How it works
The cash flow is the list of money in and out by year. Write that list first.
- Write rent, extras the tenant pays, and credits on one list.
- Do not mix a full-service deal with a net deal until you restate extras.
- If two cities differ, extras can differ more than rent.
- Then discount if timing matters.
Formula in words. Occupancy cash = rent + tenant-paid extras − credits. Then, if needed, NPV that path.
| Input | Meaning |
|---|---|
| Face rent | The contract rent |
| CAM | Shared building cost |
| Tax | If the tenant pays it |
| Insurance | If the tenant pays it |
Worked example
Here is a teaching sample. It is not customer data and not a result from a live client.
| Metric | Lease A | Lease B |
|---|---|---|
| Start rent | $33,000 | $30,690 |
| Year-1 extras | $14,000 | $14,980 |
| Year-1 credit | $4,000 | $2,200 |
| Sample NPV | $351,156 | $342,781 |
| Year | Rent | Extras | Credit | Cash out | Value today |
|---|---|---|---|---|---|
| Year 1 | $33,000 | $14,000 | $4,000 | $43,000 | $39,815 |
| Year 2 | $33,990 | $14,420 | $0 | $48,410 | $41,504 |
| Year 3 | $35,010 | $14,853 | $0 | $49,863 | $39,583 |
| Year 4 | $36,060 | $15,298 | $0 | $51,358 | $37,750 |
| Year 5 | $37,142 | $15,757 | $0 | $52,899 | $36,002 |
| Year 6 | $38,256 | $16,230 | $0 | $54,486 | $34,335 |
| Year 7 | $39,404 | $16,717 | $0 | $56,121 | $32,746 |
| Year 8 | $40,586 | $17,219 | $0 | $57,805 | $31,230 |
| Year 9 | $41,804 | $17,736 | $0 | $59,540 | $29,785 |
| Year 10 | $43,058 | $18,268 | $0 | $61,326 | $28,406 |
| Sample NPV | — | — | — | — | $351,156 |
How to read the sample
Sample NPV for the extras-heavy lease is about $351,156. A second path lands near $342,781. That gap is a talking point, not a promise.
Extras are already a big share here. If one path wins only because a credit sat in the wrong year, start over.
Year notes for the extras-heavy lease
- Year 1 of the extras-heavy lease has rent of $33,000.
- Shared building cost is $14,000.
- A credit of $4,000 lowers the cash you pay that year.
- Cash out this year is about $43,000. Extras are already a big share here.
- Later cash gets a shrink for time. At 8 percent, year 1 is worth about $39,815 today.
- Next, year 2 rent is $33,990.
- CAM, which is a shared building cost, is $14,420.
- There is no credit in this year.
- You pay about $48,410 this year after extras and credits. A cheap rent story would ignore this CAM line.
- Time shrinks later cash. At 8 percent, year 2 is worth about $41,504 today.
- Then year 3 rent is $35,010.
- Extras for the building come to $14,853.
- Credits skip this year.
- The net cash this year is about $49,863. Escalation on extras matters too.
- Waiting has a price. At 8 percent, year 3 is worth about $39,583 today.
- After that, year 4 rent is $36,060.
- The shared building cost this time is $15,298.
- No extra credit shows up this year.
- Cash out this year is about $51,358. A second city could change this more than rent.
- Later cash gets a shrink for time. At 8 percent, year 4 is worth about $37,750 today.
- In year 5 of the extras-heavy lease, rent is $37,142.
- Shared building cost is $15,757.
- There is no credit in this year.
- You pay about $52,899 this year after extras and credits. The last year still carries extras.
- Time shrinks later cash. At 8 percent, year 5 is worth about $36,002 today.
- Year 6 of the extras-heavy lease has rent of $38,256.
- CAM, which is a shared building cost, is $16,230.
- Credits skip this year.
- The net cash this year is about $54,486. Keep this later year in the sum for the sample.
- Waiting has a price. At 8 percent, year 6 is worth about $34,335 today.
- Next, year 7 rent is $39,404.
- Extras for the building come to $16,717.
- No extra credit shows up this year.
- Cash out this year is about $56,121. 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 $32,746 today.
- Then year 8 rent is $40,586.
- The shared building cost this time is $17,219.
- There is no credit in this year.
- You pay about $57,805 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 $31,230 today.
- After that, year 9 rent is $41,804.
- Shared building cost is $17,736.
- Credits skip this year.
- The net cash this year is about $59,540. The row still belongs in the sum for the long path.
- Waiting has a price. At 8 percent, year 9 is worth about $29,785 today.
- In year 10 of the extras-heavy lease, rent is $43,058.
- CAM, which is a shared building cost, is $18,268.
- No extra credit shows up this year.
- Cash out this year is about $61,326. 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 $28,406 today.
Add those year values. The sample NPV for the extras-heavy lease is about $351,156. This is a teaching sample, not a client result.
Questions this topic answers
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How to use this with OccupancyNPV
This page answers the concept. OccupancyNPV applies it inside a DealWorkspace: enter lease scenarios, review cash-flow and occupancy cost, then compare NPV and discount-rate sensitivity. OccupancyNPV NPV is not the same as a face-rent comparison. OccupancyNPV is not a CRM or lease-administration suite, and this page is not legal or investment advice.
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