How to Show and Explain the Concessions Impact

It is LseMod's contention that there is No Free Money!

We believe if a Landlord is offering free rent, a construction allowance, or other concessions, those costs, including the interest expense to “borrow” the money, is factored into the rental rate.

Our Concessions Impact is a calculation that tries to approximate how much the concessions are costing in terms of a higher rental rate.

The costs are amortized over the lease term at the discount rate. It is like an installment payment where all the payments are the same and the amount borrowed is the total dollar value. The Excel formula we use is -PPMT(annual discount rate/12,term in months, term in months,cash value)*12/rsf). In the case of Free Rent, we calculate the NPV of the Free Rent before calculating its concession impact.

To see the formula, in the Silver Series, the calculation is done on the Inputs sheet in the section Other Factors, Unit Metrics and Formulas. In LseMod Pro, the calculation is in the section Other Factors & Concessions Impact.

In the example below, first the Rent Assumptions are shown, then the Concessions Impact.

What does it mean? If there was no free rent and no landlord paid construction allowance, the base rent of $24.00 could be reduced by $3.86, i.e. without concessions, the rent would be $20.14 assuming the landlord is amortizing his costs over the term at 8%.

To show the cost in the Financial Summary Assumptions, use the Modify Reports button and select Concessions in Assumptions - Show/Not Show.

To hide the Concessions Impact on the Assumptions Reports sheet printout, use Modify Reports and either use the Move Assumptions command or the Change Color commands to white out the text.

Related Topics:

How to hide the Concessions Impact

Applies To:

	Silver Series		Gold Series		Specialty Programs
ü	LseMod Tenant Rep	ü	LseMod Pro		LseMod Condo
ü	LseMod Industrial		LseMod Purchase		LseMod Commission
ü	LseMod Landlord		LseMod Sale Leaseback		SpacePro
	LseMod Buy
ü	LseMod Sublease
ü	LseMod Retail
ü	LseMod Economic Development