ASC Evaluation Details and Structure 5

Question 1

How does ARGUS handle a lease that begins partway through a calendar year in the cash flow model?

Accepted Answer

ARGUS pro-rates the rental income for the partial year based on the actual lease commencement date

Answer

ARGUS pro-rates income (and associated costs) for leases that begin mid-period, ensuring the model reflects only the months of actual occupancy in the partial year.

Question 2

What is a 'blended cap rate' in a multi-tenant ARGUS evaluation?

Accepted Answer

A weighted average cap rate reflecting the different implied yields across each tenant's lease, used to characterize the overall portfolio yield

Answer

A blended cap rate is the weighted-average yield implied by applying individual lease economics across all tenants in a property, giving a single summary figure for the overall asset.

Question 3

In ARGUS, property management fees are typically modeled as:

Accepted Answer

A percentage of Effective Gross Income (EGI) collected each year

Answer

Management fees are an operating expense typically calculated as a percentage of EGI (commonly 2–5%), ensuring the expense scales with actual income collected.

Question 4

What does a Debt Service Coverage Ratio (DSCR) below 1.0 indicate in an ARGUS levered analysis?

Accepted Answer

Net Operating Income is insufficient to cover the annual debt service, meaning the property cannot service its mortgage from operations alone

Answer

DSCR = NOI ÷ Debt Service; a ratio below 1.0 means NOI is less than debt service, so the investor must contribute out-of-pocket cash to cover the shortfall.

Question 5

When modeling a mixed-use property with retail and office tenants in ARGUS, how are different lease structures handled?

Accepted Answer

Each tenant space can be assigned its own lease type (gross, net, modified gross) and corresponding recovery structure independently

Answer

ARGUS allows tenant-level lease structure customization, so retail tenants on NNN leases and office tenants on gross leases can coexist accurately in the same model.

(ASC) Argus Software Certification Practice Test

(ASC) Argus Software Certification Practice Test

ASC Evaluation Details and Structure 5