Sensitivity assumptions

Planon Real Estate : RE Assets : Application settings : Company settings : Sensitivity assumptions

System administrators can define sensitivity assumptions in Application settings > Sensitivity assumptions. This screen provides the following functionality:

• Displays a list of existing sensitivity assumptions.

• Allows editing, duplicating, or deleting an existing sensitivity assumption.

• Enables creation of a new sensitivity assumption.

Creating a sensitivity assumption

When adding a new sensitivity assumption:

• Name: Required and must be unique.

• Description: Optional. If provided, it will appear in the pick list of the Sensitivity Analysis Wizard.

• Content requirements

◦ Each assumption must include at least one variable and one scenario.

◦ A variable can only be used once per sensitivity assumption.

◦ Each variable must have a type:

- Absolute: Adds or subtracts a fixed value from the base amount (e.g., +50).

- Relative: Multiplies or divides the base amount by a percentage (e.g., +5%).

• Scenario management

◦ The scenario name can be edited.

◦ Scenarios can be deleted.

The following table shows the list of variables and the implementation of each variable:

Variable	Implementation
Exit Yield PGI	The sensitivity analysis enforces the terminal value method Exit Yield PGI. If a property uses a different terminal value, the Exit Yield PGI (before acquisition costs) is calculated by dividing the Potential Gross Income at the end of the forecast period by the Gross Terminal value. The Exit Yield PGI is then used as a basis for the sensitivity analysis.
Acquisition costs capital value	The acquisition costs capital value is the sum of the RETT capital value, VAT capital value, notary costs capital value and agent costs capital value. The delta is based on the output.
Acquisition costs terminal value	The acquisition costs terminal value is the sum of the RETT terminal value, VAT terminal value, notary costs terminal value and agent costs terminal value. The delta is based on the output.
Estimated rental value per annum	The ERV is based on the quantity and method. However, for the sensitivity analysis, the output - ERV per annum per property - is used. The ERV can take different values for each assumption period. The delta is therefore also added to each assumption period. The ERV can't be negative so the base ERV minus the delta can't be lower than 0.
Review rent per annum	The review rent is based on the quantity and method. However, for the sensitivity analysis, the output - review rent per annum per property - is used. The review rent can take different values for each assumption period. The delta is therefore also added to each assumption period. The review rent can't be negative so the base review rent minus the delta can't be lower than 0.
Vacant possession value	The VPV is based on the quantity and method. However, for the sensitivity analysis, the output - VPV total per property - is used. The VPV can take different values for each assumption period. The delta is therefore also added to each assumption period. The VPV can't be negative so the base VPV minus the delta can't be lower than 0.
Tenant turnover rate	The tenant turnover rate for fixed term contracts applies for both the initial as continuous value. The tenant turnover rate for indefinite period contracts are a time series. The delta is applied for each period. Both for the fixed term- as indefinite period contracts, the tenant turnover rate + privatization rate current lessees can't be higher than 100% or bellow 0%. Therefore, the calculation engine corrects the delta for this.
Privatization rate	The privatization rate is ignored for fixed term contracts and can’t be higher than the tenant turnover rate or the sum of the privatization rate current lessees and privatization rate can’t be higher than 100%. The calculation engine corrects the delta for this.
Relet term	The relet term for fixed term contracts applies for both the initial as continuous value. The relet term for indefinite period contracts only has 1 value. The relet term has a lower boundary of 1 month so the calculation corrects the delta for this. Also the base value + delta is rounded to whole integers when the type equals % of current value.
Vacancy term	The vacancy term for fixed term contracts applies for both the initial as continuous value. The vacancy term for indefinite period contracts only has 1 value. The vacancy term has a lower boundary of 0 month so the calculation corrects the delta for this. Also the base value + delta is rounded to whole integers when the type equals % of current value.
Rent free term	The rent free term for fixed term contracts applies for both the initial as continuous value. The rent free term for indefinite period contracts only has 1 value. The rent free term has a lower boundary of 0 month so the calculation corrects the delta for this. Also the base value + delta is rounded to whole integers when the type equals % of current value.
Cash incentive	The cash incentive is only applied to fixed term contracts.
Non-recoverable operating expenses	The aggregated cash flow non-recoverable operating expenses used for the delta. Because this cash flow can take different values for strategies (in case of the highest strategy), the delta is added to both turnover/privatization when highest strategy is applicable. When an absolute delta is provided, the system assumes for the DCF calculation a once every 1 year in advance payment on the 1st of January with no indexation.
Investments	The aggregated cash flow investments used for the delta. Because this cash flow can take different values for strategies (in case of the highest strategy), add the delta to both turnover/privatization when highest strategy is applicable. When an absolute delta is provided, the system assumes for the DCF calculation a once every 1 year in advance payment on the 1st of January with no indexation.
List of all applicable index series	The index series is a time series, so apply the delta to each calendar year.
Hardcore yield	The user can provide an absolute or relative delta.
Reversionary yield	The user can provide an absolute or relative delta.
Froth yield	The user can provide an absolute or relative delta.
Discount rate	The total discount rate is calculated by adding the risk free rate, market risk premium and property risk premium. However, the delta is based on the total discount rate. Because the discount rate can take different values for strategies (in case of the highest strategy), the discount rate is added to both turnover/privatization when highest strategy is applicable.