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Seminar: Evaluating Commercial Leases: The Tenant and the Terms Both Matter
February 7, 2022 @ 8:30 am - 4:30 pm
Instructor: Gary DeWeese, MAI
This 7-hour seminar introduces participants to how the terms of a lease and the risk profile of the tenant influence the valuation of commercial real estate. Participants will see how the business features of commercial leases affect the quantity and the duration of the income stream that a property will generate and the development of the property’s income statement. Non-traditional sources of income, the proper period to use in measuring the income, measuring the real vacancy rate, expenses that might not be recoverable by a landlord if a CAM formula is incorrect, and how other special clauses in a lease can all affect the property’s income stream will be examined. The second part of the seminar discusses tenant credit risk issues and explains why understanding a tenant’s financial strength is key to assessing the quality of the income stream.
- Recognize tenant credit risk.
- Identify lease terms that affect risk.
- Identify key lease clauses that affect risk.
- Recognize the strength of the guarantor.
- Identify four Cs of credit analysis.
- Recognize how the market treats vacancy and collection loss in forecasting NOI for credit deals.
- Identify various approaches to estimating credit loss allowance.
- Recognize the effects of contract rent versus market rent relative to risk.
- Recognize renewal risk and renegotiation risk.
Special Notes About Registering:
- Never attended an Appraisal Institute Offering or not yet updated your password / log-in since October 1, 2019 – follow these simple steps before registering.
- Those seeking credit from states outside of California are strongly encouraged to check directly with their state licensing board(s) to confirm that the specific state(s) will (1) accept virtual / online education, (2) accepts education from an out-of-state provider and/or (3) offers reciprocal credit since the offering is approved by the CA BREA.
- Instruction will be held via Interactive Technology (ZOOM) and is based on the “live” classroom version that falls under the temporary exemption for virtual / online education due to COVID / SIP restrictions.
- This virtual program is approved for 75 points of AI CEC and 7-hours of California BREA CEC and California SBE Training Credit. This offering meets ADQC’s advanced topic criteria; AI professionals can earn 75 AI points.
- It is the student’s responsibility to have the required equipment – dependable Internet access, computer, webcam, and microphone, agrees that attendance will be monitored, to forward their Photo ID/ Driver’s License to the Chapter Office upon completing your online registration and to accept education related emails from the Northern California Chapter.
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Appraisal Institute Designated Members, Candidates and Affiliates – $245
Standard / Non-AI Professionals – $275