INVESTMENT RETURN AND PAYBACK:
* assuming 12% capital cost
The following chart below shows the easily achievable threshold needed to justify the program:
Tenants By Mail is a value added service that drives deals and produces accretive incremental returns
In considering new marketing expenditures, today’s asset managers and investors seek to achieve a proven return equal to double the initial investment, based on the Net Present Value of new leases. This goal/requirement may be expressed by the equation NPV/Cost with 2 representing a 2X return.
We compiled historical data and applied this test to 383 past Tenants By Mail campaigns. The results were astonishing – our clients have earned an average return of 5.1X. Summary data below:
Historical Averages |
|||||
| Lease Term | 5.3 | years | |||
| Lease Rate | $14.1 | sqft / yr | |||
| # Proposals per Campaign | 3.4 | proposals | |||
| SqFt Leased | 3,303 | sqft | |||
| 1st Year Lease Amount | $46,567 | ||||
| Total Lease Amount | $245,609 | ||||
| Net Present Value* | $123,705 | ||||
| Program Cost | $24,598 | ||||
| NPV / Cost | 5.1 | ||||
| IRR | 191% | ||||
The following chart below shows the easily achievable threshold needed to justify the program:
Sq Ft |
$/sqft/yr |
Term (months) |
Campaign Cost |
IRR |
NPV / Cost |
|||
Threshold for breakeven NPV |
500 |
$14.00 |
60 |
$25,000 |
13% |
0.0 |
||
Threshold for breakeven NPV |
1,100 |
$14.00 |
24 |
$25,000 |
16% |
0.0 |
||
Threshold for 2x Target |
1,500 |
$14.00 |
60 |
$25,000 |
83% |
2.0 |
||
Threshold for 2x Target |
3,200 |
$14.00 |
24 |
$25,000 |
167% |
2.0 |
||
Historical Average |
3,303 |
$14.10 |
63 |
$24,598 |
191% |
5.1 |
©Tenants By Mail Inc. | 1300 Adams Ave. Suite 20E, Costa Mesa, California, 92626 | 714-374-0222
Member ICSC Since 1967