Q: Are the leases on the 1200 Columbia Pike on rent roll considered to be gross leases?
A : Yes. Under the terms of a gross lease, the lessor pays all expenses customarily associated with ownership. These expenses include utilities, repairs, insurance, and taxes as examples. Please see the 1200 Columbia Pike Appraisal Excerpts on (Page 5 in the PDF excerpt) for a more extensive list.
Q: Could you briefly explain how the $1.78 per square foot is calculated? I am missing something in my calculations.
A: We have assumed that you’re citing the $1.78 per square foot monthly rental for Myron Peterson CPA/CFA in Unit 240 displayed in the Columbia Pike Rent Rolls. This amount also appears in Slide 35, which captures an excerpt from the Rent Rolls.
The $1.78 is calculated by dividing the Unit 240 Monthly Rent of $1,794.24 by the Unit Size of 1,008 square feet or ($1,794.24) / (1008) = $1.78. It’s important to note that the monthly rent of $1,794.24 does NOT appear in Slide 35.
Q: Can you describe the Debt Constant calculation please?
A: The debt constant is a unique number for every combination of a) an interest rate, b) the associated amortization period, and c) the payment frequency, e.g., monthly quarterly, semi-annually, or annually.
The most common use of the debt constant is to multiply it by the loan amount to calculate the required debt service on that amount of debt at the stated interest rate, amortization period, and payment frequency. In addition, the debt constant is used to identify the maximum amount of debt that can be serviced from a property’s net operating income available for debt service.
Shockproof! Training provides an online worksheet that identifies the debt constant from the user’s input for the interest rate, amortization period, and payment frequency.
Course overview: Commercial Real Estate