ASC Market Assumptions 5

Question 1

In ARGUS Enterprise, how does the 'inflation rate' general assumption differ from the 'market rent growth rate' market leasing assumption?

Accepted Answer

Inflation drives operating expense escalation while market rent growth drives future lease rental rates independently

Answer

The general inflation rate escalates operating expenses and CPI-linked items, while market rent growth independently drives the rental rates on new and renewal speculative leases.

Question 2

When a lease in ARGUS has a CPI rent escalation tied to actual CPI rather than a fixed bump, which input must the analyst define under general market assumptions?

Accepted Answer

CPI or general inflation rate

Answer

CPI-linked escalations in ARGUS reference the general inflation or CPI rate assumption set by the analyst to project future rent bumps.

Question 3

An ARGUS model for a mixed-use property has retail space on the ground floor and office space on upper floors. Best practice is to assign these spaces:

Accepted Answer

Separate market leasing profiles reflecting different rent levels, TI norms, and lease terms by use type

Answer

Retail and office uses have distinct market characteristics and should carry separate market leasing profiles for accuracy.

Question 4

In ARGUS, the 'holdover' assumption specifies what happens when a tenant's lease expires and they remain in the space without a new lease. Which market assumption typically governs holdover rent?

Accepted Answer

Holdover is typically modeled at a premium above the expiring contract rent or at market rent

Answer

Holdover tenants often pay a rent premium (e.g., 110–150% of contract rent) or market rent as a penalty for occupying space without a signed lease.

Question 5

An analyst is stress-testing a valuation and changes the market rent growth assumption from +3% to 0% annually. The most likely direct impact on the DCF output is:

Accepted Answer

Lower projected rents on future leases, reducing NOI and decreasing property value

Answer

Flat market rent growth means new and renewal leases will carry lower rents than in the base case, depressing future NOI and reducing the present value of cash flows.

(ASC) Argus Software Certification Practice Test

(ASC) Argus Software Certification Practice Test

ASC Market Assumptions 5