ASC Expense Modeling 2

Question 1

In ARGUS Enterprise, what does 'grossing up' operating expenses mean when calculating tenant CAM reimbursements?

Accepted Answer

Adjusting expenses to reflect what they would be at a specified occupancy level (e.g., 95%) so tenants pay a fair share even when the building is partially vacant

Answer

Grossing up normalizes variable expenses to a hypothetical full-occupancy level so that no tenant benefits from or is penalized by building vacancies when computing reimbursable expenses.

Question 2

How are capital expenditure reserves (replacement reserves) typically modeled in ARGUS Enterprise?

Accepted Answer

As an annual per-square-foot reserve entered in the CapEx or capital expenditure section, reducing cash flow below NOI

Answer

Replacement reserves are usually entered as a per-square-foot annual amount in the capital expenditures section, flowing through below NOI to reflect ongoing capital set-asides.

Question 3

What is an 'expense pool' in ARGUS Enterprise, and what is its primary purpose?

Accepted Answer

A grouping of specific expense line items that are allocated to tenants for reimbursement purposes, allowing precise control over which costs are recoverable

Answer

An expense pool lets analysts bundle designated expense lines together and assign them to tenant leases for CAM recovery, giving control over exactly which costs flow to which tenants.

Question 4

In ARGUS Enterprise, how does the software calculate a tenant's CAM reimbursement using the pro rata share method?

Accepted Answer

By dividing the tenant's leased square footage by total building square footage and multiplying by the recoverable expense pool total

Answer

Pro rata share reimbursement divides the tenant's leased area by the total rentable building area and multiplies that fraction by the total recoverable expenses, giving each tenant their proportional share.

Question 5

When modeling real estate taxes in ARGUS Enterprise, which approach most accurately reflects the risk of a reassessment upon sale?

Accepted Answer

Modeling taxes to step up in the year following a sale event based on the projected sale price and local assessment ratio

Answer

A sale can trigger a reassessment, so sophisticated ARGUS models include a tax step-up in year one of a new ownership period based on expected sale price and local mill rates.

(ASC) Argus Software Certification Practice Test

(ASC) Argus Software Certification Practice Test

ASC Expense Modeling 2