How do you read a rent roll?
A rent roll is a snapshot of what is leased right now: unit by unit for residential, tenant by tenant for commercial, showing who occupies the space, at what rent, and until when. Read it for three things. What is actually being collected today, how far that sits from market, and when each lease rolls.
The columns that carry the information
A residential rent roll gives you unit number, floor plan, square footage, tenant, lease start and end, in-place rent, a market or asking rent, security deposit, and a status flag. A commercial rent roll adds the recovery structure, the expense stop or base year, options, and often a percentage rent clause.
Everything else on the page is administrative. The four fields that drive a model are square footage, in-place rent, lease end date, and status.
Loss to lease is a gap, not a promise
Loss to lease is the difference between what the units would produce at market rent and what the in-place leases actually produce. A large number is the entire pitch of most value-add deals, and it deserves more suspicion than it usually gets.
Two questions decide whether it is real. First, is the market rent column a market rent or the property manager's aspiration? Test it against your own comps, not against the offering memorandum's comps. Second, how fast can you capture it? On twelve month leases every unit rolls once inside year one, but they roll on a staggered schedule, so a unit that turns in month nine pays the new rent for three months of that year. Even a perfect execution collects roughly half the annual uplift in year one. Capture also costs money: turn cost, downtime, and often a concession.
Physical, leased, and economic occupancy are three different numbers
Physical occupancy counts units with somebody living in them. Leased occupancy counts units under a signed lease including future move-ins. Economic occupancy is collected revenue divided by gross potential rent, and it is the only one that shows up in cash flow.
The spread between them is where the story hides. A property at ninety five percent physical and eighty seven percent economic is telling you about concessions, bad debt, employee units, model units, or units held offline for renovation. None of those are visible in the headline occupancy figure a broker leads with.
A rent roll is also an expiration schedule
Sort by lease end date and you have the rollover profile. For multifamily this mostly matters for seasonality and for how quickly a renovation program can move. For office, retail and industrial it is the deal. A single year holding forty percent of the income is a cliff, and it needs a renewal assumption, a downtime assumption, and the capital to re-tenant if the assumption is wrong.
Look at credit concentration at the same time. One tenant at thirty percent of income means you are underwriting that tenant as much as the building.
Where a rent roll misleads
Asking rent is not effective rent. Two months free on a twelve month lease means the tenant pays ten months of rent over a twelve month term, which is a seventeen percent discount that no column on the page displays. Renewals in progress are sometimes shown at the pending rent rather than the current one. Month to month tenants may sit at a premium that will not survive a real market test. And a rent roll dated more than a few weeks before your review is not current.
The discipline that catches all of it is the same one: reconcile the rent roll to the T-12. Annualized rent roll revenue, less vacancy and concessions, should land near trailing actual revenue.
Altyst extracts the rent roll and the trailing statement together, ties one against the other, and flags each disagreement with the document and page it came from. Every extracted value is flagged for your review, carrying its source and a confidence signal, and you can override any of them.
Related questions
What is loss to lease?
Loss to lease is the difference between gross potential rent at market rates and the rent the in-place leases actually produce. It represents rent that could be captured as leases roll, net of the turn cost, downtime and concessions required to capture it.
What is economic occupancy?
Economic occupancy is collected rental revenue divided by gross potential rent. It differs from physical occupancy because it also absorbs concessions, bad debt, non-revenue units and units held offline.
What is the difference between a rent roll and a T-12?
A rent roll is a point-in-time snapshot of current leases and rents. A T-12 is twelve months of actual income and expense. The rent roll tells you what should be collected going forward; the T-12 tells you what was collected historically.
How current does a rent roll need to be?
Within a few weeks of your review. Leases roll continuously, so a rent roll more than a month old can misstate occupancy, in-place rents and the near-term expiration schedule.
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