Single Tenant Net Lease Valuation Model in Excel
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- čas přidán 6. 07. 2024
- A real estate financial model, built in Excel, for valuing single-tenant triple net leased properties. The model uses three discount rates, rather than one, to value the credit income, speculative income, and residual income cash flows of a STNL deal.
00:00 - Introduction
02:30 - Tabs Overview
04:15 - Property and Tenant Details
06:30 - Analysis Details
08:45 - Lease Details
11:00 - Expense Assumptions
13:15 - Investment Returns
15:30 - Residual Assumptions
17:45 - Evaluation and Property Value
20:00 - Case Study Examples
22:30 - Q&A Session
You can download the model here: www.adventuresincre.com/singl...
Learn more about the author here: www.spencerburton.org
Spencer, thanks. Well designed, engineered and explained.
Interesting; Good videos. Thanks.
Great job! I'd be quite curious to see a model with a value-add component of showing an acquisition of a STNL with less than 3yrs remaining lease term, with an extended lease or with the exercise of an early option.
18:00 why do we use Cashflow from Operations after capex / cap rate
to get gross residual value, rather than using NOI/cap rate?
Great video - are you planning on doing a multi-tenanted model?
AlexBeasant Hi Alex. thanks for watching. You might check out my All-in-One: www.adventuresincre.com/all-in-one-underwriting-model-for-real-estate-development-and-acquisition/
If we were kids, I would let you start at quarterback..............without argument! I hit like, I subscribed, I added to.... Thanks again. Great "effen" video.
Nice Video
Considering that STNL properties are valued using the income approach (aka, CAP rate) why isn't the cap rate used in your valuation? This model would be valuable if it told you the cap rate to purchase a property at in order to meet your investment criteria.
Gary Smith - Thanks for the comment. While I agree that most purchasers of STNL properties assess value using the direct capitalization method (year one NOI divided by some "market" cap rate), this model values the STNL property using the discounted cash flow method - discounting forecasted cash flows in each period together with a reversion value back to today. I posit, that using the direct capitalization method in valuing STNL properties does not sufficiently price for the lease maturity risk, does not accurately price changes in the asset's value as the quality of the tenant or length of the credit lease term change, nor does it accurately reflect the difference in value between the credit lease cash flows vs speculative lease cash flows.
In fact, it was for this very reason that I created the model. To introduce a more detailed method of valuing these types of properties; to bifurcate the two disparate cash flow types, forecast them into the future, and then discount each back at distinct, user-defined discount rates. The result is, I believe, a more accurate reflection of value vs. the basic direct cap on year one NOI.
With that said, calculating the imputed cap rate at acquisition is as simple as taking year one NOI and dividing it by the resulting DCF value. This is a metric I've included in the model for reporting and comparison purposes. You can find that on the Valuation tab, cell C9. Thanks again for commenting and please don't hesitate to reach out with any other questions you might have.
Spencer Burton .