select_terminal_noi: Robust selection of terminal NOI for resale valuation
In cre.dcf: Discounted Cash Flow Tools for Commercial Real Estate

select_terminal_noi

R Documentation

Robust selection of terminal NOI for resale valuation

Description

Chooses a stabilised net operating income (NOI) for terminal value calculation, using a hierarchical decision rule designed to mitigate distortions driven by vacancy, capital expenditure, or atypical end-of-horizon cash-flow patterns.

The selection logic proceeds as follows:

If NOI_N is (numerically) zero and force_theoretical_if_noi_n_zero is TRUE, use noi_theoretical when provided.
If year N is clean (zero vacancy, zero capex, and NOI_N > 0), use NOI_N.
If year N is distorted but year N-1 is clean and NOI_{N-1} > 0, use NOI_{N-1}.
Otherwise, if noi_theoretical is provided, use it.
As a last resort, fall back to NOI_N. A warning is emitted only when NOI_N <= 0.

Usage

select_terminal_noi(
  noi,
  vacancy = NULL,
  capex = NULL,
  noi_theoretical = NULL,
  force_theoretical_if_noi_n_zero = TRUE
)

Arguments

`noi`	Numeric vector of length `N` containing annual NOI values for years 1..N.
`vacancy`	Optional numeric vector of length `N` giving annual vacancy rates. When `NULL`, vacancy is assumed to be zero in all years.
`capex`	Optional numeric vector of length `N` giving annual capital expenditures. When `NULL`, capex is assumed to be zero in all years.
`noi_theoretical`	Optional numeric scalar giving a stabilised theoretical NOI (for example market rent multiplied by area).
`force_theoretical_if_noi_n_zero`	Logical scalar. When `TRUE`, and `NOI_N` is numerically zero, `noi_theoretical` is used when available.