Notes on underwriting
Arguments rather than definitions — the modelling mistakes that recur, and what they cost. Every figure is one the software computes.
Free rent does not shorten the lease
Three months free on a five-year term is a 63-month cycle, not a 60-month one — and models get this backwards.
An anchor worth 49% of the rent can take 61% of it
Co-tenancy clauses mean losing one tenant does not cost you one tenant's rent.
The four tests a lender runs, and the order they run them in
DSCR, debt yield, LTV and break-even occupancy answer different questions. Passing one says nothing about the others.
Lease expiries stack, and the year they stack in is the risk
A rent roll with a healthy average term can still have two thirds of its income expiring in one year.
Loss to lease is not upside until somebody signs
The gap between in-place rent and market rent is worth what your expiry schedule lets you collect — which is usually much less.
Percentage rent: the breakpoint decides whether you ever see any
A 6% clause on a tenant below its breakpoint pays exactly nothing, and most models do not check.