ASC Cash Flow Analysis 4

Question 1

An Argus model for an industrial property shows 'Base Rent' growing at 3% annually under market rent assumptions.
If a tenant's lease contains a fixed rent escalation of 2%, what rental income does Argus project for that tenant?

Accepted Answer

2% growth following the contractual lease schedule

Answer

3% growth following the market rent curve

Answer

The higher of 2% or 3% each year

Answer

The average of 2% and 3% applied annually

Question 2

Which Argus Enterprise output report best shows the year-by-year breakdown of all revenue, expense, and cash flow line items for a 10-year hold?

Accepted Answer

Cash Flow Detail Report

Answer

Rent Roll Summary

Answer

Sensitivity Analysis Matrix

Answer

Lease Expiration Schedule

Question 3

A property with $1,000,000 NOI is acquired with a $750,000 annual debt service. What is the Debt Service Coverage Ratio (DSCR), and what does it indicate about cash flow safety?

Accepted Answer

1.33x — the property generates 33% more income than needed to cover debt

Answer

0.75x — the property is overleveraged with negative equity cash flow

Answer

1.00x — break-even with no margin for expense increases

Answer

1.75x — debt service is 75% below NOI

Question 4

In Argus, tenant improvement (TI) allowances are modeled as a cash flow item that appears in which section of the pro forma?

Accepted Answer

Capital Expenditures / Leasing Costs

Answer

Operating Expenses

Answer

Non-Recurring Revenue

Answer

Debt Service Schedule

Question 5

When a sale-leaseback transaction is modeled in Argus, the seller-tenant's new lease would typically be structured as which lease type to preserve the buyer's net cash flow predictability?

Accepted Answer

Net or absolute NNN lease with tenant responsible for all costs

Answer

Gross lease with landlord paying all expenses

Answer

Modified gross lease with shared CAM

Answer

Percentage rent lease tied to tenant revenue

Question 6

In an Argus cash flow, 'Effective Gross Revenue' (EGR) is calculated as:

Accepted Answer

Potential Gross Revenue minus Vacancy & Credit Loss plus Other Income

Answer

Base Rent minus Operating Expenses

Answer

NOI plus Capital Expenditures

Answer

Gross Scheduled Income minus Debt Service

Question 7

A sensitivity table in Argus shows IRR results varying by exit cap rate and rent growth. If exit cap rate increases from 5.5% to 6.5%, holding rent growth constant, the expected effect on IRR is:

Accepted Answer

IRR decreases because the reversion value is lower at a higher cap rate

Answer

IRR increases because a higher cap rate signals stronger market demand

Answer

IRR is unaffected because cap rate only impacts NOI, not returns

Answer

IRR doubles because cap rate and IRR are directly proportional