Companion files
What Every Clause Does to Net Operating Income, Value and Risk
These are the companion files of How to Read a Commercial Lease by Julian R. Sterling.The book on Amazon →
One Excel workbook that does the three refinements chapter 19 names and never performs, now corrected. Around it, a blank version for your own rent roll, thirteen working documents to print, forty questions that mark themselves, and three cases the book does not work. All free. Nothing is gated behind a sign-up, and no email address is asked for.
The workbook, its blank version, the three cases, the printable documents, the question book and the read-me. Each group below can also be downloaded on its own. Last revised 23 September 2026.
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Appendix F · Chapters 18 and 19
The third refinement is already inside the headline, working the wrong way. Chapter 19 warns against capitalising a four-year over-market stream in perpetuity — “a buyer capitalizing it in perpetuity is paying for something that is not there”. The warning arrives four paragraphs after the headline, and the headline does exactly that. Four years of 54,000 is worth 186,049, not 864,000: the perpetuity overstates the deduction 4.6 times. Correcting it runs upward, to 6,465,951.
Time-weighting removes twenty-eight per cent. A gap is an uplift that begins at expiry. The regional bank’s is worth 94 per cent of face, one year out. The coworking operator’s — the largest gap on the rent roll in percentage terms — is worth 60, eight and a half years out. The largest contributor is the technology tenant’s gap, 1,645,918, and gross 6,652,000 becomes 4,783,212.
And netting the cost of realising it changes the answer rather than adjusting it. Chapter 18 priced it and never brought it across: renewal costs 32.01 a foot, re-letting 119.68. Applied at every expiry and discounted, the net mark-to-market is 2,788,730 at a hundred per cent renewal rate, 807,365 at sixty, and negative at twenty-five. Solve it: the break-even renewal probability is 43.7 per cent. Below that, a buyer is paying for a mark-to-market that does not exist — and the arithmetic is generous, because the uplift is a perpetuity while the cost is charged once, so 43.7 is a floor rather than an estimate.
The correction is 4.5 times larger than the exercise the chapter performs in full. Printed 5,788,000; corrected 807,365; correction 4,980,635 — eighty-six per cent of the printed figure and 8.9 per cent of the asset. The chapter’s clause-by-clause value bridge, the best thing in the book, is −1,752,400 as printed, itemised to the dollar across five chapters. The larger number is three sentences.
And one line of that bridge breaks the rule Appendix F applies. Chapter 10 capitalises the anchor’s renewal gap, 55,000 a year, in perpetuity: 880,000. The gap lasts the five years of the renewal, 275,000 in all, undiscounted. Valued over the five years at 6.25 per cent it is 230,113, and the bridge becomes −1,102,513, 2.0 per cent of the asset rather than 3.1 — so the mark-to-market correction is 4.5 times it, not 2.8.
And the seventh item on its own closing list is negative. With every renewal probability at zero, the contractual-only mark-to-market on this building is below zero: capturing the gap costs more than the gap is worth. A seller quoting 5,788,000 of embedded upside and a buyer quoting a negative figure are reading the same rent roll correctly, and the distance between them is an assumption neither has been asked to state. Thirty-five checks.
Download the workbook26 KBGo to sheet 5 and read the break-even. Then change the capitalisation rate on sheet 1 and watch it move: a lower cap rate makes the perpetuity larger relative to the one-off leasing cost, so the break-even falls. Then replace the six tenancies with your own rent roll — everything downstream is formula.
It cannot tell you whether a tenant will renew, and the whole point of sheet 5 is that it does not have to: it converts the assumption into a threshold and hands the belief back to you. Nor can it read your leases — a termination option makes the honest expiry earlier than the contractual one, and the chapter is right that weighted average lease term to break is always shorter. Where a lease has one, put the break date in the years-left column and the whole file re-solves against it.
The workbook with every input emptied. Enter up to six tenancies, the leasing costs, your renewal probability and the renewal option; the checks sheet counts what is still missing and tests what holds for any inputs.
Chapters 10, 18 and 19 · Appendix F
Tenancy by tenancy: area, in-place and market rent, years left. Then the capitalisation rate, the cost of a renewal and of a re-letting, your renewal probability, the terms of a renewal option and the clauses of your own value bridge. The file gives the honest over-market figure, the time-weighted gap, the mark-to-market net of the cost of realising it, the break-even renewal probability and the seven-item page. An empty row counts as nothing, and an over-market tenancy is found wherever it sits.
