Commercial Acquisition: Reimbursable & Non-Reimbursable Expenses

Purpose

The purpose of this post is to outline the key functions of the Reimbursable and Non-Reimbursable Expenses in CREModels Commercial Acquisition models. The tutorial will go through what to input into the model and how the outputs are calculated.

Overview

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In the Commercial Acquisition model, all Operating Expenses can be entered in the Reimbursable Expenses table or the Non-Reimbursable Expenses table. The total Reimbursable Expenses will be used to calculate Expense Reimbursement income from the tenants.

Reimbursable Expenses

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For each expense line item, the user must enter the name of the line item and the initial annual $ amount. The user can enter an annual % increase for each expense and what % of the expense line item is variable. The portion of the expense line item deemed variable by the input entered in the % Variable column shall be varied by occupancy. For example, as shown above, the initial annual Gas expense is $1,200, but 50% of this expense is variable. So, if during Year 1, the property is only 80% occupied, then the actual Gas expense will be: ($600) + ($600*80%) = $1,080.
For Management Fee, the user must enter what % of Effective Gross Revenue that the Management Fee shall be calculated as.
The last column of the Reimbursable Expenses table displays the initial calculated $/SF/Yr expense amount, with the total of these expenses (not including Management Fee) displayed in the final row of the table.

Non-Reimbursable Expenses

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For each expense line item, the user must enter the name of the line item and the initial annual $ amount. The user can enter an annual % increase for each expense and what % of the expense line item is variable. The portion of the expense line item deemed variable by the input entered in the % Variable column shall be varied by occupancy.
The last column of the Non-Reimbursable Expenses table displays the initial calculated $/SF/Yr expense amount, with the total of these expenses displayed in the final row of the table.