5/9/2016. Leasing Financials: The Numbers Behind the Deal

Transcription

1 Leasing Financials: The Numbers Behind the Deal Table of Contents I. Company Structure II. Property Ownership Structure III. Property Capital Stack IV. Property Business Plan V. Evaluating the Economics of Lease Deals VI. Net Effective Rent: Basic Method VII. Net Effective Rent: Discount Cash Flow VIII. Lease Structures Impact on Value IX. Closing Summary I. Company Structure 1

2 Some Examples REIT Private REIT Pension Fund Private Equity Fund Large Private Real Estate Owner Small Private Real Estate Owner Independent Owner REIT A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types regularincome streams, diversification and long-term capital appreciation. REITs typically pay out all of their taxable income as dividends to shareholders. In turn, shareholders pay the income taxes on those dividends. A security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. Private REIT A real estate investment trust that is not traded on the national stock exchanges. Investments typically last for a set time period. At the end of the hold period the investors cash out through an initial public offering, a merger, or liquidation. The investment usually lacks the liquidity of a publically traded REIT. Pension Fund A fund established by an employer to organize the investment of a portion of the employees' income toward retirement. The pension fund is a common asset pool meant to produce steady growth over the long term, and provide pensions for employees when they reach retirement. Real Estate Private Equity Firm An organization that pools capital from investors into a fund to invest in equity or debt positions in real estate. Cites:, FarlexFinancial Dictionary Farlex, Inc. All Rights Reserved; Copyright 2012,Campbell R. Harvey. All Rights Reserved. II. Property Ownership Structure 2

3 Operator/Owner/Sponsor Equity These are the people that run the properties day to day. They may hire a third party brokerage and/or property management firm to run the asset. This group of people is most involved on a day to day. Other Equity/Preferred Equity This person, group or company purchases interests in the property. These are usually limited partners who receive a preferred return, provide vast majority of the capital, receive a share of the remaining cash flow and profits, and receive a bulk share of tax benefits such as depreciation and interest deductions. They are partners with the owner/operator sometimes, called the sponsor. The word limited refers to their responsibility in day to day operations of the property not in interest in the real property. Usually these groups are regularly involved. Leasing reps usually have to have bi-weekly or monthly calls to keep this group in the know. Additionally, Leasing Reps may need to meet with this partner on a regular basis.* Lender These people, groups, or companies provide mortgages to real estate investors to purchase properties. They are not necessarily involved in the day to day operation of the property, however, keeping rapport and communication on a regular basis is important. Sometimes waivers are needed for certain leasing transactions or pools of money are set aside for certain leasing projects. *Cite: The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright 2007 by The McGraw-Hill Companies, Inc. III. Property Capital Stock What is the Capital Stack? A description of the capital invested in the shopping center. The most risky position is at the top and as you work down the stack the positions get less risky. Higher positions expect higher returns. Typically the stack is arranged as follows. Some stacks may or may not have all or some of the below. Less complicated real estate transactions sometimes have less complicated capital stacks than the below.* *Cite: The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright 2007 by The McGraw-Hill Companies, Inc. 3

4 Sponsorequity: cash investment by the owners of the property.* Preferredequity:shares of stock that have greater rights than normal shares. Owners of preferred equity may be entitled to dividends, income, etc. when there is not enough to pay all shareholders.** Mezzanineinvestors:groups who advance money to a business and receive, in return, a combination of promissory notes and preferential ownership shares in the business.*** Secondandotherjunior mortgages/subordinate debt:a class of debt, that in the event of insolvency, is prioritized lower than other classes of debt. The most common kind of junior debt is an unsecured loan, which has no collateral.**** First Mortgages/Investment grade debt:a type of mortgage that through a lien gives precedence to the lender of the first mortgage over all other lenders in case of default.***** *Cite: The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright 2007 by The McGraw-Hill Companies, Inc. **Cite: The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright 2007 by The McGraw-Hill Companies, Inc. ***Cite: The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright 2007 by The McGraw-Hill Companies, Inc. ****Cite: Farlex Financial Dictionary Farlex, Inc. All Rights Reserved *****Cite: Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright 2003 byhoughton Mifflin Company. IV. Property Business Plan Know the Company s Hold Period of the Property Long Term Hold Medium Term Hold Short Term Hold Sale Refinancing Give it Back to the Bank 4

