Office Building Model

The model centres on a small set of operating drivers. A Rent Roll anchors five tenants, with square footage driven by a tenant mix block, lease escalations, expiry dates, blended rent per square foot and weighted average lease term.

• A single scenario switch flexes market rent growth, stabilised occupancy, operating expense escalation and the exit cap rate across base, downside and upside cases. Financing inputs separate loan term from hold period and set an interest-only window, while property tax includes an acquisition-time reassessment multiplier.
• Because these drivers sit in one assumptions area, changing a single input flows through the ten-year cash flow rather than being re-keyed sheet by sheet.

Revenue builds potential gross income from base rent, then applies downtime loss on expiring space, free rent, recovery income and parking. Vacancy and credit loss are deducted once from that total to reach effective gross income, so the two adjustments cannot double-count individual line items.

• Recoverable operating expenses are grossed up toward a target occupancy, with a floor that only ever increases recoveries modestly. On rollover, expiring tenants either renew or step to market rent with a downtime haircut.
• Turnover is driven by a single average lease term input that splits space between new and renewal deals, feeding tenant improvements, leasing commissions and reserves.

The debt schedule computes a level-payment annuity once on the original loan, then splits each year between interest and principal, with no principal during the interest-only period. A balloon payoff is forced at loan maturity, and the loan term is independent of the hold period so a refinancing can be represented by extending it.

• Debt service coverage, debt yield and current loan-to-value ratios sit alongside the schedule. On the cash flow statement, acquisition costs and initial leasing capital combine with financing and a yearly operating walk.
• Exit value is calculated forward off exit-year NOI, with a trailing cap value shown as a memo, and net proceeds feed levered and unlevered IRRs, equity multiples and yield on cost.

A GP/LP waterfall uses three capital-account balances that accrete each year at the preferred rate and two higher hurdle rates, drawn down by distributions so the preferred return accrues on the declining unreturned balance. Distributions are allocated across four tiers: a return of capital plus preferred return shared pro-rata, a catch-up bracket, then 80/20 and 70/30 splits above the higher hurdles.

• The promote is carved out of the LP slice, letting the GP recover its co-investment pro-rata and earn promote on top. A tax sheet applies straight-line depreciation over thirty-nine years, interest deductibility, capital gains and depreciation recapture at exit, producing an after-tax IRR.
• Sensitivity tables show an analytic levered IRR proxy across exit cap rate and rent growth.