Commercial Property Valuations made easy with automated Cash Flow, Exit Values, NPV, IRR and MIRR
Originally published: 07/02/2022 15:21
Last version published: 03/07/2025 12:28
Publication number: ELQ-70218-2
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Commercial Property Valuations made easy with automated Cash Flow, Exit Values, NPV, IRR and MIRR

Commercial Real Estate Valuations the way Analysts and Investors need to see them with NPV, IRR, MIRR, Cash Flows and Exit Values

Description

This CRE Valuation Model will take you less than 40 seconds to input the data and view your results.


The model requires just nine input fields—covering the lease amount, expenditures and incremental lease percentage—and will automatically provide you with 5-, 7-, 10-, 12-, 15- and 20-year models showing all cash flows, exit values, NPV, IRR and MIRR: exactly what investors, fund managers and portfolio managers need to see. All or any factors may be changed in a flash.


Gearing options are built into the model so you can easily view the effects that gearing will have on the building’s performance. Most prudent investors target a specific MIRR under certain conditions, so this measure has become the most important for analysts.


A short note on the difference between IRR and MIRR: IRR has a flaw in that, once cash flows turn positive, it assumes you can reinvest them at the same rate as the initial cash flow—something that is virtually impossible. MIRR corrects this by capping positive cash flows at the funders’ rate, because it is possible to invest in your own debt. For this reason, analysts rely more readily on MIRR.


The CRE Valuation Model is dynamic and designed so that administrative or support staff can easily input the data on behalf of consultants.

This Best Practice includes
Excel Template

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Further information

The main objective of this Valuation model is to be able to input basic data and see how the value measures against certain critical formulas such as NPV, IRR and MIRR. You are able to within a second change the cap rate and see how this effects the returns across 5 to 20 years. Change any data and perform CRE Valuations as the professionals will have.

Where you have buildings that are tenanted you will have the exact science. Untenanted buildings are valued exactly the same in that a predicted rental/lease amount is used to apply a value.

This is not a valuation mechanism for developments. We have specific development valuation models which must include XNPV and CIRR which re the date-sensitive version of NPV and IRR respectively


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