Evaluating Commercial Leases: The Tenant and the Terms Both Matter


This 7-hour seminar introduces participants to how the terms of a lease and the risk profile of the tenant influence the valuation of commercial real estate. Participants will see how the business features of commercial leases affect the quantity and the duration of the income stream that a property will generate and the development of the property’s income statement. Non-traditional sources of income, the proper period to use in measuring the income, measuring the real vacancy rate, expenses that might not be recoverable by a landlord if a CAM formula is incorrect, and how other special clauses in a lease can all affect the property’s income stream will be examined. The second part of the seminar discusses tenant credit risk issues and explains why understanding a tenant’s financial strength is key to assessing the quality of the income stream.
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State Approvals

Program State Approval & Hours

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Who should Enroll

  • Appraisers
  • Lenders
  • Brokers
  • Other market participants involved in the valuation of commercial real estate


  • Recognize tenant credit risk.
  • Identify lease terms that affect risk.
  • Identify key lease clauses that affect risk.
  • Recognize the strength of the guarantor.
  • Identify four Cs of credit analysis.
  • Recognize how the market treats vacancy and collection loss in forecasting NOI for credit deals.
  • Identify various approaches to estimating credit loss allowance.
  • Recognize the effects of contract rent versus market rent relative to risk.
  • Recognize renewal risk and renegotiation risk.




No Exam



Appraisal Institute CE Points

Attend: 75 AI Points

Class Time

7 hours



Program Overview

Required and/or Recommended Equipment

System Requirements

None specified

Additional Information

Seminar Materials Include:
  • Seminar Handbook (197 pp.)
  • Pre-Class Memo (1 p.)

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