Once you've completed all the preceding worksheets for the commercial income approach and concluded your market rent, income, and expense information, this table will pull through those conclusions.
Prerequisites
- Valcre Subscription: Professional or Enterprise
Table of Contents
Video Guide
This video will demonstrate using the Direct Capitalization sheet (DIRECTCAP).
Please note that the platform has been updated since the formation of this video, the process and steps is the same, however it may look slightly different.
Written Guide
Step 1: Set up the table
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Show $/SF (Yr.) Column: Displays the annual dollar per square foot column |
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Show $/SF (Mo.) Column: Displays the monthly dollar per square foot column. |
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Show $/Unit Column: Displays the dollar per unit column |
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Use DCF Year 1 in Direct Cap: Option to use the DCF Year 1 value in Direct Capitalization. This applies only if you're using a DCF. |
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Show Rent Roll Area in Report: Displays Rent Roll area |
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Comments: The comments for PGR, EGR, and NOI are auto-generated based on the values in the Direct Capitalization table. These comments will be pulled through into your report. You can modify them if needed by typing directly into the yellow fields. |
Direct cap table
Step 1: Hide Unused Rows
To clean up the table, select the Hide Unused Rows button.
Occupied space
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Tenant: These are the tenant names entered on the RentRoll sheet.
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NRA: The Net Rentable Area for each tenant. |
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Category: The leasing group assigned to each tenant. |
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Contract: The contract, which is pulled from the RentRoll sheet. |
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Market rent: The market rent that is concluded in the rent modules (RENT1/2/3/4 sheets).
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Cont V Mkt: This percentage is auto generated |
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$/SF YR: Dollar per square foot annually |
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$/Year: Overall annual rent |
Step 2: Determine Which Rent to Use
Select the rent you'd like to use. The selected option will be bolded, and the others will be greyed out.
Vacant Space
- Any vacant units entered on the RentRoll sheet will be displayed here.
Gross Rental Revenue
Total rental revenue is composed of:
- Potential-based rent
- Vacant space market rent
- Any other tenant revenue (e.g., CAM, parking, etc.)
This generates the Potential Gross Revenue (PGR).
Vacancy Loss
Step 3: Enter your $/year values in the shaded cells or select the % from the drop-downs to the right. The selected value will automatically generate the corresponding dollar value, contributing to the Effective Gross Revenue (EGR).
Operating Expense Conclusion
- These values are pulled from the IE Conclusion sheet and allows you to view how these expenses are being reimbursed.
Net Operating Income
Step 4: Enter the cap rate value in the yellow cell, or select to use a blended cap rate from the drop-down. This will populate the indicated value.
Pro tip: Select the Indicated Value drop-down to change this to a range. Adjust the spread using the Value Range spread to the right as needed.
Step 5: Apply adjustments to the value as required
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Yes: Adds the adjustment line (Adjustment 1/2/3) below the Indicated Value. Enter the adjustment type and amount.
- No: Removes the Adjustment 1/2/3 line.
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Multiple:
New Adjustment Option (Available in Workbook versions 1.6.1.0 or higher):
Select Multiple from the dropdown to add three adjustment types, which pull data from the LeaseUp (Lease-Up Analysis Detailed Table) and the Extra sheet (Net Present Value table):-
PV of Capital Expenditures
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Rent Loss & Leasing Costs
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PV of Below Market Rent
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- Use up to 3 adjustments as needed.
Step 6: Complete the table
- Round the values by selecting the appropriate option from the Select value indicated drop-down.
- Select Round to the Nearest from the drop-down to round the values accordingly.
The value conclusions will be pulled through into the Values sheet.
| Continue Learning about Valcre with our next suggested guide: Valcre Workbook: DCF sheet |
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