5 Cash on Cash Return The annual return made on the property/lease in relation to the initial investment. Cash on Cash Return= (Annual Dollar Income/Total Dollar Investment) Example 1: Unlevered Investment: $1,000,000 Net Operating Income: $110,000 Cash on Cash Return= $110,000/1,000,000 = 11.0% Example 2: Levered Let s use the same example but add leverage to the equation. Let s assume in the above equation the investor takes out a loan for 70% of the value ($700,000). Let s assume a 6% interest rate and, for example purposes to keep it simple, it s an interest only loan. Although there is an additional debt service expense, the initial outlay of cash is much less, and the investor can put up much less of their own money for the same investment. Net Operating Income: $110,000 Less: debt service (6%): $42,000 Net Cash Flow: $68,000 Cash on Cash Return = $68,000/$300,000 (only putting up $300k in cash as investor is taking a loan for the rest) = 22.6% 5

6 V. Evaluating Economics of Lease Deals How Can We Use the Unlevered Return on Cost Example Above to Evaluate Lease Deals? Example 1 Proposed New Tenant: Beauty Supply SF: 2,000 Yr. 1 Annual Net Rent: $50,000 Brokerage $4psf: $8,000 TI Allowance: $30,000 Vanilla Box Cost: $120,000 Unlevered Return on Cost = $50,000/ ($8,000 + $30,000 + $120,000) = 31.6% When evaluating on whether to do this deal or not many other factors come into play as the above doesn t take into account credit of tenant, market rent, merchandising mix, etc. Landlords don t have infinite capital so there is consideration of whether they can put the capital to work in a different deal to make a better return. The Landlord may also say that there are not many deals inside or outside of real estate that can generate that level of return and may want to make the deal. Example 2 Existing Tenant: Chinese Restaurant Annual Net Rent: $40,000 SF: 2,000 Brokerage Commission: $0.00 TI Allowance: $0.00 Vanilla Box Cost: $0.00 Proposed New Tenant: Beauty Supply SF: 2,000 Yr. 1 Annual Net Rent: $50,000 Brokerage $4psf: $8,000 TI Allowance: $30,000 Vanilla Box Cost: $120,000 Should we use the $50,000 as the income portion of the equation? Most organizations would not. As it isn t $50,000 of NET new income. 6

7 Example 2 Cont. Incremental Income ($50,000-$40,000)/($8,000 + $30,000 + $120,000) = 6.3% What this says is that for an additional $10,000 in income the Landlord must spend $158,000. That is a 6.3% unlevered return on the cost to attain that new income. If the company s organization requires a larger return than 6.3% the Landlord may choose to renew the existing Tenant at a lower rate than spending the money to get the additional new income. The Leasing Rep would be able to increase its unlevered return on cost if it was able to decrease the cost or get more rent. If the Leasing Rep increased the rent by $1.00 psf(the annual rent would be $52,000) and eliminated the tenant allowance, but still vanilla boxed the space for the Tenant (the cost would be $128,000), and also got a new construction bid at $20,000 less. The new return would be as follows: ($52,000-$40,000)/($8,000+$100,000) = 11.11% Evaluating the Economics of a Leasing Deal Relating to Cash Flow Net Effective Rent (Landlord Perspective) There are a few ways to determine net effective rent: The contract rent less free rent, tenant improvement allowance, brokerage commissions, and other expenses to the deal for the Landlord. Simply comparing the average base rent of two different leases could be misleading, the net effective rent controls to some extent for factors such as expenses and different lease durations, and is therefore a measure that allows different types of leases to be compared. VI. Net Effective Rent: Basic Method 7

