Li

Lipsey School of Real Estate2011 Systems for Success

Presented by

Mike Lipsey, MCRE

Module 1 Best Practices

1.1…..…………..Winning More Tenant Rep Assignments

1.2…..….....................................……Performance Leasing

1.3…..……….……….......................…Performance Listing1.4..………….………………………Presentations That Win

Module 1: Best Practices

Winning More Tenant Rep Assignments

I-RRR (Industry Rent to Revenue Ratio) Industries Average Revenue Dedicated to Rent

C-RRR (Client’s Rent to Revenue Ratio) Client’s Revenue Dedicated to Rent

DTOR (Dollars to Occupy Ratio) I-RR ± Other Expenses ± Market Conditions

Users in the United States BizStats.com – FREE Financial Tools and Business Statistics. BizMiner.com – Detailed Financial Information for a Fee.

Users in Canada StaCan.gc.ca – Canadian Business Statistics

Internet Sources – Establishing I-RRR and C-RRR (Private Companies)

1.1

Calculating Projected Base Rent (Example)

I-RRR (Industry Rent to Revenue Ratio)*Annual Gross Revenue = Projected Base Rent

(Example) 4.3 (I-RRR) * 500,000 (Annual Gross Revenue) = Projected Base Rent

* After Year 1, Increase Annual Gross Revenue by 8%

1.1

Contract Year Annual Gross Revenue I - RRR Projected Base Rent

2012 $5,000,000 4.30% $215,000

2013 $5,400,000 4.30% $232,200

2014 $5,832,000 4.30% $250,776

2015 $6,298,560 4.30% $270,838

2016 $6,802,445 4.30% $292,505

1.1Establishing I-RRR (Tools)

1.1Establishing I-RRR (Tools)

1.1Establishing I-RRR (Tools)

Insurance Carriers & RelatedS-Corp Annual Average Sales, Income & Expense 2011

Rent 3.24%

1.1Establishing I-RRR (Tools)

2011 S-Corporations: Rent as a Percent of Sales

1.1Establishing I-RRR (Tools)

1.1Establishing I-RRR (Tools)

Rent 3.3% 4.6% 5.2%

S-CorporationsWith Net Income(as % of Revenue

ArchitecturalEngineering & Related Services

Accounting, Tax

Preparation & Payroll

Services

Legal Services

1.1Establishing I-RRR (Tools)

Calculating Dollars To Occupy Ratio

* Assumption: 3% Annual Increase in Other Expenses

Contract YearAnnual Gross

RevenueI - RRR Projected

Base Rent

Other Expenses /

Market Conditions

DTOR Total Dollars To Occupy 300 W Adams 190 S LaSalle 29 N Wacker Dr

2012 $5,000,000 4.30% $215,000 3.70% 8.00% $400,000

2013 $5,400,000 4.30% $232,200 3.81% 8.11% $437,994

2014 $5,832,000 4.30% $250,776 3.93% 8.23% $479,701

2015 $6,298,560 4.30% $270,838 4.04% 8.34% $525,495

2016 $6,802,445 4.30% $292,505 4.16% 8.46% $575,785

Present Value

/ by Lease Term

/ by Usable SF

1.1

Lease Resolution Worksheet

Contract Years Remaining Base Rent With Escalations Contract DTO SIC Budget Market DTOR Occupant's Forecasted Revenue DTOR

2012 $26.00+ $280,000 $210,000 $180,000 $3,500,000 X6

2013 $26.50+ $290,000 $225,000 $190,000 $3,750,000 X6

2014 $27.00+ $300,000 $240,000 $200,000 $4,000,000 X6

2015 $27.50+ $310,000 $255,000 $210,000 $4,250,000 X6

2016 $28.00+ $320,000 $270,000 $210,000 $4,500,000 X6

10,000 SF I-RRR 4.5

Expenses .5

Sub-Market 1.0

DTOR 6.0

1.1

Bakke Lipsey Pricing Vacancy1.1

Establishing Market Comparables1.1

Evaluating Building Quality1.1

Enhanced Rent Analysis1.1

Determining Appropriate Asking Rent1.1

10.2...........................................…Performance Leasing10.3..…………………………………Performance Listing

