Valuation Workbook: Using the OAR - Capitalization Rates sheet

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

Prerequisites 

  1. Subscription Tier: Professional or Enterprise
  2. Current Valcre Valuation Workbook downloaded and set up
  3. Completed SALE1 | SALE2 (if applicable) sheets
  4. Completed DIRCAP sheet
  5. Completed CMA1 Sheet

 

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

How-to Guide

You can access the OAR - Capitalization sheet in your Valuation Workbook by selecting OAR from the bottom or left-side menu selector. 

Market Extraction Method table

This table contains information based on your selection in Step 1, which is brought in via the completed Sale 1 and/or Sale 2 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 clean up your table, removing excess space.

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

  • Yes - Adds additional fields to the table such as, but not limited to, Market Conditions, Location, and Size

NOI/SF & Capitalization Rate table

This optional chart assists your analysis and can be pasted into your report or synced via a data link. 

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 reports to use this table and subsequent chart. 

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

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

 

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

  • This will add the appropriate number of markets and the ability to import the appropriate PwC report by market. 

Step 3: Select to Hide Range Columns 

  • If you don’t have or wish to use the data for these columns

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

The number of selected periods must match those reflected in the PwC reports imported. 

  • EX: You can’t select the Ten Years option if you import five years of data.

 

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 report and can be edited or adjusted to reflect your preferred order of Market Names.

Step 6: Manually enter the ranges for each market you imported.

 

National Investor Survey Chart

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

Pro tip:  This PwC 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

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Step 3: When ready to incorporate this table into your report. Use the Insert File/Link feature in the Report with the table naming convention listed beneath the table. 

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If not using:

Step 1: Select No for Utilization. This will close up the table. 

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Please don't delete any rows or columns in the Valuation Workbook, as this will affect the sync into your Report and cause errors. 

 

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. 

 

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Rate & Growth Analyses

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

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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

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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: 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. 

Please don't delete any rows or columns in the Valuation Workbook, as this will affect the sync into your Report and cause errors. 

Pro Tip:

Concluded Capitalization Rate: The conclusion made in the DIRCAP sheet is reflected here. 

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

 

 

If you have additional questions about using the OAR - Capitalization Rates sheet in the Valcre Office, please contact Valcre Support using the live chat feature in Valcre Online or Valcre Mobile.

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