8 Basic Method Example 1 10,000 sf lease 36 months $20.00 psfbase rent w/$0.50 annual escalations 1 month free rent (first month) Calculation: Year 1 (11 months) $20.00 x 10,000 sf x (11 / 12) = $183, Year 2 (12 months) $20.50 x 10,000 sf = $205,000 Year 3 (12 months) $21.00 x 10,000 sf = $210,000 Total Consideration = $598, Effective Rent ($598,333.33/ 10,000 sf) / 3 years = $19.94 psf Cite/Sources: Basic Method Example 2 (this doesn t include any interest on landlord s costs) Tenant Pizza Restaurant Square Footage 2,000 Term (in months) 60 Base Rent (psf) $30.00 Escalations $0.00 Tenant Allowance (psf) $10.00 Landlord Work (psf to vbox) $50.00 Free Rent 3 Brokerage Commission 5% Annual Base Rent $60, Total Annual Base Rent (TABR) $300, Monthly Base Rent $5, Less Free Rent (LFR) $15, TABR LFR $285, Less Tenant Improvements (TI) $20, TABR LFR and TI $265, Less Landlord Work (LW) $100, TABR LFR and TI and LW $165, Less Brokerage Commission $15, Net Cash Flow $150, Net Effective Rent PSF $15.00 VII. Net Effective Rent: Discount Cash Flow 8

9 Let s Get Creative with a Lease Negotiation Landlord Tenant Landlord Potential Proposal Counter Counter Resolution 5,000 5,000 5,000 5,000 Rentable Area (sf) Lease Term (mos) Avg. Rental Rate ($/sf) TI Allowance ($/sf) Free Rent (# of mos) Leasing Commissions (%) 6.00% 6.00% 6.00% 6.00% Gross Rent 650, , , ,250 (-) Free Rent 0-63,750-31,875-31,413 Total Rent 650, , , ,838 Net Rent 650, , , ,838 (-) TI Allowance , , , ,000-34,425-36,338-35,810 (-) Commissions -39,000 Net Cash Flow 461, , , ,027 Net Effective Rent PSF Source/Cite: Explanation The Landlord originally offered the Tenant $30.00 psf in TI The retailer gets an estimate from his construction department. Based on existing conditions, that the previous use was a national apparel retailer, the retailer realizes they probably only need $20 psf to finish the build out. In the Tenant s counter the Tenant proposes $20 in TI but reduces the rental rate to $25.50 psf and increases the free rent time to 6 months. The Landlord s original net effective rent was $18.44 and the Tenant s proposal was $ The next round, the Landlord counters with a rent of $25.50 and only 3 months of free rent. On the face of it, the counter resulted in $.50 reduction in the rental rate and 3 months free rent which was not originally included. Good for the Tenant? No The financial structure gives the Landlord a higher net effective rent than originally proposed by $.33 psf. The final is a proposed resolution. This lowers the base rent psf slightly, decreases the TI, and increases the free rent period. As you can see this is a different structure but the same net effective rent psf as the Landlord s original proposal. Comparing Two (2) Leasing Deals Using Simple Net Effective Rent Pizzeria Proposal Nail salon Proposal Rentable Area (sf) 2,000 2,000 Lease Term (mos) Avg. Rental Rate ($/sf) TI Allowance ($/sf) Landlord Work ($/sf) Free Rent (# of mos) 0 12 Leasing Commissions (%) 6.00% 6.00% Gross Rent 260, ,000 (-) Free Rent 0-60,000 Total Rent 260, ,000 Net Rent 260, ,000 (-) TI Allowance -60,000 0 (-) Landlord Work 0-20,000 (-) Commissions -15,600-14,400 Net Cash Flow 184, ,600 Net Effective Rent PSF