The book’s inputs are listed in a text file inside the archive. Type them back in and the file returns 4,783,212 time-weighted, 807,365 net at sixty per cent, a break-even of 43.7 per cent and a clause bridge of −1,102,513.
Download the blank set24 KBThirteen pages to print and use. A4, with margins wide enough for US Letter.
Chapters 1 to 19 · Appendices A to C
The lease abstract of Appendix A in two pages, with a citation column. The file and the three tests of chapter 2. The net effective rent worksheet, with both of the book’s deals and the convention that reproduces 21.38 and 27.37 to the cent: rent monthly in arrears at the monthly equivalent of 7 per cent, capital on day one, which the book never states. The twenty-four cost categories marked landlord or tenant. The recovery checklist, the gross-up and the four structures. The options schedule and notice diary. The security schedule beside the exposure. Retail: breakpoint, exclusives matrix, co-tenancy map. The risk provisions. Renew or re-let, with the boundary rent. The seven-item valuation page. And the forty red flags, with columns for the annual and the value effect.
Download the PDF42 KBA workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Six on reading the lease, seven on rent and effective rent, seven on structures and recoveries, seven on options and risk, seven on the model, the value and Appendix F, and six on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part: that is your revision list.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for each answer.
Download the question book17 KBNew material, not a restatement. Three situations the chapters name and never take to a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a checks sheet closes it. Type your own figures in and every finding recomputes.
Chapters 8 and 19 · Case one
Chapter 8 says a 5 per cent compounded cap and a 5 per cent non-cumulative cap “can differ by twenty percent or more”, and chapter 19 books a 3 per cent cap at −18,400 a year. Built year by year on the anchor’s own pool, with an uneven cost path, the two caps differ by 6.7 per cent; reaching twenty takes a single jump of 23.0 per cent after four quiet years. The −18,400 needs controllable costs rising a steady 4.82 per cent a year. And the lazy shortcut overstates here, understating only once uncontrollable costs outrun about 6.4 per cent.
Chapters 3, 12 and 14 · Case two
A centre whose supermarket stops trading but keeps paying, so it is not in default. With co-tenancy in six of eight inline leases, the centre loses 337,600 a year, 0.54 times the anchor’s own rent, and 584,880 once four termination rights mature. If the anchor also leaves, 67.5 per cent of the centre’s income goes. Chapter 3’s ground-floor unit is one of the tenants, breakpoint and all.
Chapters 10 and 19 · Case three
Chapter 10’s option at 95 per cent of market, weighted over three markets. The discount is linear, so the scenarios add nothing: 230,113 at the start of the renewal, not the 880,000 of a perpetuity. And at a market of 38 the tenant renews at 36.10 rather than leaving. The short call the chapter describes is real only at a fixed rent: at 41.80 the expected gain rises 43 per cent above the gap on today’s market.
Download the three cases39 KB| Amber fill | an input — you may edit these |
| Grey fill | a formula — do not overtype these |
| ADDED | in the workbook, one input: the renewal probability — and sheet 5 inverts it into a break-even. In the cases, every added figure is marked ADDED in the note and beside its cell |
| Checks sheet | thirty-five controls in the workbook — fourteen reproduce the book before anything is questioned; each case closes on its own checks |
The building and its six tenancies are the book’s own and fictional, as they are in the book. The leasing costs are chapter 18’s. This is not valuation advice, and no workbook substitutes for reading the leases.
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers, and the PDF in any reader. They use no macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks to update links on opening, decline — there are none.
| 23 Sep 2026 | The book’s workbook corrected: the renewal option of chapter 10 is valued over its five years, 230,113 rather than 880,000, so the clause bridge is −1,102,513 and the mark-to-market correction 4.5 times it; the over-market stream is found wherever it sits on the rent roll; the largest gap is named correctly. Thirty-five checks. Added: a blank version, thirteen working documents, forty questions that mark themselves and three new cases. The workbook can now also be downloaded on its own. |
The other books with companion files. The full list of titles is on the author page.
How to Read a Commercial Lease develops the complete framework behind these models, with the assumptions, trade-offs and worked examples tied together.
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