A Practitioner's Guide to Street Rate, In-Place Rate, Length of Stay and the Rent Roll That Has No Leases
Julian R. Sterling
Every other asset class hands you a lease. A self-storage store hands you
470 customers who can cancel this month. The price on the website is £32.65/sq ft. The rent roll
collects £35.93/sq ft. That gap — 10.0 per cent — is not a market fact: it is an operating record,
and resetting every customer to the website price removes 17.7 per cent of the asking price.
These are the workbooks the book was written from. Every figure the book prints is
reproduced by a live formula, and the model workbook ends with a sheet that compares the
two line by line.
The files
The whole book
The Self-Storage Model
The cohort engine every figure in the book is computed from. Self-storage has no leases, so the rent roll cannot be read from a schedule — it is built from cohorts of arrivals decaying against a hazard of departure, each carrying the increases it has received. 590 units across six sizes, the three prices, length of stay, the cost base, the break-even, the ten-year cash flow and the exit. On the store in the book the website says £32.65/sq ft and the rent roll collects £35.93/sq ft. Overwrite the tape and every figure moves.
Self_Storage_Model.xlsx · XLSX · 40 KB
Chapters 4 and 5
The Rate Increase Planner
The decision the asset class turns on, laid out so you can put your own response curve into it. Fill in your move-outs in the month after each increase cycle and it solves for the increase that maximises net operating income — 12.82 per cent on this store, worth £0.4 million of value — and shows how flat the answer is either side of it.
Rate_Increase_Planner.xlsx · XLSX · 9 KB
Chapters 3 and 14
The Lease-Up Tracker
Month by month against the plan: move-ins, move-outs, net gain and the enquiries behind them. Its diagnostic column answers the question most lease-up plans have never been asked — occupancy equals move-ins times length of stay, so what occupancy can your actual flow hold? Here that flow is 34.0 new customers a month, indefinitely.
Lease_Up_Tracker.xlsx · XLSX · 12 KB
Chapters 26, 29 and 30
The Bid Sheet
The bridge from asking price to bid, the six inversions — each of which closes the gap on its own — and the omissions table for the facing page, with a column saying where each unpriced item can actually be found. Most of them are public.
Blue on pale blue is an input you may edit. A yellow fill is the carrying
assumption of the sheet — the one to argue about first. Black is a formula.
Nothing is locked, protected or watermarked. There are no macros and no external links.
The model workbook ends with a sheet called Checks: the figure as the book
prints it, the figure the workbook computes, the variance and a status. If a line ever
reads “to check”, the workbook and the book have drifted apart — and the
workbook is right.
Three numbers to compute on your own store
Length of stay, in months. Not churn, not occupancy — the
expected months an arriving customer stays. Here it is 13.8 months. Almost everything else is a
function of it, and most operators do not report it.
The move-in flow your occupancy requires. Occupancy equals move-ins
times length of stay. Holding 79.6 per cent here takes 34.0 new customers every month, indefinitely.
Ask any lease-up plan for that number before you ask it anything else.
What you spend to stand still. Discount plus marketing, divided by
nothing — just the annual total. Here it is £109,074, or 11.0 per cent of the rent roll, purely to
replace the customers who leave. That is the recurring cost of an income with no contract
behind it.
One warning, because it decides the answer
The increase applied to existing customers is what manufactures the rent roll, and how
far to push it turns on a number nobody publishes: how sharply customers respond. The
second workbook exists to measure it rather than assume it. What the book can say is which
part of the conclusion survives not knowing: the optimum ranges from 10.1 per cent to 17.4 per cent across
plausible beliefs — too wide to act on as a figure — but under every one of
them it lies above the 8.2 per cent this store applies. The magnitude does not survive. The
direction does.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 - the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost. The number that mattered appears in no report at all.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
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