course description
long-term commercial leases have complex, variable cash flows – including significant upfront cash incentives, free rent, and periodic increases in rents. it’s important for property managers and owners to be able to determine the real value of this cash flow, to compare it to alternative terms or offers, the property budget, or other owner objectives. effective net rent is a widely used analysis tool incorporating discounted cash flow and the time value of money to determine the financial impact lease terms and concessions have on property income and value. in this course, tom elmer, cpm®, covers key principles of the time value of money and demonstrates how to calculate effective net rent using the effective rent tab of the irem financial analysis spreadsheet.
learning objectives:
- review concepts and mechanics of time value of money (tvm)
- discuss how amount and timing of lease terms and concessions impact the value of a lease
- compare lease alternatives using discounted cash flow (dcf) analysis to calculate effective net rent
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