How it works
Write the cash list first. Then decide what the page is measuring.
- Write the face rent.
- Write every free month and TI dollar.
- Spread those credits across the term, or discount them first.
- Show both numbers in the same unit.
Formula in words. Effective rent sits below face rent when credits exist. The gap is the concession story.
| Input | Meaning |
|---|---|
| Face rent | Sticker |
| Free rent | Months at zero |
| TI | Build-out money |
| Term | How long you spread the gift |
Worked example
Here is a teaching sample. It is not customer data and not a result from a live client.
Lease A start rent$48,000
Lease B start rent$44,640
Discount rate8%
Sample NPV A$390,354
| Metric | Lease A | Lease B |
|---|---|---|
| Start rent | $48,000 | $44,640 |
| Year-1 extras | $6,400 | $6,848 |
| Year-1 credit | $22,000 | $12,100 |
| Sample NPV | $390,354 | $377,533 |
| Year | Rent | Extras | Credit | Cash out | Value today |
|---|---|---|---|---|---|
| Year 1 | $48,000 | $6,400 | $22,000 | $32,400 | $30,000 |
| Year 2 | $49,440 | $6,592 | $0 | $56,032 | $48,038 |
| Year 3 | $50,923 | $6,790 | $0 | $57,713 | $45,814 |
| Year 4 | $52,451 | $6,993 | $0 | $59,444 | $43,693 |
| Year 5 | $54,024 | $7,203 | $0 | $61,227 | $41,670 |
| Year 6 | $55,645 | $7,419 | $0 | $63,064 | $39,741 |
| Year 7 | $57,314 | $7,642 | $0 | $64,956 | $37,901 |
| Year 8 | $59,033 | $7,871 | $0 | $66,904 | $36,146 |
| Year 9 | $60,804 | $8,107 | $0 | $68,911 | $34,473 |
| Year 10 | $62,628 | $8,350 | $0 | $70,978 | $32,877 |
| Sample NPV | — | — | — | — | $390,354 |
How to read the sample
Sample NPV for Face versus effective sample is about $390,354. A second path lands near $377,533. That gap is a talking point, not a promise.
Year notes for Face versus effective sample
- Year 1 of Face versus effective sample has rent of $48,000.
- Shared building cost is $6,400.
- A credit of $22,000 lowers the cash you pay that year.
- Cash out this year is about $32,400. The credit makes year one look kind.
- Later cash gets a shrink for time. At 8 percent, year 1 is worth about $30,000 today.
- Next, year 2 rent is $49,440.
- CAM, which is a shared building cost, is $6,592.
- There is no credit in this year.
- You pay about $56,032 this year after extras and credits. Face rent returns in year two.
- Time shrinks later cash. At 8 percent, year 2 is worth about $48,038 today.
- Then year 3 rent is $50,923.
- Extras for the building come to $6,790.
- Credits skip this year.
- The net cash this year is about $57,713. The sticker now runs the invoice.
- Waiting has a price. At 8 percent, year 3 is worth about $45,814 today.
- After that, year 4 rent is $52,451.
- The shared building cost this time is $6,993.
- No extra credit shows up this year.
- Cash out this year is about $59,444. Later years still follow the face path.
- Later cash gets a shrink for time. At 8 percent, year 4 is worth about $43,693 today.
- In year 5 of Face versus effective sample, rent is $54,024.
- Shared building cost is $7,203.
- There is no credit in this year.
- You pay about $61,227 this year after extras and credits. The last year is almost all sticker.
- Time shrinks later cash. At 8 percent, year 5 is worth about $41,670 today.
- Year 6 of Face versus effective sample has rent of $55,645.
- CAM, which is a shared building cost, is $7,419.
- Credits skip this year.
- The net cash this year is about $63,064. Keep this later year in the sum for the sample.
- Waiting has a price. At 8 percent, year 6 is worth about $39,741 today.
- Next, year 7 rent is $57,314.
- Extras for the building come to $7,642.
- No extra credit shows up this year.
- Cash out this year is about $64,956. The row still belongs in the sum for the long path.
- Later cash gets a shrink for time. At 8 percent, year 7 is worth about $37,901 today.
- Then year 8 rent is $59,033.
- The shared building cost this time is $7,871.
- There is no credit in this year.
- You pay about $66,904 this year after extras and credits. Keep this later year in the sum for the long path.
- Time shrinks later cash. At 8 percent, year 8 is worth about $36,146 today.
- After that, year 9 rent is $60,804.
- Shared building cost is $8,107.
- Credits skip this year.
- The net cash this year is about $68,911. The row still belongs in the sum for the long path.
- Waiting has a price. At 8 percent, year 9 is worth about $34,473 today.
- In year 10 of Face versus effective sample, rent is $62,628.
- CAM, which is a shared building cost, is $8,350.
- No extra credit shows up this year.
- Cash out this year is about $70,978. Keep this later year in the sum for the long path.
- Later cash gets a shrink for time. At 8 percent, year 10 is worth about $32,877 today.
Add those year values. The sample NPV for Face versus effective sample is about $390,354. This is a teaching sample, not a client result.
Trusted sources
These are public references. They are not endorsements and not client results.