In this model, we will calculate our revenues, our rental revenues. The first thing I'd like to do is take a look back at the operating assumptions, and I'll blow this up a little bit so we can see it. Again, we have tenant and lease type assumptions here. We have three different types of leases, triple net, single net or modified gross, and a full service gross, and assumptions about how much square footage they have on the property, as well as annual rent increase and what they're paying in rent, the market price for rent. So we're gonna take this information and we'll use it both in terms of calculating the revenues and as well when we calculate the expenses. We also have additional expenses here, which will help us calculate our net rental revenues, as well as our operating expenses and capital expenditures. So the first thing we're gonna have to do is calculate some of the building fundamentals. We know our square footage from the assumptions that we use in calculating the sales price. We also know that our net leaseable area is calculated by applying the assumption for net leaseable area to that. The next step will be to calculate the leased area for each of the three tenants. So for the triple net leased tenant, we're going to take the assumption for how much of the net leased area is occupied by the triple net tenant and apply it to the net leaseable area. We will then calculate their pro rata share by taking their net leaseable area, dividing it by the total net leaseable area. And I'm gonna anchor this so that I can copy that formula down when it comes time to the other lease types.

The next cell asks us for the pro rata for expense reimbursement. And this is simply asking us to confirm that their pro rata of the net leaseable area translates into an expense reimbursement. And for the triple net leased area, it will because that is what a triple net leased area implies. So we're simply going to link to that 40%. For the single net leased area, we will go over to our assumption on the operating assumptions tab and apply the 35% times the net leaseable area.

And then for the pro rata, I'm simply gonna copy this formula down because at this point, it is copyable and the pro rata for expense reimbursement here again is going to be the same because whatever expenses we do ultimately assigne to this lease type, they will only pay 35% of them because that is their pro rata share of the building. For the full service gross lease, we're going to take the assumption of 25%, multiply it by the net leaseable area and copy this formula down from above, which amounts to 25%. And as you can see, we have it hard coded here because the full service gross lease is not going to translate into any expense reimbursement for the owner. So that's hard coded is a zero. In terms of calculating the revenues, what we have to do here is first establish our triple net rent per square foot per month. As you can see from the top, we are using a monthly model. A monthly model is probably most common in real estate because it gives the most flexibility in being able to track multiple tenants and multiple leases at one time. In this model, we are going to do that. We're not going to have a lot of lease terminations and lease starts just to keep it simple. So that will make some of the modeling a little bit easier to follow. However, that would be the point of a monthly model. It's also common to see a quarterly model from an investor perspective. The first thing we need to do is pull in our triple net rent, which we will get from our operating assumptions tab. And that's going to be the $48. And this is per year, so we need to translate it into per month. Most markets quote per year. Some markets like California, for example, do quote per month, just the local standard. But here they're quoted per year and we need to translate that into a monthly rent per square foot. And then what we need to do next is we need to link to the increase in the rent. However, the increase in the rent has to be modeled carefully because the increase is annual. We don't wanna break the annual increase down into monthly increments because that's not how rents work. They don't go up every month, they go up typically once per year. So we're going to need to put a formula in

in the date section. If we look up in row two, you can see that we have a one indicating that we are in year one. And this starts actually in column C. And even though that's technically time zero or the end of the previous year, we're using this for formula conventions as the start. And this will go all the way up until month 12 when it will become two to indicate that we are in the second year of the lease. And then at 25 months, it becomes three and so on and so forth until the end of the model. So we're going to use these to help us tell the formula when we have changed into a new year. So for the increase, it will be equals, open parenthesis, D2 minus C2 times the actual annual increase as indicated in our assumption, which is the 3.5%.

And that should give us a zero. Now, we have to anchor that assumption because that assumption does not actually carry across on our assumption page. But if we copy this until the end of the model, we'll see that what happens is that as soon as we hit the first month of year two, we get an annual increase of 3.5%, and the same goes for the beginning of year three, et cetera, et cetera. So this now is a formula that we can use to apply to our beginning rent. So it'll be just the general growth formula, previous year times one plus the growth rate and we can copy that across and the growth rate will apply again only when that annual increase is hit, as it does in column P. So we'll do the same thing now for the single net lease, which is priced at $62 annually divided by 12. And once again linking to our dates at the top times the annual increase of 3.5% for C18.

And if we anchor that assumption, we can copy that across as well. And now what I think I'll do here is I'll wait until I get the formula bill so I can copy them all across at the same time.

And I can do a check once I'm done as well. Same thing here for the full service gross lease which is priced at the highest point 'cause it does include the expenses divided by 12 times my annual increase of the full service gross lease anchored. And I'll copy my growth formula from above and I should be able to copy these across similar results.

Just checking to make sure that it does in fact go up after the end of year one and it does. So this completes our rental revenue calculation for the three different leases.