10 Explanation The pizza proposal has no Landlord work, but $30 psfin tenant allowance. Additionally, there is zero free rent period, and the Tenant is at $26 psf. The nail salon has zero tenant allowance, yet the Landlord is required to put the HVAC, electric, and plumbing in good working order. This is a cost of $10 psf. Additionally, the nail salon is getting a year of free rent. However, in exchange for the year to get a year in free rent the Tenant was willing to pay a premium in the contract base rent of $30 psf. Even with the 1 year of free rent the net effective rent from the nail salon deal is higher. Keep in mind this net effective rent equation doesn t take into account intangibles such as credit, merchandising mix of the center, projected sales volumes, etc. *The Net Effective Rent is not an end all be all analysis. It is one way to look at a deal. It is simple and effective yet limited. The above few simple equations enable a Leasing Rep to compare leasing deals with different economic terms and to compare apples to apples. However, there are many other factors that can be considered in evaluating the numbers behind a deal. Time Value of Money The idea that a dollar today is worth more than a dollar in the future because the dollar received can earn interest up until the time the future dollar is received.* Another reason a dollar today is worth more than the future is that the future is uncertain. Usually the same amount of money today isn t as valuable as the same amount of money in the future. Example: A Hersey s candy Bar in 1969 cost $.10 At a Hersey s candy bar costs $.89 In 1969 $1.00 could buy you TEN candy bars. In 2015 $1.00 can only buy you one at Target.* * **Cite: Copyright 2012, Campbell R. Harvey. All Rights Reserved. *Cite: and Present Value (a few different definitions to understand the concept) Present value is the current worth of a future sum of money or stream of cash flow when there is a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows.* Present value is today s value for income to be received in the future. Two factors affect the analysis: (1) the perceived risk that one might receive nothing at all in the future, or a smaller amount than expected, and (2) the potential income from alternative investments that could be purchased if one were paid the present value for a future income stream.** *Cite: Investopedia's Guide To Wall Speak, Edited by Jack Guinan. Copyright 2009 by Investopedia. Used with permission of The McGraw-Hill Companies, Inc. **Cite: The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright 2007 by The McGraw-Hill Companies, Inc. 10

11 Present Value Formula PV = C/(1+i) n PV = Present Value C=is the future amount of money (in our case annual rent) k= interest rate n is the number of compounding periods (or years) Effective Rent = k(pv)/(1+k)[(1-1/(1+k)] n (Annuity Payment) K=same discount rate as above T= is the term of the lease Step 1 = Calculate the lease s present value as described earlier Step 2 = Calculate the annualized vale of the lease s present value to get the effective rent Why would we do this? Comparing the initial or average base rent charged in two leases could be misleading. The effective rent is a way of expressing the net present value of the rental payments of the lease in an equivalent annual payment (what the finance world calls an annuity). Pro Forma: Present Value Net Effective Rent Calculation Example 1 Lease Terms Unit Area 1,000 SF Base Rent $12.00 $/SF $12,000 Annual Base Rent Annual Rent Total Lease Term $60,000 Total Base Rent for Entire Term Rent Rent Free Period 6 Months Tenant Improvements 0 PSF Lease Duration 5 Years Discount Rate 10.00% Percentage Effective Rent Per Square Foot $/SF Total Cash Flows $54,000 Effective Average Annual Cash Flow $10,800 Effective Annual Rent (PSF) $10.80 $40,035 Total Net Present Value of Annual Cash Flows Annual Effective Discounted Rent $9,601 Annual Effective Discounted Rent (psf) $9.60 Internal Rate of Return 10.00% Description Year Year Year Year Year Year Total Base Rent $12,000 $12,000 $12,000 $12,000 $12,000 $60,000 Less, Value of Free Rent Period ($6,000) $0 $0 $0 $0 ($6,000) Total Cash Flow (40,035) $6,000 $12,000 $12,000 $12,000 $12,000 $54,000 Present Value of Annual Cash Flow $5,455 $9,917 $9,016 $8,196 $7,451 $40,035 *Cite/source: Explanation $40,035 represents the net present value of the sum of the lease payments. Another way to look at the net present value of the cash flow is to say that it is worth $40,035 today if a 10% return was required. $9,601 represents the effective rent of the lease an equal annual level payment. If you multiplied this by the term you would get more than $40,035. The reason being as this is not a sum of the present value. Definitionof 'Internal Rate of Return-IRR' the discountrateoften used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project'sinternal rate of return, the more desirable it is to undertake the project.* 11

