-year report, you can select 5 years for your chart range. 
Step 5: Import the report for each market by selecting Import next to the table.
Note: The Market Name will be imported directly from your PwC US report and can be edited or adjusted to reflect your preferred order of Market Names
Step 6 (if applicable): If you selected to show the range columns, manually enter the ranges for each market you imported. 
Step 7 (if applicable): To show a retrospective quarter, adjust the quarter to the desired end quarter. This will modify the table to show a Retrospective quarter line and be reflected appropriately in the National Investor Survey Chart below.
2024-05-15_15-19-09.gif
Snag_60ad7b3.png Pro tip: Select Reset YR/QTR to bring your table and chart back to the most recent quarter. 
Snag_213bd2e.png

National Investor Survey Comments

This comment box is only available with workbook version 1.7.1+

Use the Narrative Writer function (Must have: Valcre AI add-in, workbook version 1.7.1+ and add-in 2.1.1+) to create your preferred narrative style. Make any changes by typing directly into the narrative box before selecting Use Narrative.

  • The content created by the Narrative Writer does not pull into the reports at this time. To add the content controls please follow the directions in the helper file. If you would like this content permanently included in your report, please send your non-linked report with the content controls added in the applicable section to Valcre Support

 

National Investor Survey Chart

The chart will reflect the data from the reports and the National Investor Survey table above.

Snag_60ad7b3.png Pro tip:  This PwC US import and how you set up the National Investor Survey will be reflected in the Rates sheet's IRR and Residual Cap Rate tables. 

Market Participant Interviews table

This is an optional table to utilize if required for your report.

If using:

Step 1: Select the Number of Participants you interviewed, up to 5 participants. This will adjust the table accordingly, ensuring you do not have blank rows. 

 

Step 2: Select Yes for Utilization Snag_1e5288f.png
Step 3: Fill out the table by overwriting the placeholder text within the yellow-shaded cells.

If NOT using:

Step 1: Select No for Utilization. This will close up the table. 
Snag_1e49fd7.png
  • As with any table, do not delete columns or rows; it will cause workbook errors to form and prevent their usage in the Report.   

Market Cap Rate Chart

The information in this chart is populated using the CMA1 Enhanced Market Analysis sheet, showing you the Cap Rate trends for your asset type in the overall market. 


Rate & Growth Analyses

This section allows you to calculate a cap rate based on a lender's and an investor's return requirements. 

Snag_133dbe3.png

Step 1: Select the Type of Analysis

Step 2: Select the Mortgage Term (Amortization)

Step 3: Enter the Mortgage Ratio (LTV) 

Step 4: Enter the Equity Dividend Rate (EDR)

These items will also populate in the Simple Band of Investment table, providing you with the Mortgage and Equity Components and the Indicated Capitalization Rate

 

Snag_14a5f51.png

Capitalization Rate Summary

This table will summarize the data you have used in previous tables on this sheet.

Step 1: Select if you wish to include RERC. Selecting no will remove the RERC line from the Conclusion table below.
Step 2: Select if you wish to include Realty Rates. Selecting no will remove the Realty Rates line from the Conclusion table below.
Step 3: Optional. If enabled Amend the Component Name of the National RERC Average and/or National Realty Rates Average.
Step 4: Remove any sources you are not using by hiding the row to remove the calculation. 
  • As with any table, do not delete columns or rows; it will cause workbook errors to form and prevent their usage in the Report.   

Snag_60ad7b3.png Pro Tip: Concluded Capitalization Rate: The conclusion made in the DIRCAP sheet is reflected here. 

Snag_23fcbfd.png

Continue Learning about Valcre with our next suggested guide: Valcre Workbook: Using the DIRCAP - Direct Capitalization sheet.

Additional Questions?  Valcre Support is ready to help with all your Valcre product questions! You can connect to us via phone, email, or chat! 

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