Extra Credit With Alec Pacella

This blog entry is about the cash flow model (left image) with a focus on “Credit Loss.”  In the cash flow model, credit loss is a contingency that accounts for the risk that the tenant (or tenants) will fail to meet their rental obligation while under lease.  The reasons for this can vary – perhaps the tenant declares bankruptcy, becomes insolvent or simply shuts out the lights on a Friday and never comes back.  But whatever the reason, and investor has to recognize the risk of losing rental income due to tenant issues and this risk is typically expressed as a percentage of gross rental revenue.   Read more about this cash flow model and”Credit Loss,” in the linked article written by Alec Pacella featured in the April issue of Properties Magazine.

Contact Alec Pacella with NAI Daus, 216 831 3310.