12 Let s Add Some TI! Pro Forma: Discounted Cash Flow Net Effective Rent Calculation Example 2 Lease Terms Unit Area 1,000 SF Base Rent $12.00 $/SF Annual Base Rent $12,000 Annual Rent $60,000 Total Lease Term Total Base Rent for Entire Term Rent Rent Free Period 6 Months Tenant Improvements $20 PSF Lease Duration 5 Years Discount Rate 10.00% Percentage Effective Rent Per Square Foot $/SF Year Year Year Year Year Year Description $12,000 $12,000 $12,000 $12,000 $12,000 Base Rent Less, Value of Free Rent Period ($6,000) $0 $0 $0 $0 Total Cash Flows $34,000 Effective Average Annual $6,800 Cash Flow $6.80 Effectfive Annual Rent (PSF) Total Net Present Value of $21,853 Annual Cash Flows Effective Annual Rent of $5,241 Present Value Effective Annual Rent of $5.24 Present Value (PSF) 10.00% Internal Rate of Return Less, Value of Tenant Allowance ($20,000) $0 $0 $0 $0 Total Cash Flow (21,853) ($14,000) $12,000 $12,000 $12,000 $12,000 Present Value of Annual Cash Flow ($12,727) $9,917 $9,016 $8,196 $7,451 VIII. Lease Structures Impact on Value Lease Structure s Impact on Value Three Types of Valuation: 1. The Cost Approach 2. Assumes Value = Cost = Land Value + (Building replacement cost-accumulated depreciation). 3. Usually Land Value is valued separately using the Sales Comparison Approach. Sales Comparison Approach This approach is what most people are familiar with as it is the accepted method for valuing residential real estate. Normally this method involves selecting properties with similar characteristics in the same market area that have recently sold. The appraiser will then deduct value from the subject property for comparative deficiencies and increase value for advantages. Most lenders require comp sales during financing even though the income capitalization methodmay be used. Income Capitalization Approach While most investors and lenders use a combination of all three methods the income approach is the most common method of valuation in the Shopping Center Industry. This approach allows investors to estimate the value of a property based on the income that specific property produces. The income approach is computed by taking the net operating income of the rent (all income minus expenses) collected and dividing it by the capitalization rate (the investor srequired rate of return). Property Value = NOI/CAP Rate Cap rate is a rate of return on a real estate investment. 12

13 NOI = $1,250,000 Cap Rate =.08 or 8% Property Value = $15,625,000 Example $15,625,000 = $1,250,000/.08 Conceptually the above formula states that to make an 8% annual return on the $1,250,000 income stream the investor would pay $15.6M to purchase the property. The higher the cap rate the lower the property value. (If an investor requires a higher rate of return it means the investor is willing to pay less for that income stream. This would be a means to increase the return.) If the NOI increases the property value will go up. There are no market standards for cap rates, there are no tables, and no universal formulas. Cap rates are determined by themarket. The more perceived risk the asset and market, the more that cap rates go up. The more core the asset, the less perceived risk then cap rates go down. They vary by property type, market, credit worthiness of tenants, and many other things. But why does the Income Approach Method of Valuation matter in Leasing decisions? A Leasing Reps job is to increase value. The Leasing Rep has a direct impact on NOI. The more NOI the Leasing Rep can generate the more value in the property they create. Example Anchored Shopping Center NOI = 150,000 Cap Rates for similar anchored shopping centers in this market = 7% Potential Market Value = $150,000/.07 = $2,142,897 Leasing Rep proposed 3,000 sf restaurant, tenant is going to pay $20.00 NNN in rent or $60,000 per annum. New NOI = $210,000 New Potential Property Value = $210,000/.07 = $3,000,000 New Property Value Old Potential Property Value = $3,000,000-2,142,897 = $857,103. Isolating this lease and not considering many other factors this restaurant deal increased the property value by $857,103! This is not as relevant of an analysis if there isn t a capital event pending (a sale or potential refinancing). In the event that there is a long term hold, the formulas previously discussed are potentially more relevant than this model. As the value added is only critical if the ownership wants to access that value. Extreme Example Landlord is going to be selling a Shopping Center in six months. The cap rate for shopping centers of similar quality in this market is 7%. Tenant Shoe Store Square Footage 5,000 Leasing Rep has a deal on the table. Term years 7 Base Rent (psf) $15.00 Escalations $0.00 Tenant Allowance (psf) $20.00 Landlord Work (psfto vbox) $70.00 Free Rent 3 Tenant = Shoe Store Brokerage Commission 3.00 Size = 5,000 sf Base Rent = $15.00 psf Annual Base Rent $75, Commission =$3.00 psf Total Annual Base Rent (TABR) $525, Monthly Base Rent $6, Free Rent = 3 months Less Free Rent (LFR) $18, TABR LFR $506, Escalations = 0 Less Tenant Improvements (TI) $100, TI Allowance = $20.00 psf TABR LFR and TI $406, Less Landlord Work (LW) $350, Landlord Work = $70.00 psf TABR LFR and TI and LW $56, Less Brokerage Commission $15, Net Cash Effective Rent $41, Net Effective Rent PSF $

