A rent roll is a snapshot of every tenant in a property: who they are, what they pay, when their lease started, when it ends, and what is contractually owed. On paper it looks like a boring spreadsheet. In reality it is the truest picture of the income you are actually buying.
Here is what I am actually looking for when I read one:
1. Lease expiration schedule. When do the leases roll? If half the building expires in the same 12-month window, you are buying concentrated rollover risk, no matter how full it looks today. I want to see the rollover spread out.
2. In-place rent vs market rent. Are tenants paying below, at, or above what the market would charge today? Below-market rent is embedded upside. Above-market rent is a warning: that income may not survive renewal.
3. Tenant credit and concentration. One tenant paying 80% of the rent is a very different risk than ten tenants paying 8% each. In single-tenant IOS, this is the whole game, which is why we underwrite the tenant's credit and their need for the location as hard as we underwrite the dirt.
4. Escalations. Does the rent step up over time, and by how much? Flat rent in an inflationary world is a slow loss.
5. Actual vs contractual. What is owed is not always what is paid. I want to know who is delinquent and who keeps quietly renewing.
The rent roll tells you what you are buying. The offering memorandum tells you what someone wants you to feel about it. Read them in that order.
What is the first column you go to when a rent roll lands in your inbox?
Wednesday Real Estate 101: The rent roll
