ASC Cash Flow Analysis 3

Question 1

When Argus Enterprise calculates the 'Rollover Probability' for an expiring tenant, a lower probability of renewal results in:

Accepted Answer

Increased downtime and leasing cost assumptions applied to the space

Answer

Higher projected base rent for the renewal term

Answer

Lower vacancy loss in the cash flow

Answer

Reduced tenant improvement allowance modeling

Question 2

In a DCF analysis within Argus, the 'Reversion Value' at the end of the hold period is typically calculated by:

Accepted Answer

Dividing the terminal year NOI by the terminal capitalization rate

Answer

Multiplying Year 1 NOI by the going-in cap rate

Answer

Summing all future cash flows beyond Year 10

Answer

Applying GRM to the terminal year gross revenue

Question 3

A cash flow model for a Class A office shows 'Free Rent' concessions reducing early-year income. How does Argus typically account for straight-line rent adjustments for GAAP reporting?

Accepted Answer

Argus only models cash rent received each period, ignoring GAAP adjustments

Answer

Free rent periods are excluded from the Argus model entirely

Answer

Argus averages base rent over the full lease term for GAAP straight-lining

Answer

Free rent is capitalized and amortized over the lease term

Question 4

Which metric does an analyst most commonly use to compare unleveraged property performance across markets when reviewing an Argus cash flow?

Accepted Answer

Going-In Cap Rate (NOI / Purchase Price)

Answer

Equity Multiple

Answer

Net Present Value (NPV)

Answer

Internal Rate of Return on equity

Question 5

In Argus, 'Contractual Rent Steps' for an existing tenant are best entered using which feature?

Accepted Answer

Lease-level rent schedule with specific step dates and amounts

Answer

Market Rent growth rate applied globally

Answer

CPI inflation index linked to the lease

Answer

Operating expense gross-up adjustment

Question 6

When a large anchor tenant vacates in Year 3 of an Argus model, the most significant near-term cash flow impact beyond lost rent is typically:

Accepted Answer

Co-tenancy clause rent reductions triggered by other tenants

Answer

Increased management fee income

Answer

Higher terminal cap rate assumed by the model

Answer

Reduced real estate tax assessments

Question 7

In Argus Enterprise, the 'Inflation' or 'General Vacancy' tab applies a global vacancy factor that is separate from lease-specific vacancy. This factor is intended to capture:

Accepted Answer

Structural vacancy from unleased space between tenant rollovers at stabilization

Answer

The probability that existing tenants default mid-lease

Answer

Absorption timing uncertainty for speculative new supply

Answer

The physical vacancy caused by construction downtime