14 Explanation On the surface a net effective rent of $1.65 psfdoesn t seem all that appealing in most circumstances. This deal has a total cost of $483,750. However, remember this Landlord is going to sell this shopping center. With an additional NOI to the property of $75,000. $75,000/.07 (cap rate) = $1,071, Maybe the Landlord would take the almost break even lease deal for the increase in value? Spend $483,750 to make an additional $1,071, An unlevered return on cost of approximately 45% ($483,750). We see this in our industry at times when Landlords have capital events on the horizon. Aside From Rent What Are Some Other Leasing Structure Items That Can Affect Value? Term The longer the contracted term the more stabilized the asset is perceived to be. When lease rates of an asset are extremely below market, short term leases might be considered an opportunity and, potentially, value opportunities. Standard fit out vs. custom fit out. 14

15 Options/ROFR/Right to Expand etc. Options give control to the tenant. ROFR gives control to the tenant. Right to expand gives control to the tenant. Right to terminate could cause income after the termination date to be discounted. Tenant control will be a factor in determining how much residual value will be left to an investor. Tenant Allowances While the extreme example above about how buying a deal can increase value, buyer beware as lenders, analysts, and investors are sensitive to over market tenant allowances. This could cause someone to discount the NOI of a property. Exclusives/Prohibited Uses/Uses Clauses Restrictions limit pool of potential tenants to new investors. Uses that impact wear and tear on a building can impact the valuation. 15

16 Operating Costs CAM Caps CAM Exclusions Base Years All of the above cause shrinkage in the NOI and will affect the NOI of the property. Go Dark Clauses/Assignments/Subleases If a retailer can lease or assign their lease to another tenant with no Landlord input or net worth provision this could impact value. If a tenant can go dark this could trigger co-tenancy clauses. It can also limit potential lease up of other spaces. If a tenant goes dark or tries to assign/sublease to a lesser creditworthy tenant it could affect valuation, therefore Landlords should try to attain recapture clauses in leases. Co-Tenancy Clauses If many tenants have a co-tenancy to a specific tenant or group of tenants this could impact value because if that one tenant leaves the center than there is a downward spiraling effect of NOI. Landlords should have provisions that don t let co-tenancy provisions carry on forever and have appropriate remedy provisions to address in the event a cotenancy violation occurs. 16

17 IX. Closing Summary Teamwork Flexibility Tips Teamwork Acquisitions: Understanding what acquisitions is doing and how they are underwriting a potential acquisitions is critical in negotiating the best leasing deal possible. Construction: Working with both in house construction, outside construction, and working with the tenant on what existing features they can reuse will help to reduce the upfront costs and increase your net effective rent, unlevered return, and value. Property Management: work with property management to keep spaces clean, make sure the property looks in the best condition it can, and gain market intelligence. This will all assist in maximizing net effective rent. Management/Leadership/Executive Management: Make sure they are on the same page as you. You should know what returns they are trying to hit, payback periods, and what are their expectations. Asset Management: this group is communicating with partners, and constantly managing the financials of the property. Work closely to make sure you are on track and going where you need to go. Retailers: Retailers want and need to open up stores. Retailers will be running net effective rent scenarios, IRR hurdles, and other factors on their side. Communicate and learn as much as possible so that you can negotiate the best deal possible. Flexibility Understand timing. Know the parameters and internal hurdles. Communicate ferociously and keep people updated as things change in the market. Get creative. (Creatively structuring deals and have flexibility in some areas to maximize other areas). Leasing space will be much tougher. 17

18 Tips Read. Stay on top of industry trends and what is going on in the economy. Know your markets. Meet with a peer group. Ask questions internally and learn what you don t understand. Get involved in deals. The more deals you get involved in, the better structure deals you will make and the more value you will create. Course Evaluation Please Complete Your Evaluation Now. 1. Take Out Your Smartphone or Tablet 2. Go to survey.icsc.org/2016recon 3. Select this course: A closer Look at Leasing Financials: The Numbers behind the Deal 18