4 ms·

There are regional differences in methodology but here in Canada, with institutional clients, we model rent abatements, TIs, and LCs. So no, it is not inaccurat

by jamwil 2y ago

There are regional differences in methodology but here in Canada, with institutional clients, we model rent abatements, TIs, and LCs. So no, it is not inaccurate. If you’re a lender that only cares about NOI and not a pension fund establishing a periodic value, you are free to ignore the adjustments below the line. But they are there in any Market Value appraisal.

voisin 2y ago
I am in Canada too. If you are working for a pension fund doing appraisals for their own assets that’s totally different. I am referring to appraisals for lending decisions. I have pension fund lenders on current projects and past projects and they absolutely did not care about (or even inquire about) incentive packages affecting NER so long as the stabilized NOI meets the debt servicing ratios. I have dozens and dozens of market value appraisals for projects I’ve done and projects I’ve looked at doing (vendor provided) by appraisers all across the country and I have never, ever seen one that takes into account inducement packages.
- jamwil 2y ago
  Like I say, if you’re a lender that only gives a shit about stabilized NOI, that’s A-Ok. But if I’m signing an appraisal that asserts a Market Value with no extra assumptions or conditions, that market value will account for your free rent and TIs. Can I ask out of curiosity, are you located in the maritimes?
  - voisin 2y ago
    No, I am located in BC now (Cranbrook) but primary assets in Ontario (link in profile) and working on a project in Alberta at the moment. I did live out near Halifax for a good chunk of Covid and had offers in on projects in Halifax and Sydney. Happy I didn’t get the Halifax projects but still sad I missed the Sydney project.
    - jamwil 2y ago
      Nice. I'm also in B.C. now (Vancouver) but spent most of my career so far in Calgary. I realize the source of confusion here — I said NOI is based on NERs in my first comment when I should have said market value. NOI would indeed typically be stabilized at market face rents, and then we would apply below the line adjustments for off-market rents, abatements, leasing/capital costs, etc.

by jamwil 2y ago

voisin 2y ago

I am in Canada too. If you are working for a pension fund doing appraisals for their own assets that’s totally different. I am referring to appraisals for lending decisions. I have pension fund lenders on current projects and past projects and they absolutely did not care about (or even inquire about) incentive packages affecting NER so long as the stabilized NOI meets the debt servicing ratios. I have dozens and dozens of market value appraisals for projects I’ve done and projects I’ve looked at doing (vendor provided) by appraisers all across the country and I have never, ever seen one that takes into account inducement packages.

jamwil 2y ago
Like I say, if you’re a lender that only gives a shit about stabilized NOI, that’s A-Ok. But if I’m signing an appraisal that asserts a Market Value with no extra assumptions or conditions, that market value will account for your free rent and TIs. Can I ask out of curiosity, are you located in the maritimes?
- voisin 2y ago
  No, I am located in BC now (Cranbrook) but primary assets in Ontario (link in profile) and working on a project in Alberta at the moment. I did live out near Halifax for a good chunk of Covid and had offers in on projects in Halifax and Sydney. Happy I didn’t get the Halifax projects but still sad I missed the Sydney project.
  - jamwil 2y ago
    Nice. I'm also in B.C. now (Vancouver) but spent most of my career so far in Calgary. I realize the source of confusion here — I said NOI is based on NERs in my first comment when I should have said market value. NOI would indeed typically be stabilized at market face rents, and then we would apply below the line adjustments for off-market rents, abatements, leasing/capital costs, etc.