Lease Analysis Calculator
Terms
Period Type = 1
Tenant Improvements = 0
Commission = 0
Other = 0
Payments =
Discount Rate =
Analysis
Periodic Rate =
Term =
NPV =
NPV/Term =
NUS/Annuity =
IRR =
NER [US] =
NER [Can] =
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Performs various return analyses on property leases, including net present value (NPV), NPV per term, Net Uniform Series (NUS) per annuity, internal rate of return (IRR), and both US and Canadian Net Effective Rate (or Rental).
- Period Type: Whether the entries are in total dollars or dollars per square foot (PSF), with entries on either a monthly or yearly basis.
- Tenant Improvements: Improvement dollars paid.
- Commission: Commission dollars paid.
- Other: Other concessions e.g. relocation costs, lease buy-outs, etc.
- Payments: Periodic rental payments. Column 1 is the periodic rental payment. Enter each payment on its own row. If a second column is entered (in the form 1000;3) then the second column is the number of occurrences for that payment.
- Discount Rate: Annual discount rate expressed as a percentage.
- Periodic Rate: Discount rate expressed on a periodic basis, as determined by the Period Type.
- Term: Term of the lease.
- NPV: Net Present Value.
- NPV/Term: Net Present Value per term.
- NUS/Annuity: Net Uniform Series of payments or annuity.
- IRR: Internal Rate of Return expressed as an annual rate. IRR requires initial cash outflows (e.g. If Tenant Imps plus Commission plus Other is 0, then IRR will display 0).
- NER [US]: Net Effective Rental (effective lease rate) for US leases only, also known as average rents. This is the effective rent received after deducting all costs of leasing (e.g., commissions, improvements, etc.).
- NER [Can]: Net Effective Rate or rental for Canadian leases only. This calculation consists of the average yearly rents received divided by other concessions paid on an annual basis. Commissions and tenant improvements are not considered.
Examples
Example 1
A potential tenant is interested in leasing space. The costs include $3,000 for tenant improvements, $2,000 in commissions and an estimated $4,000 for other expenses. In exchange, you'll receive rents of $1,000 per month for the first year, $1,500 per month for the second, and $2,000 per month for the third. A 6% return is reasonable. What is the net present value of the deal?
- Period Type: Total$/Month
- Tenant Imps: $3,000.00
- Commission: $2,000.00
- Other: $4,000.00
- Payments:
1,000.00;12
1,500.00;12
2,000.00;12
- Discount Rate: 6.000%
The deal's net present value is $39,651.13.
Example 2
If a new lessor received a deal where there was no rent for 6 months, followed by 6 months at $18/ft², $20/ft² for the next 12 months and $22/ft² for the last 12 months, what is the US effective lease rate (NER [US]) if the discount rate is 6%?
- Period Type: PSF/Year
- Payments:
0.00;6
18.00;6
20.00;12
22.00;12
- Discount Rate: 6.000%
The deal's net effective rent is $17 PSF.
Keywords
Period Type
Tenant Improvements
Commission
Other
Payments
Discount Rate
Periodic Rate
Term
NPV
NPV/Term
NUS/Annuity
IRR
NER [US]
NER [Can]
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Net Present Value
Net Uniform Series
Internal Rate of Return
Net Effective Return
Canada
USA
United States