Performance Leasing / Performance Listing

1.2 1.3

Prospecting Pyramid

Tier 1 – Base Industry / Market

Tier 2 – Macro – Sub

Tier 3 – Micro – Sub

Tier 4Target Rich

Largest Group (Prospects)Inexpensive Investment

Smallest GroupLucrative Investment (Time / Financial)

2nd Largest Group (Prospects)Inexpensive Investment

2nd Smallest GroupLucrative Investment

1.2 1.3

Prospecting Pyramid

Tier 1 – Base Industry / Market

Tier 2 – Macro – Sub

Tier 3 – Micro – Sub

Tier 4Target Rich

Included on Email BlastCold Call

Scheduled MeetingAll Marketing Information

Personalized EmailMarketing Card / Warm Call

Drop InMarketing Card / Warm Call

1.2 1.3

Prospecting Pyramid

Tier 1 – Base Industry / Market

Tier 2 – Macro – Sub

Tier 3 – Micro – Sub

Tier 4Target Rich

REIT

SouthwestUnited States

Office

Seeking> 100,000

1.2 1.3

ListGrabber (Screen Shot)1.2 1.3

ACT! (Screen Shot)1.2 1.3

Business Development VS Transaction Management

Activity Breakdown

Transaction Management Advanced Steps, Existing Relationships Examples (Financing, Appraisals, Negotiation)

Activity Plan Actual Plan Actual Plan Actual

Business Development

Business Development

Transaction Development

Transaction Development

Business Development Introductory Steps, Creating New Relationships Examples (Cold Calls, Introductory Flyers)

Performance Listing (Genesis)

Leases Signed

Negotiations

Proposals / LOI

Site Visits

Contacts

Units of Activity

1

2

3

4

5

6

1.2 1.3

Performance Listing (1 Year Plan)

Leases Signed

Negotiations

Proposals / LOI

Site Visits

Contacts

Units of Activity

1

2

3

4

5

6

8

16

128

256

768

3,840

1.2 1.3

Investment Sales Model (6 Month Plan)

Closing Will Require

Contact Negotiation

LOI

Property Tour

Package Mailings

Contacts

1

2

3

4

5

6

1

2

4

12

42

250

Units of Activity 5,0007

1.2 1.3

Performance Listing (Leasing Plan)

JAN Plan

JAN Actual

FEB Plan

FEB Actual

MAR Plan

MAR Actual

APR Plan

APR Actual

0

1

2

3

4

5Letters of Intent

JAN Plan JAN Actual

FEB Plan FEB Actual

MAR Plan MAR Actual

APR Plan APR Actual

0

1

2

3Signed Leases

Activity JAN Plan

JAN Actual

FEB Plan

FEB Actual

MAR Plan

MAR Actual

APR Plan

APR Actual

Units of Activity 1600 - 1760 - 1936 - 2130 -Contacts 320 - 352 - 387 - 426 -Site Visits 64 - 70 - 77 - 85 -Proposals 11 - 12 - 13 - 15 -Letters of Intent 3 - 3 - 4 - 4 -Lease Negotiations 1 - 1 - 1 - 1 -

Signed Leases 1 - 1 - 2 - 3 -

1.2 1.3

JAN Plan JAN Actual

FEB Plan FEB Actual

MAR Plan

MAR Actual

APR Plan APR Actual

0

1

2

3

4

5Letters of Intent

JAN Plan JAN Actual

FEB Plan FEB Actual

MAR Plan

MAR Actual

APR Plan APR Actual

0

1

2

3Signed Leases

Performance Listing (Plan VS Actual)

Activity JAN Plan

JAN Actual

FEB Plan

FEB Actual

MAR Plan

MAR Actual

APR Plan

APR Actual

Units of Activity 1600 1550 1760 1700 1936 2000 2130 2200Contacts 320 300 352 350 387 400 426 450Site Visits 64 60 70 45 77 80 85 90Proposals 11 10 12 10 13 14 15 20Letters of Intent 3 4 3 2 4 3 4 5Lease Negotiations 1 1 1 1 1 2 1 4

Signed Leases 1 0 1 1 2 2 3 3

1.2 1.3

Presentations That Win (5 Step Approach)

Executive Summary

Situation

Approach

Expierance

Conclusion

1

2

3

4

5

1.4

Performance Example1.4