While change can sometimes be worrisome, ultimately, newer software models have proven to be helpful. For instance, can you imagine being stuck using Windows 2000 in today’s world and having data storage in MB rather than in GB or TB (as is the case of my external hard-drive)? Or imagine hiring a programmer who only knew C++.
The latest software upgrade to the ARGUS platform is entering into the repertoire of commercial real estate professionals, known as Enterprise. While many companies have been hesitant to switch over right away in favor of keeping the older DCF model, the latest announcement from ARGUS includes ending its support of DCF licenses on June 30, 2017. Also, since I began teaching the program at UCLA Extension in 2015, many universities including UCLA Extension have no longer provided instruction in DCF. Although ARGUS has stated it is “committed to working with [customers] to ensure a smooth transition” many professionals have been concerned about how this shift will impact the commercial real estate arena.
In order to help better prepare you for ARGUS Enterprise, here are a few key changes:.
The first notable change is the user interface within Enterprise. The look and feel of Enterprise are meant to be intuitive for Microsoft Office users, with some semblance to Excel. Many of the entries, like in the Rent Roll tab, populate various rows, tabs, and drop-down options. You are also able to scroll and create multiple row entries. The language and terminology between DCF and Enterprise in many situations remain relatively unchanged; however, the method of entry provides more options, easier flow, especially for more complex modeling situations.
In the DCF model a user can export the entire file into an excel document. With Enterprise, this feature has been modified. There are now many reporting options in Enterprise – more than even one user may even need, so the ability to export everything into Excel is a bit more difficult. Valuation Reports alone has eight options, and Tenant Reports has nine. Instead, you can export an individual report to an Excel or PDF file. Some users have the option of creating “Report Packages,” depending upon the license, which combines several different options together into a customized Excel or PDF file.
Complex Recovery Structures
While creating complex recovery structures isn’t new, Enterprise has made it a bit easier to see what exact expenses have been included into the expense pools, as well as if there are any detailed items such as administrative fees, or capped costs individually by the tenant.
One of my favorite updates to Enterprise is with the IRR Matrix table, found under Valuation Reports. After basic inputs are made, such as purchase price and entry and terminal cap rates, a user can easily see the IRR table for the analysis period and also make immediate adjustments if necessary.
Enterprise allows the ability to export the property file to a DCF file format, which is “.sf,” so even though you may be working off Enterprise, a group still using DCF can review your file. Keep in mind, however, that due to it being simply a different program, there may be variations in the cash flow and valuation results. A warning message will typically pop-up requiring the user to agree to this.
Unlike DCF, Enterprise doesn’t automatically save every change you make, which can be both a positive and a negative. One of the biggest complaints of the DCF format was trying to model different scenarios: you would have to save the original file separately. In Enterprise, you can make changes to the scenarios (such as changing the entry CAP Rate or Analysis Period) to see how this would affect the model, without having to keep the change if you didn’t want it hard-coded. This is a great way to see the updates in a live setting.
While migrating or changing to a new platform is never without trials or errors, many groups have already been making the switch or are at least easing into the new model. And, Enterprise has already made a variety of software updates. When I first started teaching at UCLA Extension, we used 10.0. The latest model version 11.6 was released in April 2017.
Of course, at Shopping Center Advisers we are here to help with your commercial real estate modeling needs and are equipped to handle any complex scenario using the latest and greatest technology.
Contact us here: http://shoppingcenteradvisers.com/contact/